How Digital Technology Is Reshaping Rural Microfinance
When M-Pesa launched as a mobile money service in Kenya in 2007, it quickly extended banking and money transfers to remote rural areas where there were no brick-and-mortar banks. Today, M-Pesa is a well-known digital technology that transformed financial services for underserved rural families in east Africa.
With recent growth in other digital technologies, what other development opportunities are possible and what are some of the limitations? A new paper co-authored by MRR Innovation Lab director Michael Carter and Virginia Tech economist Elinor Benami explores how digital technologies like mobile phones and satellites have created new ways for rural families in developing countries to access savings, credit and insurance. The paper also explains the need to ensure that these services do not reproduce or amplify existing inequalities.
“When most people think of microfinance, they think of group-lending programs or maybe even mobile money systems like M-Pesa,” said Carter. “But there are other opportunities with mobile phones, satellites and other digital technologies to enhance access to small scale financial services to low-wealth rural households in developing countries.”
Photo courtesy of Simon Berry.