mfi

This time on The CultCast: Why iPhone 5S may have two flashes; the iOS game controller could change everything; new Thunderbolt displays on the way;  guy who sold the iPhone 4 prototype recounts the tale on reddit;  iOS 7 gets shinier in beta 2; and Tim Cook gets a back massage with Erfon after brunch.

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Elizabeth Littlefield, CGAP, Director of the World Bank and the Chief Executive Officer of CGAP –  Financial Crisis and the Microfinance Industry.

This note examines some of the key strategic issues for financial institutions considering implementing mobile banking. It suggests the aspiring MFIs to assess the market potential and devise entry strategies according to the vision of the organisation. The note also mentions that mobile banking can be a supplement or substitute to the existing product or services, depending upon the goals of operators either for reducing transaction costs or attracting new customers or for revenue. The note also suggests forging strategic operational alliances, if need be (and in between telecom and finance companies). It further advises the MFIs wishing to enter into this market to develop compatible hardware and appropriate software in addition to financial modelling for providing these kinds of services.

The need for a branch infrastructure and managing high volumes of low value transactions are the barriers related to serving the low-income market. While outlining the features of mobile banking, the note warns that the failure of such initiatives is often due to its inappropriateness to address the customers’ needs rather than because of technological problems. The note also highlights the reasons as to why should low income segment prefer technology—if it is secure, convenient, low cost, accessible/liquid and easy to transfer. It also compiles the barriers and challenges in using technology like availability of machine, lack of training, lack of sufficient funds with agents, illiteracy among clients, lack of willingness from suppliers and other resource constraints. It also highlights the significant role played by cash and its functionality.

The conventional banks rarely provide banking services to the low income segment due to high costs associated with it. However, technology has resulted in lowering down the costs per transaction, and thus impacted the banks to consider the options of servicing the low income segment. This note talks about the gains from various technologies such as ATMs, plastic cards, mobile phones, used by the present banking system to serve the people belonging to lower income strata.The conventional banks rarely provide banking services to the low income segment due to high costs associated with it. However, technology has resulted in lowering down the costs per transaction, and thus impacted the banks to consider the options of servicing the low income segment. This note talks about the gains from various technologies such as ATMs, plastic cards, mobile phones, used by the present banking system to serve the people belonging to lower income strata.