Fintech solutions deployed by microfinance organizations and initiatives vary depending on the capabilities of the organizations and their scope. As mentioned in previous blog posts, Microfinance institutions (MFI) that grant loans and perform banking functions have a much broader range of instruments at their disposal than microfinance field agents’ institutions/initiatives that represent MFIs and manage loans on their behalf.
The initial desk research performed on behalf of the Samhita’s Development Network allowed for development of a simplified framework for mapping of existing solutions in the field. They can be divided in the following categories:
mobile money and mobile wallets,
mobile banking,
digital communication and interactive customer engagement,
identification technology (including use of bio-metrics),
cloud computing, data harvesting and data analytics,
loan process digitization, including tablets for network agents and digital field applications,
partnerships with Fintech companies,
connecting SMEs to e-commerce platforms,
digital financial literacy programs/ solutions,
new approaches to credit scoring.
Mobile money
In Afghanistan, Roshan, the leading mobile operator partnered with Vodafone Global Services to offer a mobile money transfer service in Afghanistan called M-Paisa. The First MicroFinanceBank (FMFB-A) started to facilitate loan repayments through M-Paisa offering reduced interest rates to borrowers that agree to receive and repay their loans using M-Paisa.
In Peru, Tienda Pago, a fintech company, provides quick short-term working loans for small store owners in a form of a line of credit in a mobile wallet accessible using a mobile phone. Store owners use it to purchase inventory from distributors using a mobile-based platform.
Mobile banking
MFI Finca Tanzania launched a mobile banking channel Finca Mobile in 2013, partnering with mobile network operators (MNO): Vodacom, Airtel and Tigo, allowing clients to perform transactions (eg. transfers, withdrawals, loon payments) at MNO agents’ branches.
Interactive customer engagement / partnering with Fintech company
Juntos Global, a fintech company, offers Conversational Account Management (CAM) that combines technology with human intelligence to create automated and personalized two-way conversations through mobile messaging with customers using financial services. The service was used by mobile money providers Tigo Money in Paraguay and Mynt in the Philippines to increase mobile wallet use via tailored messaging to customers. The same approach could be used to increase digital savings among customers.
Identification technology
In India, many institutions are using Adhaar bio-metric identification cards for instant customer identification and on-boarding. For instance, Growing Opportunity, a non-financial institution offering educational and small business loans deployed bio-metric authentication technology for all its branches in order to decrease fraud and address security concerns. Another example is an Indian microfinance institution, Ujjivan, that launched bio metric ATMs for its clients.
(to be continued)