Technology and Access to Microfinance

This presentation explores how banks can use technological developments to help poor people access finance. Currently, poor people prefer cash transactions because banks are inaccessible, inconvenient or too expensive. However, banks can leverage technology developments to service all population segments by:

• Lowering transaction costs by going electronic;
• Improving outreach through local, branchless banking;
• Reducing risks by building customer data to reduce information asymmetries.

Technology use in banking can trigger far reaching economic and social effects. To help poor people save, borrow and build assets, banks must address challenges in the areas of:

• Easy account opening;
• Ability to transact remotely;
• Convenient cash dispensing;
• Documented credit histories.

While emerging technologies have the potential to expand access, their implementation requires banks to increase their institutional capacities, develop clarity on the business model and ensure an enabling regulatory framework.