Cape Town-based e-business solutions provider ihost has implemented its second-tier banking system, Microfin, at private equity finance company Finanz`s subsidiary, Mobilefin, through Progress Software`s ASPEN Programme.
Mobilefin`s clients, more than 540 CNA, MTN and Vodacom dealerships, will benefit from the Microfin system which automates Mobilefin`s prepaid cellphone finance option, enabling purchasers of prepaid cellphones to obtain credit to purchase their phones. Prepaid cellphone purchases make up 85% of the market.
Mobilefin`s long-term strategy is to use the Microfin ASP system to roll-out its finance product to every cellphone dealership in the country.
Significantly, the system took ihost just two days to implement, following a customisation period of a fortnight, an achievement ihost attributes directly to the use of Progress Software as the development platform.
When Mobilefin began financing the purchase of cellphones at CNA, MTN and Vodacom dealerships countrywide, it needed a debtor management application "with a difference" to manage the process.
"This is because a key aspect of the contract was that we would service the second-tier market of consumers who do not have cash-in-hand or credit cards," says Lazaros Manias, MD of Finanz.
"Apart from being out of our price range, most conventional banking systems fail to address the mid-to-lower end of the market," says Manias. "That makes these systems impractical in an environment such as prepaid cellphone retailing, which comprises 85% of the cellphone market. ihost`s Microfin system matched our requirements at virtually every level. The fact that the system was offered in an application service provider (ASP) model made it even more attractive," says Manias.
Mobilefin pays ihost a monthly subscription fee per cellphone finance account.
"It`s a win-win situation because we always know what we are going to pay ihost on a monthly basis, and ihost`s income increases as our business grows," says Manias.
At an operational level, Microfin has saved Mobilefin time and money by automating many manual activities such as faxing and capturing of credit applications and monthly compilations of debit order runs.
"We adopted the ASP model because we wanted to offer a real solution," says Richard Laycock, MD of ihost. "We were up against systems that cost upwards of R1 million up-front. Second-tier financial services businesses such as Mobilefin cannot cost-justify that. The ASP model cuts costs by removing the requirement for on-site upgrades and support, since the system can be upgraded remotely. Substantial additional savings on support and infrastructure are achieved through managing our hosted systems ourselves."
In addition, Microfin has been completely Web-enabled using Progress Webspeed technology, so users access the system via the Internet, saving the expense of setting up wide-area networks (WANs). "We initially chose Progress as the development platform because independent research has consistently found Progress to be the database with the lowest total cost of ownership over the long term," adds Laycock.
"The Progress ASPEN programme has played an important role in our successful delivery of Microfin as an ASP product. In terms of the programme, we pay Progress a percentage of our revenue on each ASP client, and in return, Progress gives us all the technological advice and help we need to get that client up and running on the ASP model."
"ihost`s implementation of Microfin at Mobilefin is a perfect example of how the ASP model meets the needs of emerging markets by lowering barriers to entry," says Rick Parry, MD of Progress Software SA. "All over the world there is a growing need for software applications that enable entrepreneurs to grasp the opportunity of doing business in environments where conventional businesses fail. Progress`s strategy is aggressively to target software developers that enter these new markets to assist them in their endeavours."
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