How Technology Is Working for Clients and MFIs –– Especially for Those Living and Working in the Hardest to Reach Areas

This paper explores the potential for technology solutions, such as mobile phone-based approaches, ATMs and mobile branches, to extend financial services in hard to reach areas. It evaluates whether they can do so in a cost-effective way and also maintains the features that have contributed to the success of microfinance.

The paper draws on experience gained through Grameen Foundation’s microsavings and mobile financial-service initiatives, as well as the experiences of other organizations using technology to deepen outreach. Key points include:

• Important features of financial services that determine uptake, usability, and appropriateness from the client perspective are trust, cost, and accessibility;
• Technology has the potential to build trust, and reduce transaction costs for MFIs and their clients;
• Technology can drive efficiencies, and when coupled with the use of agents can increase accessibility;
• ATMs and mobile phones offer a potentially low-cost way to achieve accessibility and proximity.

Using technology to extend financial services to clients in hard to reach areas will require bringing together various players, a desire to innovate and support research and development among financial institutions serving the poor, and an emphasis on maintaining the elements that have made microfinance work, namely trust and reliability.