I am writing to you about a proposed pilot program to improve the value of software systems used by MFIs. After research in this area, through the support of the MasterCard Foundation, we are now in a position to move forward with that program. We would like to invite Crystal Clear Software, Ltd. to participate in this pilot program. Please review the information below and let us know if your company would be interested in pursuing this opportunity with MIX.
MIX Commitment to XBRL
MFIs rely on back-office systems not only for internal reports, but to produce reports for investors, associations, regulators and other external stakeholders. Recent research by MIX suggests that, despite reliance on sophisticated MIS systems, preparation of these reports still requires significant time and manual effort. As an important first step in addressing this problem, MIX has adopted XBRL as a standard for modeling and transfer of microfinance data, and created a comprehensive XBRL taxonomy that captures financial and social data and combines international financial reporting standards and microfinance industry standards. We also work with the Global Impact Investing Network (GIIN) on disseminating XBRL content to other users, including impact investors, and thus we will have parallel development related to standards for XBRL data transfer. Collectively, these improvements can dramatically reduce the reporting burden for MFIs while increasing the quality and timeliness of data received by external stakeholders but only if software systems used in the microfinance industry support XML reports that comply with the MIX taxonomy. Our goal is to find ways to encourage software companies to support XML reports and, in particular, reports that comply with the MIX XBRL standard.
Proposed Pilot XBRL Program
We propose to conduct a pilot program with a select number of microfinance software vendors to adapt their software packages to produce a well-formed XBRL document that can be read directly into our database for publication on the MIX Market site. We anticipate this functionality will present different challenges for different vendors. Our goal is to learn about these challenges to better understand how to support vendors in this effort. We seek to work with software providers who are prepared to join with others in sharing their experience integrating XBRL reporting into their offering. We understand and respect the need to protect proprietary information, but we also believe that there is much to be gained by soliciting direct feedback from vendors moving down this path.
Potential for Software Certification
Software that supports streamlined reporting using a common format will ultimately have significant added value for MFIs. MIX is thus considering a proposal to adopt a software certification program, offering vendors a significant tool to communicate the true value of XBRL reporting. A second goal of the proposed pilot program is to evaluate the potential value to vendors of such a certification program. Your participation in the pilot program will be invaluable in helping to refine our plans for software certification.
A Limited Commitment
The precise format of the pilot program has not yet been determined, as that program will need to be adapted to the needs and constraints of those participating. We do anticipate that participating vendors will commit to the following:
- Designate a single point of contact to represent the company and manage communications with other company personnel.
- Participate in one or two meetings of perhaps ½ to 1 day to discuss technical issues with MIX personnel.
- Respond online to questions and discussion topics posted online as appropriate.
If your company would be interested in being a part of this important movement for innovation in microfinance reporting, please reply to this email and we will follow up with a phone call to discuss particulars with you or someone you designate to represent your company.
Director of Analysis