Tag Archives: microfinance

Mobile banking and microfinance: Lessons from Pakistan

This post is written by Afsheen Shakoor, SBI-Pakistan Resident Advisor for an MFI branchless banking project. This post also appears on SBI’s blog.

Photo credit: ASASAH

Photo credit: ASASAH

Convenience.

It’s one of the greatest requests and laments of Pakistan’s microfinance clients. In surveys and informal interviews, clients say they want closer offices and quicker meetings. In this environment, little wonder that microfinance institutions (MFIs) are experimenting with mobile banking. But is mobile banking really the answer to clients’ prayers?

Well, maybe.

With mobile banking, instead of going to a branch office to make repayments, clients pay through designated agents of the partner bank or MFI. These agents may be local shopkeepers, pharmacists, or mobile retailers, and are ideally closer to the client than the MFI branch.

But in the case of Pakistan, agents haven’t been closer to the clients. Instead, they’ve clustered near the MFI and bank branches. So the gains in terms of speed and convenience have been modest, averaging as little as ten rupees. Continue reading →

Alternative channels for exploitation of the poor and unbanked?

Photo credit: Bangkok Post

This post is written by Jesse Fripp, SBI Vice President.

After initial skepticism, a lot of confusion, and countless false starts, the foundations for the e-money ecosystem – or the “LiFi” world as recently described by David Porteous and Ignacio Mas – are being laid in fits and starts. Following in the pioneering footsteps of early innovators such as GCash, SMART, M-Pesa, WIZZIT, and others, over a hundred mobile and branchless platforms are being developed and rolled out in dozens of developing countries. The dual siren song of serving “the bottom of the pyramid” from an inclusion as well as mass-market commercial perspective is sounding ever more loudly across the world, with implications that are yet to be determined.

Unlike the early days of the microfinance “revolution,” in the alternative delivery revolution, major, multi-national and/or heavily capitalized players are getting involved earlier. The major card services are already moving briskly down this road, with the acquisition by Visa of the dominant back-end mobile banking platform Fundamo, and the launch of virtual pre-paid card services in certain markets. Telcos generally struggle with the challenge of understanding and addressing market demand dynamics outside of their primary air-time business, but are cash-rich, and increasingly well-positioned to transform themselves into “holdings” that can leverage the power of their core channel utilities while keeping the financial benefits “within the family” – including through acquisition of banks and financial services companies in key markets. Banks themselves are finally waking up to the potential, and are working their own angles. Primarily, this is through leveraging their specialized regulatory position and knowledge of financial services and products through the creation or acquisition of third-party service companies that can make use of the telco utilities efficiently, without being slaved (or more importantly, slaving their customers) to any single telco platform or provider. Continue reading →

The Future of Microfinance in the New Era of Technology-Enabled Alternative Delivery Channels

SBI led a workshop at the annual SEEP conference in Washington, DC earlier this month titled “The Future of Microfinance in the New Era of Technology-Enabled Alternative Delivery Channels.”

The workshop addressed the changing realities of how microfinance institutions must consider and approach their “market,” especially with the development of technology-enabled alternative delivery channels (ADCs).  The workshop outlined the latest developments in ADCs and sought to come to an understanding of the future possibilities for MFIs.  The speakers, which included Jesse Fripp, Vice President at ShoreBank International, Jim Hokans, Director at Bankable Frontier Associates, Ryan Favley, Manager of ADC Strategy at ShoreBank International, and Syed Mohsin Ahmed, CEO of Pakistan Microfinance Network, addressed the issues around regulation and the enabling environment related to MFIs, discussed the changing market and both the challenges with technology, commercial models, and new product dynamics based on existing experiences with branchless banking.

The workshop also included a discussion with participants on current trends, considerations, and future prospects for the MFI industry in the context of ADCs.  The speakers cautioned MFIs to take time and fully understand the industry, whether the MFI would be able to sustainably benefit from ADCs, and whether it was in line with their strategy.  Technology-enabled ADCs are a promising and exciting prospect for MFIs, given the right conditions for both the institution and the market in which they operate.