The impact of technology on the sustainable development of microfinance

Abstract

Technology and innovation are believed to be the key factors for economic growth. The effect of technological solutions have been assessed within the developed framework for stakeholders and Industry drivers specifically in Financial Services. We are continuously examining how technology can be better used to solve the problems of Microfinance by increasing sustainability and outreach to the poors. This paper analyses the impact of technology on the growth of Microfinance globally. Technology is rapidly changing how individuals access financial services and interact with financial service providers. Agent networks and other technology-enabled businesses allow people to conduct many basic transactions, such as person-to-person payments, bill payments, deposits, and more, to take place without every stepping inside a bank branch. As a result of this, it is acknowledged that most of the microfinance growth during the last decade has been attributed to the existence of strong technology platforms. At the advent of technology Financial Institutions along with Microfinance Institutions (MFIs) found it easy to reduce the operating costs and increased outreach and penetration. Management Information Systems (MIS), Branch office franchise model, Internet Banking, Electronic Fund Transfer at Point of Sale (EFTPOS), Automatic Teller Machines (ATMs), Interactive Voice Response (IVR) systems and smart cards are among the major technologies that have entered microfinance over the years from the formal financial sector. Additionally, Microfinance Institutions (MFIs) is also considering to invest in Cloudbased Computing Systems (CBS), which enables regulators to pull sectors related data further by reducing reporting time and cost of the institution.