 |
| Learning in a group |
| |
| “The M-Finance appeal rests on two possibilities. First, it allows banks to do their existing business more cost-effectively. The second, and more interesting possibility, is that mobile phones and related technologies alter the nature of banking relationships themselves.” |
| |
|
|
savings. This is an instance where mobile telephone technology replaces the human touch — and maybe, is even superior to it.
Expanding Access
Cost saving is one of the big promises of M-Finance. Developing workable business models have been challenging for micro banks and the future of M-Finance will rise or fall with its cost implications.
Micro banks have found that the costs of high-touch operations for traditional micro banks have been hard to spread over small-sized loans. Interest rates thus have often been high (often 30 percent per year and higher), especially for institutions serving the poorest customers. A hope with M-Finance is to speed up routine processes so that field staff can focus more heavily on problem areas and new opportunities. It also aims to cut the costs of dealing in
|
|
small quantities and help expand operations in remote or sparsely populated rural areas. The big question here is whether the automation inherent in M-Finance can eventually bring a compensating drop in interest rates.
Microfinance proves helpful for customers, even if it is not the panacea that its most ardent advocates promise. M-Finance has the potential to take microfinance beyond the bounds of villages and neighbourhoods and create banking services that move with customers. And it can be a platform for developing new products like emergency loans and flexible savings accounts. The potential for these applications is ample, as is the demand. M-Finance, like microfinance, will only succeed, if it rests on a deep realistic understanding of the financial needs, constraints, and opportunities of poor households.
|
