Alejandro Vazquez, fund manager at IforD, attended the B2B programme “Moving from COVID-19 to Growth” thanks to an InFiNe.lu scholarship.
His first article talks about the training format and the topic “Moving from COVID-19 to Growth”.
The B2B training programme was a virtual forum held in English and French between March 17-31 consisting of 5 online sessions of 2 hours each on Tuesdays and Thursdays covering 5 different modules.
During the virtual forum, the sessions started with a presentation of a faculty member on a specific topic complemented by the participation of invited experts to discuss and share their own experiences and views.
The profile of the invitees was mainly that of worldwide leaders in Microfinance, members of IFC, the World Bank specifically working on topics related to financial inclusion, institutional transformation, digitalization and innovation.
Following these presentations, the sessions offered participants the opportunity to interact and work on exercises in small groups to later debrief with faculty and peers. To participate in these exercises, the training offers interactive tools such as Jamboard and Mentimeter.
Each module sessions was then complemented with self-guided readings, videos and exercises shared within a single online platform.
The programme was targeted to financial inclusion peers and senior managers of Microfinance institutions to reflect and discuss about the changing financial sector, specially the rise of disruptive innovators, digitisation, and big data technology that create opportunities and treats to the traditional Microfinance industry.
The programme was divided in 5 different modules:
As a result of the COVID-19 pandemic, the Microfinance industry not only navigated with resilience through a challenging crisis but was also confronted to come up with strategic responses which created, new opportunities to disrupt the traditional business model.
Historically, most of the problems and challenges that the Microfinance Industry has faced are linked to local financial driven crisis (political, economic crisis) or to natural endemic events (COVID-19). Although the causes are different, their impact are very similar in terms of MFI cash flows and profitability (systemic risks). To tackle them, best organisations have focused or realized the following facts:
– Individual clients are affected differently by the same crisis, therefore it is critical to support and remain engaged with clients to identify their specific needs during the crisis.
– It is of upmost importance to be prepared to handle when a client is in difficulty (i.e. prepare concrete solutions for clients in different circumstances and have the systems, policies and the training in place for implementing them.
– Embrace with leadership the change and help drive the organisation to buy-in the challenges. This highlights the importance of the senior management engagement and gives the opportunity to show the true character of the institution (how actually is supporting its objectives, reputation, customer centric)
To manage these different factors, Microfinance institutions (MFIs) have implemented throughout the COVID pandemic, different strategies and have used alternative tools and means to, for example, maintain communication and contact with their clients. The positive results obtained by these strategies and tools have illustrated that beyond the Pandemic, the industry has opportunities to leverage the tools that a digital transformation (technology, data analysis) has made available to drive change, become more agile, efficient, and eventually reach more customers who remain excluded from the financial services.
The pandemic has also shown us that to positively implement a successful digital transformation and/or any other innovations within the MFIs business models, leadership remains a key component of success.
Governance, management engagement and institutional culture together with a right setup of resources and investments will ensure MFIs will explore new business models.
Some of the opportunities and new business models discussed more in detail throughout the training course were:
-Digitalization and data analysis as a powerful use of the client data to manage their communication and understand their needs,
-Efficiencies in money transfers (digital wallets) and collection of transactional information and saving services
-Digitalized credit origination (potential to replace group lending
-Use of data to enhance MFIs business model of MFIs. Facilitate marketing and bring flexibility of business rules
In summary, the training highlighted the following responses to COVID 19 that can prove disrupting to the Microfinance business
model beyond the pandemic itself.
a) Planning for immediate response to crisis
b) Acceleration of digital transformation,
c) Development of tools to better serve existing customers and acquire new, non-traditional segments.
d) Consolidation and rapid growth stage of the business;
e) Adaptive culture (i.e. internal culture) and adaptive distribution networks
f) Risk management (aggressive mode)
g) Essential elements of HR skills mixing new with the old:
h) Long-term vision of the organisation
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Picture 1 © Pallab Seth