Information and Communication Technology and Microfinance: Options for Mongolia
This paper reviews literature on Information and Communication Technology (ICT) solutions in microfinance, and analyzes possible use of the solutions for expanding microfinance services to rural remote areas by looking at the challenges and issues in the case of Mongolia.The paper discusses four possible solutions for XacBank in extending microfinance services in rural areas of Mongolia. The solutions are:
- ATMs operated as a stand-alone service center;
- ATMs placed in a post office or local XAAN bank branch;
- Wireless POS devices carried by a mobile banking team;
- Wireless POS devices placed in a XacBank franchise (local savings and credit cooperative).
The paper states the key expected outcomes of these ICT solutions as:
- Expanding the access points;
- Improving efficiency;
- Strengthening risk management.
The analysis concludes that:
- ITC is worth the investment only or for a critical mass;
- Regulation matters;
- Careful cost benefit analysis is necessary;
- Financial education will make a big difference;
- Technology cannot be a complete substitute for a delivery mechanism;
- Appropriate ICT solutions are context-specific;
- The network of points should be increased for using the card;
- ICT is no panacea.