What was once the IT industry’s problem has now moved to the banking sectors among which, Microfinance Institutions (MFIs) are the most affected. According to research by Microfinance Institutions Network (MFIN)[1], the total attrition rate in the MFIs stands at 48.7%[2], while the attrition rate for employees with less than six months of work is 76%![2]
Field officers are the backbone of the Microfinance industry. As they are responsible for loan sourcing, collection, reconciliation, etc., this attrition has direct impact on the financial performance of the MFIs.
Reasons for talent attrition (at Field officer level):
- Intense administrative work
There are numerous responsibilities field officers carry out which includes:
- Assessing market survey, identifying the potential places for disbursing loans.
- Visiting the Joint Liability Groups (JLG) [3] centers for loan collection and management. On an average, an entry level field officer visits 7 centers a day, travelling 15 to 20 kms [4] for each center, covering around 300+ members in a month. Also, the senior field officers are expected to work two-fold than the entry level officers.
- Handling manual verification procedures in the absence of eKYC.
- Managing group attendance of the borrowers in the JLG centers.
- Conducting Compulsory Group Training (CGT) and Group Qualification Test (GQT) to educate and assess the loan process for the borrower groups.
- Performing Loan Utilization Check (LUC) post loan disbursement.
- Issuing paper receipts to the borrowers for repayments.
2. Target pressure
The field officers have targets on collections as well on new loan sourcing. They need to balance their time in doing both the activities in a given month. Factors such as field verification for KYC, manually tracing defaulters, unavailability of the borrowers in the JLG centers, spending unproductive time on operational activities, etc., eats their productive time which otherwise could be used to meet targets.
3. Competing opportunities outside microfinance industry
Adjacent industries like e-commerce delivery, merchant acquisition, etc., provide jobs that are less strenuous than the microfinance industry while offering more competing remuneration to the field officers.
How are MFIs tackling attrition?
To tackle talent attrition and retain employees, MFIs have started providing health insurance benefit schemes and education allowances. Some institutions go to the extent of providing free group accommodation to field officers.
These measures mitigate the talent attrition problem to a certain extent, last mile digital adoption can certainly help in reducing operational burden of the field officers.
How digitalization of the field operations addresses this problem?
Finflux has been solving challenges in the Microfinance industry by digitally transforming the complete operations, from sourcing till collections through their LMS and field officer app – LoanBook. This application helps in:
- Faster loan disbursals
- Manage all leads digitally.
- Onboard faster with eKYC validation.
- Check instant eligibility through credit bureau checks & household income validation.
- Upload & verify documents digitally with the branch.
- Perform liveliness check to reduce frauds.
2. Improvement in field officer’s productivity
- Smart scheduling of center meetings.
- Instant group attendance through AI-based facial recognition.
- Instant cash reconciliation with branch P&L.
- Real-time view of performance and reduced paperwork.
3. Digital collections & fraud reduction
- Enable digital collections through payment links.
- Capture location of loan officer for fraud reduction.
- Generate receipts instantly and share it to borrowers.
By leveraging digital adoption, the productivity of the loan officers increases by 20% while witnessing an increase in business margins, improvement in employee morale, and yielding them better incentives.
If you want to level up your microfinance game, Schedule a demo.
Finflux is the highest rated enterprise software for loan processes. To know more about the product, check out the product reviews on G2 and Software Suggest.
References:
[1] Microfinance Institutions Network (MFIN)
[2] Total attrition rate in MFIs
[3] Joint Liability Groups (JLG)
[4] Data provided by Finflux’s clients