Research & Analysis

Using Technology to Build Inclusive Financial Systems

Innovative use of information and communications technologies to inexpensively process a large volume of small transactions and deliver a wide range of financial services may help to make microfinance institutions (MFIs) more efficient and commercial banks more interested in serving poor people. Falling hardware costs and growing support infrastructure are making these technologies increasingly available.

Debit and credit card readers now cost as little as US$125 and operate wirelessly, according to Santanu Mukherjee, VISA International country director (South Asia). From 1999 to 2004, the number of mobile subscribers in Africa grew from 7.5 million to 76.8 million (LaFraniere 2005).

Besides reducing delivery costs for banks, poor people may ultimately prefer using these channels because they are inexpensive and convenient. Many who are unbanked now may gain access to financial services for the first time. In a recent CGAP survey, 62 financial institutions in 32 countries report using technology channels, such as automated teller machines (ATMs), point
of sale (POS) card readers, and mobile phones, to handle transactions for poor customers.

Some are using new technology to better serve existing customers; others hope to reach new clients in areas where setting up a bank branch may be too costly.