Microfinance services in the era of... AI

(Baothanhhoa.vn) - In Thanh Hoa, the Thanh Hoa Microfinance Organization has made significant strides by applying AI to its operations, optimizing efficiency and productivity in the modern era.

TCVM staff in Thanh Hoa are applying AI and Big Data to their operations.

Embracing digital transformation and promoting financial inclusion.

The artificial intelligence (AI) revolution has become a powerful driving force for socio -economic change, including in financial services. For microfinance institutions, where every small loan is linked to the livelihoods and trust of rural families, AI is not simply about "cost optimization," but can be a tool for expanding equitable access, reducing paperwork barriers, and making more sophisticated credit decisions. However, this potential can only be realized when implemented responsibly, combining technology, people, and a suitable governance framework.

In Thanh Hoa, the Thanh Hoa Microfinance Organization has made significant strides by applying AI to its operations, optimizing efficiency and productivity in the modern era. The Thanh Hoa Microfinance Organization focuses on applying technology and promoting digital transformation in its operations (website, management software, support channel via Zalo, etc.) to enhance management capabilities, accumulate transaction data, ensure transparency of cash flow, and facilitate the application of advanced analytical tools, diversifying and improving service quality. Thanks to a standardized and digitized customer database, the Microfinance Organization can shorten processing times and reduce paper usage. This provides a favorable foundation for testing AI solutions suitable for the Microfinance model.

Applying AI and Big Data analytics in the operations of the Thanh Hoa Microfinance Institution (MFI).

The application of AI and big data analytics has enabled microfinance institutions in general, and the Thanh Hoa microfinance institution in particular, to make breakthrough developments in three core activities.

AI and Big Data enable more accurate risk assessment using "alternative data." Instead of relying solely on credit history, which is absent in many rural borrowers, Thanh Hoa Microfinance Institutions can now use transaction data, bill payment history, sales behavior, even social media data or agent data to predict repayment ability and assess borrowers. This "opens the door" for customers who currently lack credit profiles or extensive credit history information, but who genuinely have the capacity to repay.

Thanks to the application of AI and Big Data, the Thanh Hoa Microfinance Organization can automate processes and shorten customer service time. The management software is continuously upgraded with the ability to check documents, extract information, and support preliminary approval, thus shortening the review time. This is of great significance for customers who need timely capital. At the same time, submitting loan applications via website and providing online consultations via Zalo, Messenger, etc., can enhance the 24/7 service experience in remote areas.

With portfolio management and early risk warning, forecasting models and customer segmentation help organizations focus resources on preventing bad debt, optimizing debt collection strategies, and providing timely financial advice.

These applications not only help reduce operating costs but can also increase the availability of safe financing for target customers such as the poor, low-income earners, and women entrepreneurs with micro-loans. When implemented correctly, AI can bring three simultaneous benefits to Thanh Hoa Microfinance and its customers: expanding accessibility; accelerating and enhancing user-friendliness; and extending green impact.

Accordingly, many self-employed individuals, small business owners, and farmers without a credit history will have more reasonable access to loans. Fast application processing and digital communication channels like Zalo/apps help reduce travel costs for customers in remote areas. When AI assists in assessing the capacity and profitability of green business models, "green" credit will be allocated more effectively, thereby contributing to the sustainable development goals that Thanh Hoa Microfinance is striving for.

However, the Thanh Hoa Traditional Medicine and Vocational Training Organization recognizes that achieving these goals requires a roadmap with specific plans and directions. Therefore, based on an analysis and assessment of the international and domestic situation, and adhering closely to strategic directions, goals, and mission, the Thanh Hoa Traditional Medicine and Vocational Training Organization has flexibly and proactively developed a roadmap that aligns with general trends and the organization's practical realities.

First and foremost, data standardization is the initial step, creating a crucial foundation for digitizing all organizational operations, including standardizing records, transactions, and repayment history; while also transparently obtaining consent from customers in accordance with confidentiality regulations.

AI is the tool, people are at the center. The Thanh Hoa Microfinance Organization applies AI for preliminary approval, while the final decision is reviewed by credit officers. This approach both speeds up the process and ensures financial principles are met, while also promoting a high sense of responsibility among staff members for their assigned tasks.

Pilot testing for a specific product, such as green credit for organic vegetable farms; evaluating the model using production and sales data, history of participation in financial training programs, etc. Thanh Hoa Microfinance has an advantage as it already has a list of customers participating in the green model.

Training and enhancing the digital transformation and AI/Big Data application skills of staff is indispensable in any development strategy. Credit officers need to understand the operating mechanisms of AI applications, know how to explain reasons for refusing/supporting customers, and practice measures to mitigate moral hazard.

Establishing an AI governance framework and promoting collaboration to build a model control framework, assess fairness, and ensure legal compliance are also important areas that the TCVM organization has implemented and wishes to further promote in the future.

AI is not the ultimate goal, but rather a means to help microfinance institutions (MFIs) better fulfill their social mission: delivering capital to the right people at the right time with responsibility and transparency. With the results achieved and continuous efforts, the Thanh Hoa MFI has been actively contributing to the sustainable development of agriculture , farmers, and rural areas.

Text and photos: Hoang Linh

Source: https://baothanhhoa.vn/dich-vu-tai-chinh-vi-mo-thoi-ai-258839.htm