Change is the Only Constant in Life

> Posted by Danielle Donza
Change. People fear it, they avoid it and resist it, but ultimately change is the only constant in life. Some of the microfinance industry’s heavy hitters have weighed in recently on how they believe the industry is – or needs to be – changing.
Marguerite Robinson, Michael Chu, and Robert Christen, three microfinance industry leaders, discussed this topic at a recent MIT panel. They have all spent years in the trenches building microfinance institutions to prove to the financial industry that microfinance was worth taking seriously. But now that the industry has “cracked the capital markets,” they are advising the next generation of microfinance leaders that it is time to shake it up again. But how?
One answer is mobile and agent banking. After 40 years of building microfinance banks, it is time to move beyond them.  By some estimates, as many as 2.7 billion people in developing countries are still unbanked and we are never going to reach them all unless we drastically re-think the way we deliver financial services to the poor, especially in remote rural regions. Even when microfinance clients can get to a microfinance institution (MFI), it still costs that MFI roughly US$1 per transaction. Obviously not a very cost-effective business model when clients only want to transact 50 cents.
The panel also agreed that remittances are one of the most powerful ways to reach the poorest of the poor in the most remote regions. This is supported by the macro “Global Trends That Will Shape Financial Inclusion” as mapped by Elisabeth Rhyne of the Center for Financial Inclusion, which predicts population aging and youth bulges, and rising urbanization by 2020. The lives of many aging parents in remote areas could be improved by the money their children working in the cities could remit to them with mobile banking.
In a recent interview, Bob Annibale of Citi Microfinance discussed some of the innovative solutions they are working on with mobile banking and prepaid cards. And, he projected the next big markets for investors as China and the Middle East and Northern Africa (MENA).
What do you think will be (or should be) the next big change for the microfinance industry?
Have you read?
What Financial Diaries Reveal About M-PESA Use
5 Tough Questions About Mobile Banking
The Cell Phone Revolution and My Friend Hector

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