Funding Microfinance Technology

This brief provides suggestions to donors on supporting MFIs in using technology.A wide range of technologies are available to help microfinance providers improve efficiency, track operations, increase transparency and reach new customers. Most MFIs, however, struggle to select the right technologies and get the most from their investments. The paper states that donors should:

• Be realistic about what technology can achieve;
• Ensure that microfinance providers follow good investment and management principles when choosing and implementing new technologies;
• Help MFIs get specialized, independent advice from consultants on strategic priorities, technology requirements, and management of technology vendors;
• Ensure that the MFI has thoroughly evaluated the investment;
• Be realistic about costs;
• Avoid funding innovations unless the MFI has investigated the technology thoroughly;
• Ensure that technology implementation is complemented by corresponding capacity building in human resources, risk management and governance.

In some microfinance markets, the best way for donors to support the use of technology may be to fund industry-level technology initiatives, such as building the capacity of local information technology firms or programs that teach the poor how to use ATMs, debit cards and credit cards.