Giving Compass' Take:

•MicroSave founder Graham Wright lists the ways that microfinance institutions should utilize financial technology to implement global practices.

• How can donors help spread awareness about the impact of fintech on MFIs?

• Read more about global prosperity through fintech. 

How microfinance institutions can go about leveraging fintech in their products and practices? MicroSave founder and managing director Graham Wright laid out five basic options:

  • The first way MFIs could potentially use fintech is to set up their own e-money system, he said, like Equity Bank in Kenya.
  • Another option for MFIs is to use their outreach to create a cash-in/cash-out agent network.
  • A third option is simply to “ride the rails,” he said, using the payments systems that a fintech or mobile money system provide in order to make loan disbursements or repayments.
  • The fourth option is to use fintech’s data capability to facilitate communication, loan decision-making, and other essential banking functions.
  • “The fifth option that we always put on the table for MFIs is to wait and watch,” he said, “because everything is moving so quickly, it’s terribly difficult to figure out what to do, and we’re not really sure which of these fintech companies will survive and blossom into the future.

Wright also gave a run-down of how fintech is transforming financial service delivery in India, a country that has become the global hotbed of digital financial inclusion. He described how MicroSave is helping the Indian government with the gargantuan task of digitizing government-to-person payments: These amount to about $35 billion, he said, and the objective is to digitize almost all of them.

Read the full article about fintech microfinance by James Militzer on NextBillion.