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.