Software as a service: An opportunity for disruptive innovation in the microfinance software market?

Par Arvind Ashta, Jiten Patel

Technologies such as MIS may be a solution to lower operating and transaction costs in microfinance. However, the long tail of small Microfinance Institutions (MFIs) finds proprietary software expensive and open source software difficult to adopt. The specificities of the microfinance sector and its large diversity require a high degree of support from MIS suppliers. Shared infrastructure solutions such as Software-as-a-Service (SaaS) offers a good option to bring down costs and remove uncertainties. Essentially, a SaaS provider uses a software solution which they host in the cloud. The MFIs use this and are charged on the number of transactions, accounts or customers. This article provides technical details of how SaaS will operate in an international microfinance setting with its unique problems. To overcome the lack of reliable Internet connectivity encountered whilst working in developing countries, SaaS solution providers must offer flexible approaches such as use of GPRS and as a last resort, a local server as a backup. Case studies on a few early innovators (MicroPlanet Technoloiges, Mambu, IBM, FINO, MOSTFIT, MFiFlex) illustrate the mechanics of this partnership between MIS and Microfinance. Innovation diffusion will require institutional change and institutional work by the change agents.
JEL Codes: L86, O14, O32, O33


  • microfinance
  • SaaS
  • Management Information System (MIS)
  • Application Service Provider (ASP)
  • shared infrastructure
  • poverty
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