International Conference onIslamic Microfinance

CENTER OF ISLAMIC BANKING & ECNOMICS

Held At:

Faisal Auditorium Islamabad - Pakistan

Organized By :

Information Technology as a tool in strengthen Islamic Microfinance

Outline-Objectives-Technology in support to IMF (Islamic Microfinance)-Problem Areas in Manual Processing-Models Representation-Web application overview

Objectives

It has been felt strongly to explore the relevance of Islamic Financial Instruments for developing effective Microfinance Instruments and functional framework for Banks and NGOs. The need of the hour is to consolidate the valuable efforts of the scholars and practitioners to come up with a common understanding and agreed upon model of Islamic Microfinance.

Technology in Support to IMF

• Financing application from initiation to disbursement is fully computerized & paperless• Relevant customer info updated in system are automatically populated into Credit System• Web based configurable parameter driven Credit system with fully integrated end to end workflows• Online Decisioning (Approve/Reject/Return)• Auto-SMS/ Email blast on the decision of application• Credit information retained in the system

Problem Areas in Manual Processing

• New Customer Profile Creation• Poor quality of financial data• No aggregate record

Improved workflowManual workflow

Goals• Reduce costs• Improve client data quality

Results• Low labour cost• Relative efficiency

Methods• Simple web and mobile-phone application to record client data in field• Data transmission via SMS/Email• Automatic upload of data into database using a smart phone SMS-Server / Email-Server

Problem area• New Customer Profile Creation

Customer Profile form filled on paper in field

Branch Manager ApprovalPost all forms to Head Office

Head Office enters info to database

Piles of extra paper and money gone to waste

Customer is approved!

Customer Profile form filled electronically in field

Manager Approval

Customer is approved!

SMS/Email all forms to Head Office

Improved workflow

Weekly collections

Copy of transaction record put in drop-box

Admin updates records & prints balances & dues

Annual auditing by Bank / NGO

Manual workflow

Weekly collections

Book-keeping done locally Annual auditing by Bank / NGO

Goals• Improve data quality & aggregate data• Automate weekly accounting function • Create sustainable business model

Methods• Have an Accountant with a PC, serve a Federation• Charge nominal fee for data processing service• Use manual transport to ferry data back and forth

Results• Weekly meeting time cut by half• Instant evaluation of financial performance of large group of SHGs possible

Problem area• Poor quality of financial data• No aggregate record

Models at Alhuda HDA

•Donation Based Model

• Ethical Lending Model

Donation Based Model (Waqf)

Lender

• Zaqkkat• Sadka

Borrower• Charity

$

$ $

Borrower

Waqf Process

Ethical Lending Model

Lender

Lend Amount to Alhuda

Borrower

Borrower

Select Borrower

Borrower

Ethical Lending Process

Mobile Bankin

g

Credit / Debit

card

Wire Transf

er

Western

Union

Lender

Ethical Lending Process (Cont.)

Lender 1

$

$$

Lender 3

Lender 2

Borrower• Purchase Requested Goods

Pooling

Alhuda HDA Connects people through lending to alleviate poverty.

• Qarad-e-Hasnah• Zakkat• Sadka• Other donations

Lenders

• Payback 12 months Installments

Borrower

Payback Process

Thank You ……

Thank You

CENTER OF ISLAMIC BANKING & ECNOMICS

Head Office: 192- Ahmad Block, New Garden Town , Lahore, Pakistan Ph: +92-42-35913096-8, 35858990, 38407850 Fax: +92 -42-35913056E-mail : info@alhudacibe.comWeb: http://www.alhudacibe.com