Managing Client Information: Feedback Loop Lessons from Latin America

This paper focuses on the institution-client linkages, the organizational mechanisms that ensure the effective integration of client information into microfinance organizations (MFO) operations.

The paper reviews the experiences of MFOs and networks in building capacity toward market-led microfinance and explores the following questions:

• How is information on clients collected?
• How are the results conveyed to management?
• How are changes in operations conveyed to frontline staff and clients?

The paper discusses:

• The research design;
• The framework: "the feedback loop";
• The findings of the field visits to two MFOs and two networks;
• Capacity building within the MFOs and the networks.

It finds that:

• Management and loan officers need to learn how to use client information;
• Operations' people need to be part of the team;
• Reporting needs to be simple;
• The process takes time and is messy;
• Communication needs to be open.

The paper argues that client assessments had led to institutional changes that had lowered transaction costs for clients and the MFOs and had raised staff productivity. It concludes with specific recommendations to the MFOs and networks that it analyzed.