Emerging Trends in the Microfinance Industry
Professor C.K. Prahalad said, 'the poor deserve world-class products and services". Speaking in favour of microfinance and microloans aimed at low income customers; he said it would alleviate some of the problems faced by the poorer sections of society, majority of who survive on less than 2 dollars a day. Microfinance is the provision of financial services to low-income clients, including consumers and the self-employed, who traditionally lack access to banking and related services.
Mohammad Yunus, who received the Nobel Peace Prize in 2006 for creating the Grameen Microcredit Bank in Bangladesh, first started the US $27 loan in a village of Bangladesh, the loan that launched the microfinance movement. As Dr. Yunus has observed, Grameen Bank is transmitting an entrepreneurial culture to millions of Bangladeshi women.
At the beginning microfinance happened through donor and philanthropic funding. However as the activities scaled up, it was imperative to move to a commercial format. Bankers, Venture capitalists, technology solution providers, governments and public at large have realized the increased potential of microfinance.
A wide range of technologies are available to help microfinance providers improve efficiency, track operations more accurately, increase transparency, and reach new customers, thus facilitating financial inclusion. Technology has led to increased deposits, by placing easy-to-use ATMs in well-trafficked areas. Technology has led to more rural customers. Standard Bank's (South Africa) low minimum-balance, easy-to-use "ePlan" account can be opened at manned ATMs in rural areas where it would be too expensive to open branches.
