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© 2016 Opportunity Internationala 501(c)3 nonprofit.

#Mifimon: Microfinance and Technology

By Amy Carol Wolff

The following is a collaborative post from Grameen Foundation’s Edward Cable and Opportunity International’s Amy Carol Wolff.

Moderators: @amycarolwolff @mifos

Panelists: @bhalchander @creditsms @GrameenAppLab @msftcitizenship

Participants: @aaspire @hanacaraka @microempowering @HoracioCoutino @laurakummer @licorous @zyozyfounder @mongkolroek @RealizedWorth @CIPEglobal @CFI_ACCION @digitalkulcha @AJRenold @Optinnow

The topic from this past #Mifimon: strategic use of technology for microfinance.  Technology and innovation have great potential to be a disruptive force that can dramatically accelerate the growth and impact of microfinance on the poor.  With all the new and different technologies being developed, how can the industry prioritize and focus on the appropriate technologies that have thre greatest impact?  Led by @mifos representing Grameen Foundation’s Technology for Microfinance Initiative, we’ll explore how technology from back-end software like MIS to front-end technologies like mobile banking can become a critical enabler to the growth and impact of microfinance today.  Technology when used effectively can have a transformative effect in unlocking greater efficiencies, more direct outreach to the poor, the innovation of new services, greater insight into social performance, and broader financial transparency across the sector.

Questions we discussed:

  1. What role can technology play in scaling the growth and impact of microfinance?
  2. What are some good innovative uses of technology in the industry thus far? On back-end? Front-end?
  3. What barriers does microfinance face in selecting and adopting technology solutions effectively?
  4. What is the best way to ensure that technology solutions being developed are appropriate for MFIs?
  5. What are some examples of technology implementations that did not achieve the desired impact?  How did you address these challenges?
  6. What impact has technology had on microfinance so far?
  7. What is your vision for technology and microfinance in five years?
  8. How do we address risks introduced by technology?
  9. What about security? What are some data concerns posed by technology?

Key Takeaways from the Discussion

Complete Solutions Must Be Holistic and Address the Basics

@msftcitizenship: MFIs must think of whole picture and address basics like IT budget, stable platform, decent MIS, staff training, etc.

@mifos: Complete solution is not tech itself. Must align people, processes, & technology to advance social mission

Address whole picture: back-end, front-end, business processes

@CreditSMS: Branchless banking is the most promising way to expand financial inclusion in un- & under-served communities & tech is the conduit. #mifimon

@mifos: @creditsms: agree that branchless banking is vital but to be taken to scale – must have solid back-end system & optimized processes #mifimon

@HoracioCoutino: KEY in providing mobile banking is Adaptability – To mobile’s capability, to clients, to different comunications channels – #mifimon

Design Mission-Driven Solutions with Customer as Focus:

Aim to design mission-driven solutions (financial inclusion) with the focus of the end user in mind. It is important to remember that our focus is not to be the most technologically savvy, but the most effective in providing these services to our clients. Technology is merely a tool for the delivery of these services.

@msftcitizenship: Ensure user-centric IT by building solutions in partnership w/ MFI staff, not in isolation. solutions must be driven by mission

@hancaraka: Integrated and comprehensive bottoms-up approaches – “need both wings to fly”

@mifos: Open technology & open communities are key to enabling grass-roots innovation appropriate for the client

There is a Need to Work with Government and Local Players

@msftcitizenship: @hanacaraka agree- need awareness thruout ecosystem (leaders, gov, biz) that supports MFIs to encourage adoption from bottom to top

@aaspire: @msftcitizenship yes this involves GOV, Central bank and telecom providers together cud make it happen but wat is a win-win model #mifimon

@mifos: @aaspire: Win-win for private-public partnerships for tech is scale, sustainability & impact. Must have biz model & focus on poor.

Determine if Technology is Appropriate and Address Risks

For technology like mobile banking and the cloud, we must take into account risks and impact on the MFI and our clients. Ignoring these could be a dangerous mistake. Things to consider include: costs, security, power, connectivity, overall appropriateness (which is determined by an analysis of the organization and client’s needs).

@CreditSMS: Standardizing tech is necessary but difficult. Everyone involved has different – & often conflicting – incentives.

Benefits of Technology

@bhalchander: #technology can play a role in almost every aspect of microfinance to help it scale and increase impact

@CreditSMS: Most importantly, ICT can serve as a bridge from the informal to the formal economy, where credit scores & histories are possible

@CreditSMS: By allowing banks to forgo ‘brick & mortar’ structures & leverage 3rd party distribution networks united by ICT, we can reach the bottom of the pyramid more effectively.

@bhalchander: #technology can impact entire microfinance value chain –> Fundraising , client acquisition, product delivery, new product development.

@mifos: Technology (both back & front-end) is key to efficiency, transparency, service innovation, and more direct outreach to poor.

Some Resources to Check Out

Microfinance Leadership Summit

CGAP Article on Technology Standards

An Example of Technology and its Impact from Opportunity International

Seven Ways to Strategically Invest in Technology

We want to wish you a splendid holiday season! We’ll be back in January with a new list of topics, panelists and ways to engage others in your community around the economic development tool of microfinance. Thank you for participating and we’ll see you next year!

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