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#mifimon: Technology & Microfinance

By Ben Lyon

The following is a guest post from Ben Lyon from FrontlineSMS. You can stay connected and up to date with #mifimon by following @Mifimon on Twitter.

Once every two weeks, the microfinance community comes together on Twitter for Microfinance Monday, or #mifimon. Last  #mifimon, the use and implications of technology in microfinance took center stage. Questions ranged from “How do we address risks?” to “How can technology increase transparency?” to “How can technology be used to build political capital for change.” Although a range of opinions were present, several points struck a common chord. These included that technology is a means and not an end; it must be demand-driven and user-centric; and it must be appropriate. 

Before all else, #mifimon participants agreed that technology is an enabler, not an end. Advocates of technology have a tendency to push “the next big thing” and focus on analytics at the expense of intuition. The technology world moves a mile a minute. Alternatively, microfinance is about meeting people where they are, not where they will be. Microfinance practitioners occupy a middle ground where the lure of new technology must be weighed against the capacities, competencies and costs involved. 

Participants also agreed that technology has to be demand-driven and user-centric. No matter how robust or elegant, technologies are useless if the demographics they target don’t understand them or find them too difficult to use. Similarly, microfinance practitioners need technologies that are tailored to their circumstances instead of “solutions looking for problems.” One participant suggested that #tech4mf (tech for microfinance) advocates compile a list of use cases similar to “Portfolios of the Poor” [Link to:   http://twitter.com/ibl/status/11260585646]. By providing specific, flexible solutions for a range of common use cases, technology vendors have the potential to bolster thousands of institutions and impact millions of borrowers. 

Finally, #mifimon participants agreed that technology must be appropriate. Microfinance institutions operate in environments where borrowers either have limited or no access to high technology. Even though most borrowers own or have access to a mobile phone, for instance, those with access to smart phones – or data, for that matter – are de minimis.  Accordingly, iPhone and Android applications are not relevant (yet). 

Technology has the potential to revolutionize microfinance by streamlining processes, increasing transparency and expanding geographic reach. Nevertheless, microfinance practitioners should approach technology with caution in order to ensure the appropriateness and accessibility of new services. 

A snapshot of participants: @mifos, @SeaMoMicro, @GrameenFdn, @ibl, @eblantz, @CIPEglobal, @GrameenAppLab, @ADKoehler, @OpportunityIntl, @savetogether, @Ajuonline, @msftcitizenship, @HoracioCoutino, @creditsms

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