Rural Microfinance Service Delivery: Gaps, Inefficiencies and Emerging Solutions

This paper discusses some of the major technology gaps faced by rural microfinance institutions (MFIs), focusing on areas that are most important for the future growth of the industry.

The paper builds upon six months of field research with eight MFIs located in various countries. It examines three of the major tasks faced by rural microfinance service providers:

• The exchange of information with remote clients;
• Management and processing of data at the international level;
• The collection and delivery of money to remote rural areas.

For each of these gaps, the paper looks at current best practices, the role that information technology has or has not played in overcoming these obstacles and future directions. In this context, the paper discusses:

• The use of hand-held technologies for rural information collection;
• Experiences in the implementation of management information systems (MIS) at the institutional level;
• Current strategies for introducing electronic banking to remote rural areas;
• Results so far in each of these directions;
• Potential ramifications for the long-term growth and sustainability of this sector.

The paper concludes by:

• Discussing interesting and powerful new trends in microfinance;
• Postulating some potential models for the future development of the industry.