Douglas Pond, Executive Vice President for Mambu (one of The SEEP Network’s newest members) discusses how technological innovation is spawning new competitors and putting microfinance organizations under pressure
There is no doubt that technological innovation is rapidly driving new opportunities for financial inclusion. As Sharon D'Onofrio, Executive Director of The SEEP Network commented recently, “We are at a transformative point in the evolution of the microfinance sector, as world leaders embrace the mandate of global financial inclusion, and technological innovations present immeasurable opportunities to make it a reality.”
An Increasingly Competitive Field
A convergence of multiple market forces are having a widespread impact on microfinance organizations worldwide.
In financial services, both traditional banks and new alternative service providers such as mobile network operators and online lenders are seeking new markets and innovating to attract new customers, including the historically unbanked and underbanked. At the same time, increasing access to mobile devices, cloud-based services and the increasing consumer choice that goes with ubiquitous internet access means clients are demanding more from their suppliers.
Both these forces are undermining the status quo for many microfinance organizations. Some might ask, is this the end of the traditional microfinance business model?
In fact, in our experience working with more than 100 financial innovators in more than 28 countries worldwide, these factors actually create huge opportunity for microfinance organizations. By embracing new technology, innovative microfinance organizations of any size can professionalize service offerings in a radically new way, harnessing the power, scalability and security previously reserved only for top-tier financial service providers, but at a drastically reduced cost.
With this new-found ability to lower service delivery costs and reduce operational risk, microfinance organizations can achieve a step change in client service, differentiate their client offerings from new market entrants, and accelerate financial inclusion as never before.
How Can Microfinance Networks Keep Ahead?
It is an exciting time to join The SEEP Network and be a part of a community that is driving the financial inclusion agenda. We see it every day in our clients’ businesses and when talking to prospective clients. As a new member of SEEP, we are seeking to raise awareness of how technology can help drive success in achieving financial inclusion. Working in collaboration with SEEP, we look forward to sharing best practices from our customer base to accelerate the financial inclusion mission.
Technology innovation, especially in service delivery, will be the defining factor in financial services for those looking to lead in financial inclusion. We like to think of it as zero gravity banking. Together, we can be bigger than the challenges we face and usher in a new world of financial inclusion.