NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, June 11, 2015

June 8, 2015, Washington, DC—FINCA today released a case study to guide microfinance institutions wishing to implement mobile technology to increase financial inclusion. Since introducing mobile banking to clients in Tanzania over a year ago, with support from The MasterCard Foundation, nearly one-third of FINCA Tanzania’s clients are now using the service for savings deposits and other transactions.

Mobile technology and e-wallet applications have tremendous benefits for clients in Sub-Saharan Africa, including reduced travel time to bank branches, lower risks associated with carrying cash—such as loss or theft—and no more need for third-party banks. FINCA Tanzania has partnered with mobile operators so that clients can access a mobile wallet platform like M-PESA to make safe, convenient and cost-effective transactions.

One of the challenges FINCA faced working with a large mobile operator like Vodacom was the company’s sheer size and market power. It is important to discuss not only technical issues like system compatibility, but also to stipulate how the relationship will be managed. The case study outlines that a Service Level Agreement is critical for laying out the terms and expectations for both parties and ensuring the best customer experience for FINCA’s clients.

Another important recommended practice is to develop an effective customer awareness and education campaign to provide clear, step-by-step instructions and information on how the channel works. These were made available in English as well as Kiswahili, and were shared not only in print format but also as live demonstrations, for the benefit of illiterate clients.

“By publishing these lessons learned from experiences in Tanzania, we and FINCA hope to help other microfinance organizations who might be considering developing this type of channel,” said Ann Miles, Director of Programs, Economic Opportunities for Youth & Financial Inclusion at The MasterCard Foundation. “For so many people living in poverty, lacking access to finance and not having the means to be productive is a significant hindrance to improving their standard of living. With the advent and adoption of new banking technologies, financial service providers like FINCA are able to innovate like never before—reaching more people with better services.”

Rupert Scofield, President and CEO of FINCA International, added: “The speed and scale of opportunity presented by digital financial services to reach the most remote and marginalized communities is tremendous. Traditional banks and telecom companies don’t have the experience working with our client base. The MasterCard Foundation has been an excellent partner, helping FINCA build on our 30 years of work with microfinance clients. We really believe it’s partnerships like this that can maximize financial inclusion for the poor.”