Evaluating the Viability of a Mobile Phone-Based, SMS/GPRS-Enabled, Client Data Collection Channel for Urban Microfinance
This paper assesses the comparative value-addition of two alternate mobile phone-based interventions (SMS-enabled and GPRS-enabled) that Ujjivan, an Indian MFI, considered to streamline its customer profile creation process.
Ujjivan serves urban low-income clients and has been scaling up its operations. Ujjivan considered introducing a technology-based solution to resolve the problem of high costs of collecting and processing new client information as well as to increase efficiency. Study results indicate that:
- Transaction cost savings per customer profile is Rs. 11 using the SMS-based system and Rs. 10 using the GPRS-based system;
- Ujjivan can only expect to recover 44 percent in the SMS-based system and 10 percent in the GPRS-based system when investment and maintenance costs are included over a 6 year time-frame.
The study demonstrates that while both these systems will deliver profits through cost savings, these will not be sufficient to recover the heavy initial investments over a reasonable timeframe. The paper states that the viability of technology channels can be expected to increase as device costs fall, labor costs rise, labor productivity/efficiency decreases due to higher complexity of tasks, and the scale and scope of devices use increases.
