Microfinance core MIS systems : the business case for outsourcing

Key research questions included: What would the MFIs gain from outsourcing and what would the trade-offs be? Would they still be able to provide additional services (such as additional dlivery channels) by using an outsourced core MIS? Given the long history of outsourcing in the U.S. financial sector, and its prevalence at U.S. small banks, the approach to this research was to study the decision by U.S. small banks whether or not to outsource their core banking MIS and apply these lessons to MFIs in developing countries. The team interviewed small banks, vendors, and consultants to hear their perspectives on their core banking experiences and concerns. These experiences and lessons learned are summarized in two parts: in this document, a �Business Case for Outsourcing,� as well as a companion �Decision Guide� that provides guidance to MFIs on factors to consider when deciding to outsource or host a solution (either custom developed or bought) in-house. This Business Case also explores enabling environment issues that may impede the growth of outsourcing in developing countries. Three cases that studied small U.S. financial institutions are included in the appendix of this Business Case - one that outsourced from the first day in business, one that has a hybrid of in-house and outsourced systems, and one that chose to buy a package and host in-house. Two cases featuring vendors of core banking solutions are provided in the Decision Guide"s appendix. At the end of both documents is a bibliography of additional resources. The reader should review the Decision Guide after reviewing this Business Case document. (Author abstract, modified)