technology in microfinance

05.10.2012 By Emily Riemer

Technology & New Innovations at Chicago Microfinance Conference

At Friday’s Chicago Booth and Zell Center Microfinance Conference. several of my colleagues and members of Young Ambassadors for Opportunity heard from Opportunity International‘s SVP of International Business Development, Dennis Ripley, who spoke as part of a panel called “New Products and Innovations in Microfinance,” along with Kate Cochran, COO at Vittana ; Karl Muth, Consulting Economist at Grameen ; and moderator Nina Diamond 0f DePaul University’s Richard H. Driehaus College of Business. (Jennifer Tescher. President and CEO of the Center for Financial Services Innovation, was scheduled to attend but her flight was delayed.) The panel discussed technology. trends in the microfinance industry, and the innovations being rolled out among the various organizations and entities.

Karl Muth talked about reducing hard currency and other risks with expanded technology, though Grameen is not “driving technology, it’s consumer-driven.” He told a storyabout the changing nature of money transfer and the people’s finance transactions. On a recent trip to Uganda, he noticed the scarcity of buses. Just a few years ago, being a bus driver was a sought-after job in Uganda because drivers transported cash for people from urban to rural areas and received 5% as payment. But today, with so many cell phones that can transfer money and make remittances, the demand for cash-carriers has dried up and so in consequence, few people want to be bus drivers. Twelve hundred of Grameen’s clients in Uganda are using mobile money and making web-based transactions, said Muth, and Grameen has tech-savvy staff that travel around the country giving technology advice and training to clients. Muth sees Grameen as a an intermediary offering products that connect the client in the village to trillions of dollars in the global financial market. “The way we build products is important because efficient access is important,” he said.

Dennis Ripley talked about Opportunity’s microinsurance subsidiary MicroEnsure and the new insurance products made possible through cell phones and technology. Ripley explained that he and MicroEnsure CEO Richard Leftley had arranged a deal several years ago with TIGO in

Ghana. one of the largest cell phone companies. For the cost of their regular $10 monthly cell phone fee, about 7,000 TIGO customers currently receive free access to term life insurance for themselves and one member of their family, with coverage at about 40 times that cost. Opportunity is also using social enterprise platform Salesforce to gather accurate household and land data for farmers (we’ve found that most incorrectly estimate the sizes of their land plots) in order to determine the appropriate size of their agricultural finance loans. Echoing one of the ongoing themes of the day, Ripley called savings the “holy grail of microfinance.” This is especially true for farmers, for whom savings improve cash flow until harvest time to help them pay their bills so that they don’t have to side-sell their crops at a deep undervaluation.

In addition to the products Ripley detailed here, Opportunity’s partnership with Credit Suisse helps us implement further innovations, including Euronet in Malawi, a system that produces bank cards at a lower overall cost for clients and banks, and the rollout of the T24 Emerge Technology System in Colombia. enabling us to grow our bank and expand our offerings of services and financial products to our clients. In Ghana, Credit Suisse supports the marketing and expansion of branchless banking through cell phones, ATMs and POS devices.

For me, the takeaway from this panel was the efficacy of microfinance’s new innovations and existing technology, as well as the ongoing need for even more efficient tools that meet clients’ needs. Clients are innovative and resourceful, and they will find ways to access existing technology like cell phones in order to spend less of their day accessing financial services and more time growing their businesses and improving the economic situation of themselves and their families. Microfinance organizations can give their clients the best shot at improving their situations by continuing to innovate with the most effective technological tools.

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