Cloud-based Micro Financial Services Delivery Infrastructure Helps Boost Emerging Markets

Financial products and services are prerequisites to creating conditions for sustainable economic development in emerging markets. However, for the majority of the population in emerging markets and the developing world, particularly countries across East Africa, South East Asia and Latin America, gaining affordable access to finance is still a significant challenge.  Financial institutions shy away from providing financial services to the unbanked due to the associated costs and risks involved. But the strategic pursuit of emerging markets for growth by banks and insurance companies also means that micro and rural programs are fast emerging as parts of mainstream financial services. 

Microsoft has invested billions of dollars in public cloud infrastructure that software vendors can leverage to offer services at a fraction of the cost of traditional brick-and-mortar infrastructures. With the cloud-based delivery model, banking services such as peer-to -peer transactions, agency banking, electronic funds transfer, cards transactions, clearing transactions, and remittances can now be made available on a pay-as-you-go basis.

Companies such as Temenos and Gradatim have bet on Microsoft’s cloud platform for making sustainable financial services become a reality for emerging markets.

By bringing its core banking platform into the Microsoft Windows Azure cloud platform, Swiss core banking vendor, Temenos, is helping microfinance institutions bring banking to the masses. By hosting its core banking services on Microsoft's Azure platform, Temenos gives financial institutions anywhere in the world the ability to deploy the system on a per-use basis. Small microfinance institutions in a rural or remote region can access these cloud services with just a browser and basic communications investment. The cloud-based infrastructure delivery model eliminates the high costs for small and mid-tier banks for investing and running their own infrastructure (like data centers). Instead, banks have the opportunity to leverage scalable cloud infrastructure supported by a consumption-based pricing model. Temenos is already moving a network of 12 Mexican financial institutions from a traditional hosted environment onto the Windows Azure platform, with 5 of the institutions—Sofol Tepeyac, Grupo Agrifin, Findeca, Soficam, and C Capital Global—expected to go live in a few months.

Another company is pioneering to bring affordable insurance services to emerging markets. Gradatim IT Ventures, based in India, is one of the information technology players in the microfinance space. Its MF-Insure solution is designed to consolidate and simplify the various business operations of micro-insurance providers spanning the life, health, non-life, and pension lines of business. Gradatim has a customer using MFInsure microinsurance services via the Microsoft public cloud, Windows Azure, to manage its microinsurance program across multiple countries. Although each country has different regulatory compliances, distribution models, provider groups, and claims settlement processes, the customer’s company has been able to use a single instance of MFInsure and customize for each country accordingly. This approach has significantly reduced the cost of multiple-country operations.

Cloud computing has the capacity to completely change the financial services landscape. Anyone anywhere can have access to modern financial services and systems without the cost and other barriers usually associated with this technology. Small financial companies in emerging markets can buy into modern banking technology built on Microsoft’s Windows Azure cloud platform without having to invest in equipment or people to run the technology. Sophisticated managed services can be afforded by very small local institutions such as a large network of credit unions or micro banks. These are the times of change.

The opinions and views expressed in this blog are those of the author and do not necessarily state or reflect those of Microsoft.

Comments (2)

  1. SR says:

    In the emerging markets where it is very difficult to break-even. I am not sure how Temenos is helping Mexican Institutions financially sustain. In the Indian context, it is just not about Cost, but also volume and security.

    1. Recently (May 23) there was news about Microsoft Cloud going down affecting many of its customers

    2. Before that we heard Google losing customer data – making cloud actually not so attractive

    3.About Temenos: From what i know for sure, they has only one reference in India…which had to migrate from its (Temenos') native DB to Oracle due to data volume. Talking about it, there are very few instances where SQL Server could scale. Leaving your customers to only assume on MS's capabilities.

    Gradatim has been mis-represented by you as "one of the leading information technology players in the microfinance space". Yes they have very few customers in Africa, but they are largely a VC funded shop. They are neither managed by domain experts nor have been known to be a Microsoft Technology Evangelists. They operate in the "opportunistic" patch.

    I am sure Microsoft would have invested heavily in such players, but these players are hardly known to be ones who have been spotted giving MS its due back. Same has been the struggle MS has been having with all leading partners like TCS, HP, Infosys etc.  

  2. The first customer experience on MFInsure has been positive. The performance have been above expectations (the reference is to customer experience). We do see a great advantage with Multi tenancy and mobility options, few factors in my opinion suited our implementation the best. I do share Temanos view that Lat AM market is more receptive to the Cloud than India or Africa. Again, our experience has been large insurance companies are keen on the cloud experience,  once the security concerns are addressed.    

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