Innovation in Action: Equitas

September 1, 2009 Posted by Update

A Unitus partner since September 2007, Equitas based in Chennai, India, is one of the fastest-growing MFIs in India. In just over 20 months of operations, the young MFI has reached more than 500,000 clients.

The bedrock of Equitas’s scalability is its approach of delivering efficient back-office support to its branch teams. Equitas has established a dedicated and centralized back-office team, allowing field personnel to focus purely on customer-facing activities. This system has dramatically increased productivity, with each loan officer able to manage a caseload of 2,500 clients and a team of only 70 back-office personnel deployed to service the entire customer base of 500,000. Such high levels of efficiency are possible because of a series of technological innovations adopted by the IT and Operations teams.

Pre-Printed Stickers. Though Equitas has leveraged cutting-edge technology for many of its solutions, for others it has relied upon ingenuity and reason. As one example, Equitas has deployed stylized stickers© as payment receipts on member passbooks instead of implementing expensive technology in the field. These stickers deliver the benefits of handheld devices at a much lower cost and require no maintenance. In addition, the transaction time at the center meetings has been reduced to just 20 minutes, compared to 30 minutes at other MFIs.

SMS-Based Collections Monitoring in Real Time. Equitas has established a simple and highly effective system to track collections on a real-time basis. Within 15 minutes of completion of a collection meeting, the loan officer sends an SMS containing key collection information to a central server. An Internet-based application helps Branch and Area Managers immediately detect any anomaly in their collections and facilitates quick resolution of the problem.

Forms Tracking System (FTS). With approximately 100 branches, tracking the progress of each new center’s paperwork is crucial to assess and improve the turnaround time in disbursing loans. Toward this purpose, an FTS has been established to monitor progress of the membership forms by stage. The FTS is a workflow-integrated online system (Internet-enabled) that follows Equitas’s 14-day process for disbursing loans. MIS reports based on this system provide aging analysis information that helps the management team identify bottlenecks in operations for prompt resolution. Additionally, the volume of business in the pipeline gets reflected online, which helps the treasury function operate efficiently.

Automated Forms Processing. An Optical Mark Recognition (OMR)-based membership form system allows clients to fill out paper membership forms with OMR capability. As the OMR form is scanned, most fields in the form are updated directly into the system. The introduction of this system has reduced the time required for the back-office team to add new members’ details into the system to three or four minutes–three times faster than before.

Using simple but innovative approaches, Equitas has shown that an early investment in technology can enable unprecedented growth. One of the company’s first recruits was a senior CTO with more than 25 years of IT experience in the financial services sector. As a result of this initial investment, Equitas rolled out its entire end-to-end IT system before launching operations in December 2007. The IT team at Equitas has subsequently combined clarity of focus and excellence in execution to create a unique business model that is highly efficient and scalable.

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