Mobile Financial Services: The Microfinance Perspective

This PHB Briefing Note describes four models of how MFIs are involved in mobile financial services (MFS). It is based on projects that PHB Development performed for microfinance clients and case studies from other sources. It is first in a series that will elaborate on the various components required for an MFI to successfully introduce MFS. The note lists benefits and costs for the MFI as well as requirements from the MFI. It concludes with suggestions for support by funders and donors. The note states that MFIs use the mobile network for easier repayments of loans and deposit making or when acting as agents for cash-in and cash-out services. MFIs using mobile phones or the mobile network to make their internal operations more efficient are mostly found in India and Africa. A few MFIs, mostly large institutions with bank licenses have built their own mobile banking systems. The note suggests that implementing MFS should go hand in hand with structured transformation of the MFI. It lists three transformations that could arise, namely:

• Market and customer orientation;
• Operational performance improvement;
• Technical efficiency.