The rapid pace of technological change is making it harder than ever for businesses to keep up. Disruptive technologies are constantly emerging, and those that don’t embrace them risk being left behind. This is especially true in the world of microfinance, where new technologies are changing the way people bank and borrow money.
If you’re not already using technology to improve the way you deliver financial services, now is the time to start. Here are four ways you can use technology to future-proof your microfinance business:
1. Use mobile money to reach more customers.
Mobile money platforms like M-Pesa and Airtel Money are becoming increasingly popular in Africa. They allow customers to transfer money and make payments using their mobile phones. This is a convenient way for people to access financial services, and it’s also a great way for microfinance institutions (MFIs) to reach more customers.
2. Use data analytics to better understand your customers.
Data analytics can help you understand your customers’ needs and behaviours. This information can be used to improve your products and services, and to target specific customer segments with tailored marketing campaigns.
3. Use digital channels to reach more people.
The internet provides a low-cost way for MFIs to reach more people with their products and services. Whether it’s through a website, social media, or email marketing, digital channels can help you reach a wider audience with your message.
4. Use alternative data sources to assess creditworthiness.
Traditional credit scoring models often exclude low-income borrowers, which makes it difficult for them to access formal financial services. However, alternative data sources like utility bills and rental payments can be used to assess creditworthiness. This allows MFIs to serve a wider range of customers and reduce the risk of loan defaults
MFIs that embrace these technologies will be well-positioned to survive and thrive in the years ahead.
Technological change is inevitable, but that doesn’t mean businesses have to be left behind. By adopting some simple technologies, MFIs can future-proof their businesses and stay ahead of the curve. Mobile money, data analytics, digital channels, and alternative data sources are all powerful tools that can help MFIs reach more customers and deliver better products and services.