14. OurBank, a software for a network
One of the major developments which technology brought about, was allowing community banks to act as banking correspondents on behalf of other major financial institutions in Brazil. Banking correspondent involves arrangements between traditional banks and the community banks whereby the latter agree to act as an outlet for the former’s financial services. Through the use of point of sale devices or basic personal computers which act as terminals used for financial transactions, clients can pay bills, open bank accounts, deposit or transfer money, access credit, bank account balance and statement and withdraw government benefits from the community banks. As a banking correspondent, the community banks then have to deal in both Reals (issued on behalf of traditional banks) and social currencies.
Thus, people in excluded locations were able to open bank accounts, pay bills, deposit and transfer money with traditional banks through community banks which acted as banking correspondents. However, Asier points out that, “Banking correspondence has not evolved much since it was first created. It was huge, it was very helpful, and it continues to be very helpful in many communities, because these communities now have access to basic banking services, and because the technology provides them with those services. But banking correspondence did not continue to develop into the kind of products that can further develop those communities. So, banking correspondence continues to provide very basic services, and now, these communities – whether excluded or recently included – they have a demand for many more services, more sophisticated, involving larger loan amounts, more flexible conditions, etc.”
Instituto Palmas knows that this gap can be only filled by adopting and using new technologies. The challenge is to develop or acquire technologies which have a reasonable cost-benefit ratio. Thus, the institute is engaged in developing adapted technological tools in order to provide suitable products to the excluded communities. Asier notes that technology can: “…have big impacts on how Instituto Palmas deals with education barriers that are in many of these communities; where they do not have a lot of time for basic education, to use advanced types of software. But they know how to operate cell phones, they know how to operate basic types of software, because everybody has them.”
To that end, Instituto Palmas is presently developing in partnership with the Indian organisation Mahiti Infotech, a free software system for information management called OurBank designed specifically for microcredit institutions. This software will be crucial to the network of community banks in several ways.
Firstly, at the time being, all existing software operate on line, by exchanging information between branches and require an internet connection. OurBank, on the other hand will not require the community bank to have access to the internet.
For Instituto Palmas, creating banking products and delivering them to communities are intrinsically linked to technology, since, as per Asier: “… technology is going to give us the ability to make the entire process more flexible, more user-friendly, more efficient, more adapted and, cheaper, in general. So, if we are able to use technology in the whole process of designing and implementing, executing, monitoring – any product, service or strategy that we use – we are going to have much bigger impact, it is going to be easier to manage and to replicate the model of community banks.”
It is not just the OurBank platform that has to be user-friendly, but also the procedures to create new products or to modulate the system without creating difficulties in the process. The environment where community banks are located may vary or may change quite rapidly. It, therefore, becomes imperative that the technology is quickly adaptable to new conditions, needs and regulations. The platform must be adapted to incorporate those changes while at the same time performing efficiently on a daily basis.
For Instituto Palmas, the cost efficient impact is as important as diminishing the geographic barriers between the excluded or recently included communities. For Asier, communities from all corners of Brazil will “participate in the process of delivering or creating products, through crowd-funding or crowd-sourcing, and other things that we are going to be looking into. They will come up with new ideas and products, strategies which will support our actions to lobby for changes in public policies, in general”.
Thus, by expanding the network through the OurBank software, the lobbing power of community banks, for influencing changes in public policies in their favour, will also increase. The huge impact that the institute desires to obtain is to jump over this barrier, and create a legal framework for community banks, as mentioned before. Such positive externality would be brought by the use of new technologies.
The OurBank platform software is therefore the first of its kind. Both Instituto Palmas and Mahiti Infotech are presently working a plan to create a research and innovation laboratory, where ideas and products can be developed in order to help the network of community banks expand and function more efficiently.