Archive for: Microfinance
by Gautam Ivatury : Friday, August 31, 2007
Putting in place a cost-effective, efficient, scalable core banking system (or information system) is a tough job for any business. For many small and medium microfinance institutions (MFIs), it’s proven to be virtually impossible. Strong IT staff are hard to come by and retain, managers have limited training in making IT decisions, and getting loan officers and accountants to buy into a new system is no piece of cake.
When are these MFIs going to learn to stick to their knitting and outsource their IT systems, just like the rest of the financial services world? … Well, maybe it’s not so easy…
Read the rest of this page »
by Jim Rosenberg : Tuesday, August 21, 2007
 In the world of mobile telephony, Jan Chipchase needs no introduction. Suffice it to say he studies – on a global scale – how people use mobile phones. Jan’s title is “Human Behavioural Researcher” at Nokia, and CGAP and infoDev recently had the chance to host him at the World Bank to talk about his work, as well as the impact mobile phones are having in developing countries.
Jan noted that for many people the mobile phone is the first thing they see in the morning and the last thing they see at night. They wake up with it and fall asleep with it.
“That’s immensely challenging – to understand the context – the need to be able to go in there and understand how a device fits into the context of human experience,” Jan says.
As for what this has to do with increasing access to finance (that’s our focus) for some of the world’s poorest people, Jan asks this question:
“What do illiterate people and billionaires have in common?”
The answer: both groups like to delegate tasks.
“Illiterate people can do anything on a mobile phone. The way they get around tasks that they don’t understand is by asking someone else to do it for them. In a way, it’s like asking someone else to complete the design process.” He says this is especially true for text messaging.
Will illiterate people buy a phone specially designed for them? Jan Chipchase doesn’t think so – too much stigma attached.
“The biggest innovation to help the poor?- and I’m speaking for myself here – is to get phones down to a price point that poor people can afford,” Jan says.
We’re at a banking conference in Sao Paulo, where I had a chance to present on agents and our work in Colombia. In terms of using banking agents to reach remote areas and poor clients, the Brazilian financial system represents probably the future of many Latin American markets. Whereas countries like Colombia are just starting to develop such outlets, in Brazil they already make up 56% of all financial system points of sale are, reaching all municipalities.
Since our last visit in June 2006, the atmosphere has changed a lot. Whereas last year, banks were still experimenting with different approaches and were not yet convinced that banking agents were viable, today everybody we asked during our last week in Sao Paulo, considered banking agents a profitable channel. Banking agents move clients which are high cost for the bank (small ticket size, often only limited usage of products) to the low-cost agent channel, and free space in branches for clients which generate more revenue for the bank. Before branches were full of people just paying their bills. Read the rest of this page »
by Hannah Siedek : Friday, April 13, 2007
CGAP’s Technology Program is interested in technology solutions which deliver a wide range of financial services, including credit. In many of our projects, technology helps us to automate decision making and transfer transaction data over long distances. Making credit decisions remotely using a credit score application for people without credit history, and automating the disbursement of funds is still a challenge for many financial institutions. Therefore, the CGAP’s Technology Program seeks to experiment with ways on how to extend credit to very poor unbanked clients without involving a credit officer. Read the rest of this page »
by Jim Rosenberg : Saturday, April 29, 2006
by Gautam Ivatury : Saturday, April 15, 2006
by Gautam Ivatury : Sunday, January 29, 2006
Some of the innovations commercial banks need to service poor clients may be found in information and communications technologies (ICTs).This Focus Note addresses the following questions: Can banking technologies, applied innovatively in developing countries, make microfinance profitable for formal financial institutions? Will they reduce costs to such an extent that banks could profitably serve even those whom MFIs have mostly excluded to date, such as very poor and remote rural customers? Will these customers be comfortable using technology?
by Gautam Ivatury : Wednesday, September 29, 2004
(adapted from Elizabeth Littlefield and Richard Rosenberg, “Microfinance and the Poor: Breaking Down the Walls between Microfinance and Formal Finance,” Finance & Development 41, no. 2 (June 2004): 38-40)
There is a dawning understanding that developing countries’ financial systems need to be more accessible to poor people and that there are practical ways to make this happen. All kinds of financial institutions–regulators, mainstream rating agencies, commercial and state banks, insurance companies, and credit bureaus–are starting to play a part in developing sound, inclusive financial systems that serve the majority of poor countries citizens.
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