MICROFINANCE MANAGEMENT SYSTEM: CORE 2 LOAN MANAGEMENT SYSTEM WITH CREDIT REWARD POINTS & AI SUPPORT

Abstract

As the digital landscape continues to evolve, the microfinance industry has also advanced to meet the growing demand for faster, more accessible services. This study develops Core 2 of a Microfinance Management System (MFMS), focusing on loan management enhanced by a credit reward mechanism and AI-based real-time risk assessment. The system aims to improve borrower engagement, streamline operations, and strengthen risk management capabilities. With increasing capital demands and rising default risks, MFIs face difficulty in maintaining service scalability. This project addresses those challenges by introducing standardized processes that reduce default risks while supporting scalability and improved service delivery. The development of the system followed the Agile methodology, which divides the project into distinct phases. In the concept phase, the product owner defined the project's scope and objectives, and a development team was formed based on skill and availability. During the iteration or construction phase, most of the system’s core functionalities were built and refined through continuous collaboration and feedback. The team also provided real-time support to ensure smooth development and resolve emerging issues. The final phase involved stabilization and preparation for deployment, ensuring that the product met its functional and technical requirements. The implementation of the Core 2 Loan Management System resulted in notable improvements for the partner microfinance institution. The integration of credit reward points encouraged responsible borrowing behavior, while AI support provided actionable insights for resource optimization. These enhancements led to increased operational performance and more effective decision-making within the organization. This project demonstrates the potential of integrating AI and gamified credit incentives into microfinance operations. The credit reward system promotes financial discipline among borrowers, while AI tools contribute to efficient resource use and risk mitigation. These innovations not only strengthen financial stability but also offer a cost-effective approach to expanding financial inclusion. Overall, the study presents valuable contributions to the application of technology in microfinance, particularly in loan servicing and credit behavior management.