Two months ago at the Convergences 2015 Conference in Paris I spoke about new tools for new solidarity methods : collaborative & open platform. With the rising of Wikipedia-like platforms, projects like building a Core Banking System (Octopus, MIFOS), a Micro Finance Fund (Babyloan, Kiva ..) or a risk management infrastructure (Open Space) can no longer be achieved in a closed world. ICT allow us to build things together, as long as we create a common goal and discipline among members.
At the last main session, Jean-Luc Perron from the Grameen-Crédit Agricole Foundation and Jacques Attali from Planet Finance insisted on the necessary “professionalisation”, “industrialization” of micro-finance to better fight the crisis. Invoking solutions like merging into bigger structures, credit bureau, or external rating.
I like to see behind the words. So I asked the question, “to solve a performance issue, you invoke solutions that we created for our western financial world, with the limitations we all know : bigger is not better, credit bureaus have not prevented excessive debt, and rating agencies have not prevented toxic assets opacity. Why would we want such solutions for the micro-finance ? Can’t we innovate and find new regulation schemes, inspired by Open Platforms, i.e. collaborative tools ?
I had 2 answers, one of the liberal Jean-Pierre Klumpp (BlueOrchard) saying “we just put water on the market, it will create its own rules for the best efficiency”. And the one of Renée Chao-Beroff (CIDR), explaining the contrary, that we should regulate fast and strong, from the top.
The 2 left me unsatisfied, because they don’t focus us on what we should do now, and what is really new about it. My opinion is that micro finance rose from a brand new innovative scheme, merely unknown in Western countries, a scheme that bet on trust and pride to obtain a strong collateral (group lending). Improving the micro finance industry will probably require more of such innovations rather than blind replication of old schemes.
What would happen if we tried to improve MFIs’ efficiency adding to our toolset a bet on trust using Open Platforms (community driven, aimed at autonomization, sharing best practices and information), rather than sticking unilaterally to the old bet on mistrust : Big is Beautiful/Specialization of the players (MFI, rating agencies, IT ..)/Closed World/Top down way ?
Excellent initiatives like the Social Performance Task Force could benefit from such a decentralized contribution scheme. But putting “social network” on top of a website doesn’t change you into the wikipedia of Microfinance. This is the beginning…
Tags: ACTED, continuous improvement, open source, regulation, social performance