Mobile Banking

Some of my fondest memories of working in Microfinance Institutions (MFI) were accompanying loan officers on the long and arduous treks through the countrysides of far flung places in search of new business or tracking down delinquent clients.

I remember one of these trips vividly from my work in India. The loan officer and I left the main office at 9am. We got on a public bus for an hour ride into the country side. Then we took another public bus for 30min to a small town. We then hired a rickshaw and drove 20 min down a long dusty road. We were deposited at a mud path, and walked another 10min into the center of a small village. After all this travel, it turned out the self help group/microfinance unit we came to visit to collect money had all left to work in the fields for the day! Despite my pleasure of seeing and traveling through beautiful countryside, it was 2 hours of travel that was in vain.

I had similar experiences in all the countries that I worked for MFIs. Too often, an exorbitant amount of time and energy is expended by the organization trying to reach clients in remote areas. The situation is especially exasperated for potential borrowers who live in the rural regions of the country. These individuals are often the ones most in need of MFI services but because of their geographic distance, they can not effectively receive all the same services as a borrower living in a urban area.

A possible solution to this conundrum is the idea of mobile banking. The basic theory is that a person can use their cell phone to conduct many of their banking transactions. In the past few years, there have been numerous attempts at creating mobile banking platforms for MFIs; however, mainstream success has remained out of reach.

For my part, I am especially interested in the idea of mobile banking. Like in the US, mobile phone usage in developing countries is becoming widespread, and for lowering costs, it seems obvious that MFIs will want to utilize mobile banking technology. If anyone out there comes across companies doing mobile banking, then please feel free to share.