Outsourced Microfinance MIS Systems - A Decision Guide for Microfinance Institutions

Identifying key decision factors to consider and pricing models for outsourced MIS solutions

This decision guide aims to help MFIs break the "analysis paralysis" in the "build versus outsource" core banking management information systems (MIS) debate. MFIs in developing countries need core banking MIS to serve their clients better, but have fewer vendor choices, limited budgets, and some unique requirements. Given the success of microfinance, a few technology providers have begun to develop outsourced core banking systems. MFIs find it difficult to choose from options like custom-building the system, buying a commercial-off-the-shelf, package and outsourcing. They have to balance timeliness, suitability, and affordability criteria in order to build the MIS foundation that is critical to their growth. This research identifies key decision factors to consider, reasons to choose each option and pricing models for outsourced solutions. It also explores two key issues for core banking systems, namely, data security and total cost of ownership. Finally, the note includes an extensive list of tips and recommendations to guide MFIs in vendor selection and evaluation, and interviews of vendors of core banking solutions.