Paper

Microfinance: Leveraging ICTs

Empowering marginalized communities
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This article suggests ways in which existing information and communication (ICT) tools and technologies can bring the poorer sections of society into the ambit of microfinance services.

Over the last decade or so, microfinance has come to be recognized as the most viable, efficient and result oriented mode of financially empowering the poor. Organizations that entered the microfinance sector have, however, faced challenges in scalability and sustainability, outreach and impact of microfinance initiatives. MFIs are now becoming aware of the potential of ICT to increase outreach, control risks, increase sustainability and decrease operational costs. MFI uses of ICT include:

  • Management Information Systems (MIS);
  • Correspondent banking;
  • Credit cards, and ATMs;
  • Internet banking;
  • Mobile banking;
  • Microfinance software.

The number of experiments for integrating microfinance and ICT are going to increase in the future. The article states that ICT can only be an enabler, and the real success of MFIs has to be measured vis-à-vis their social performance, and not by their ICT readiness.