Client-Focused Technology Usage in Microfinance Institutions

This paper studies the penetration and impact of client-focused information and communications technologies (ICTs) on microfinance institutions (MFIs). It focuses on four of the most common client-focused technologies, including personal digital assistants, point-of-sale/smart cards, automated teller machines, and mobile phones. The observations are based on a survey which was conducted in February and March 2006 and received 54 responses. Key observations from the survey are as follows:

• Half of the responding institutions are using one or more client-focused technologies;
• It is unclear whether PDAs are delivering the adequate benefits to MFI operations;
• The greater the size of the client base and the larger the loan portfolio, the higher the ratio of IT related spending.

The paper concludes that:

• MFIs have high expectations that they will benefit from the use of ICT technologies, especially mobile phones;
• ATMs may be the only technology proven to deliver value to MFIs;
• The use of mobile phones by MFIs is growing the fastest of all the technologies;
• PDAs and POS/Smart cards are the next technologies in which investment is likely to occur.