Banking the Unbanked: Technology's Role in Delivering Accessible Financial Services to the Poor

This paper examines the role of technology in increasing the outreach of microfinance. It analyzes the obstacles that are keeping the industry from achieving scale, including:

• Over dependence on donor funds;
• Absence of consistent operating standards and business practices to attract potential commercial investors and partners;
• Fragmentation within the microfinance sector;
• Technical challenges and high transaction costs;
• Lack of flexibility for offering diverse financial services.

The paper then presents the advantages of technology as follows:

• Improving operational efficiencies;
• Decreasing transaction costs;
• Enabling sustainable outreach to underserved populations.

The paper discusses the study that makes use of remote transaction system (RTS) to link microfinance clients to their financial institutions.It then presents the lessons from the study highlighting that:

• Technology brings in great returns by combining it with business process;
• Innovative, appropriate technologies are required to be tailored in emerging markets to achieve scale;
• Infrastructure costs to support the technology are very high for individual MFIs.

The paper concludes by stating that through shared infrastructures and common standards, larger client base can be realized.