— Musoni’s mobile approach has proved efficient, reliable and secure
CAPE TOWN, South Africa, Aug. 20, 2014 /PRNewswire/ — Based on its recent analysis of the microfinance industry (MFI), Frost & Sullivan recognises Musoni with the 2014 Kenyan Frost & Sullivan Award for Technology Leadership. The company is the first 100 percent mobile microfinance institution in the world. By using a mobile platform as a channel to deliver its products and services to customers, Musoni has positioned itself to bring the benefits of microfinance to parts of the Kenyan population left behind by traditional microfinance institutions.
Musoni has consistently delivered its products to clients within 72 hours, which is significantly faster than the usual turnaround time of 7 to 14 days for loans in the microfinance sector in Kenya.
Continuous investment in research and development (R&D) has enabled the company to maintain its high standard of product and service delivery. A recent example of prototyping is the successful enhancement of the organisation’s management information system (MIS) to accommodate a new savings product that will be released to customers as soon as Musoni is registered with the Central Bank of Kenya as a deposit-taking institution.
"Musoni is currently offering micro-credit, and hopes to expand its services to include micro-savings and micro-insurance products," said Frost & Sullivan Senior Economic Consultant, Craig Parker. "The delivery of savings and insurance using the mobile money platform will increase customer uptake, which is currently less than three percent for micro-insurance products in Kenya. The mobilisation of micro-savings will raise customer profiles and help them qualify for micro-insurance."
Musoni works closely with international partners such as the Grameen Foundation, KfW and USAID, which enables it to gauge the challenges that the industry is facing. These best practices in process design have had a significant impact on Musoni’s growth. Since 2011, Musoni’s loan book has doubled annually; the company is also rolling out a digitised registration process that will allow it to expand its customer base.
Operational efficiency is pivotal to Musoni’s business, and by basing its operations entirely on the mobile technology platform, Musoni has eliminated the need for paper-based, back-office operations that are typical to commercial banks and conventional MFIs. The technology platform itself is the back office and all processes have been digitised, requiring no human intervention. For example, loan applications are converted to loan facilities and then registered to a loan account. The money is then transferred to the customer’s mobile wallet.
Musoni uses Safaricom’s M-PESA platform to offer micro-loans and accept repayments through mobile phones. More than 80% of the Kenyan population is registered with M-PESA, most of whom have no other access to financial services.
Furthermore, Musoni has built its own middleware as an improvement upon the M-PESA software to facilitate the money transfer process and authenticate loan repayments. The middleware has also enhanced the speed of information upload. For example, when field agents register customers for micro-loans using a mobile tablet, the loan applications are converted into loan facilities and then registered to a loan account. Once this registration is complete, the money is immediately disbursed to the customer’s mobile wallet.
The technological sophistication of the Musoni platform also encourages internal transparency, communication, and efficiency. The company is well ahead of its competitors in terms of technological sophistication because it has eliminated the need for physical branches. The automation of processes further diminishes the need for excess labour capacity on business premises.
"Within a short span of three years, the company has grown rapidly, widening its customer base well above the industry average of 15,000," noted Mr Parker. "Musoni’s commitment to innovation and development of best practices in providing purely cashless and paperless mobile banking services in microfinance has set it up for continued growth in future."
Each year, Frost & Sullivan presents this award to a company that has developed a pioneering technology that not only enhances current products but also enables the development of newer products and applications. The award recognizes the high market acceptance potential of the recipient’s technology. Recipients of this award represent the top ten percent of their industry.
Frost & Sullivan Best Practices awards recognize companies in a variety of regional and global markets for demonstrating outstanding achievement and superior performance in areas such as leadership, technological innovation, customer service and strategic product development. Industry analysts compare market participants and measure performance through in-depth interviews, analysis and extensive secondary research to identify best practices in the industry.
Musoni Kenya Ltd was formed in September 2009 and started operations in April 2010 as a credit only microfinance institution but with a full intention of becoming a deposit taking microfinance institution.
The original sponsor of the Musoni brand is Musoni BV, a company based in Amsterdam Holland, which had gained considerable experience working in the field of mobile banking and microfinance in East Africa.
Working with existing MFIs, the Musoni BV team was successful in rolling out the first partnerships between mobile money transfer services (MMT) and MFIs in both Kenya (2008) and Tanzania (2009). These early pilot programmes demonstrated the potential in introducing innovative new technologies to the microfinance industry, and were the inspiration behind setting up an MFI that would be completely cash-free, utilizing mobile money for all loan repayments and disbursements as well as the depositing and withdrawing of savings. As a result, Musoni Kenya is a world-wide leader in the MMT sector and hence was selected as the first country of operations, with more countries to follow.
Musoni stands for Mobile ‘Usoni’, a Swahili word for future, so Musoni means ‘Mobile Future’. Leveraging on technology, Musoni aims at offering the best value, most flexible and most customer-orientated financial services in the market. Their mission is to grow, build and maximize the potential of the businesses of the poor and unbanked of Kenya through the provision of affordable, flexible and customer-orientated financial services. Musoni currently serves more than 15,000 entrepreneurs with loans ranging from 5,000 to 500,000 KES (USD 60 to USD 5,800) totalling to an outstanding portfolio of 357 Million Kenya Shillings (USD 4.1 million) with a PAR > 30 of less than 3%. Musoni Kenya has four shareholders: Musoni BV, KfW, Grameen Foundation, and Access Africa Fund managed by MicroVest.
Musoni MFI is similar in several ways to the traditional microfinance model using the group methodology and character-based credit decisions. Musoni is technology focused, taking advantage of new technologies in order to improve the quality of service to its clients. Musoni is the first MFI to go 100% mobile thus being cash-free, enabling clients to repay their loans (and deposit their savings in the near future) using existing mobile money transfer products, such as M-PESA, (and potentially Airtel money, Orange money and others). This has numerous advantages for Musoni and its clientele base, especially in rural areas where other MFIs and banks are struggling to expand their reach.
Musoni has further leveraged its technology to create a paperless loan service process, integrating a tablet application called "The Musoni App" in the client registration and underwriting process. The use of the Musoni App has improved the loan turnaround time from 72 hours to less than 24 hours for an existing Musoni client. Musoni Kenya continues to innovate and is in the process of integrating automated credit scoring in its underwriting cycle.
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