Microfinance and Mobile Banking: The Story So Far

In the past decade or so, many MFIs have experimented with alternative delivery channels to reduce costs, facilitate greater outreach to hard-to-reach areas, and increase customer convenience. In theory, mobile phones could be used to reach many more customers at a lower cost than any existing delivery channel. Yet despite this potential, in the vast majority of countries there is not yet an existing m-banking service that MFIs can leverage. M-banking to date has largely been driven by MNOs and, to a lesser extent, by some large banks. MFIs have by and large not played a significant role in the implementation of m-banking services.

This Focus Note aims to do two things: (i) explore the various roles that MFIs can play in m-banking and (ii) explore the potential benefits MFIs and their customers expect to gain from pursuing m-banking.