Banking the Unbanked: Technology's Role

This paper presents conclusions about the role that technology can play in increasing the reach of microfinance, from a series of pilot projects that The Microdevelopment Finance Team carried out in Uganda. The paper states that:

• The MTF team envisioned a “"data transaction backbone”" that would link microfinance clients to their financial institutions and beyond;
• The resultant technology was known as the Remote Transaction System (RTS);
• The study led the team to the following conclusions:
  • Technology, combined with business process change, brings the greatest returns;
  • Emerging markets require innovative appropriate technologies that are designed for scale;
  • The cost associated with building the infrastructure to support this enabling technology is too high for MFIs to venture alone;
  • Partnerships between MFIs and local companies assist in reducing infrastructure costs.
• Technologies, such as the RTS, can evolve and provide functionality that serves to build bridges between MFIs and the formal financial sector.

The paper concludes by stressing the importance of shared infrastructure and common standards in order to meet the costs of providing financial assistance to a large client base.