Time for Micro-Technologies

It is an accepted fact today that microfinance has come a long way in the last few years but there still exist a large number of inefficiencies in the system.

As we look at the MF Institutions, there are advanced marketing, finance, human resource and accounting ideas adopted from mainstream businesses by them. But one sphere which they lag from more efficient businesses is the technology platform. As we look at all kinds of Microfinance institutions (small/medium/large), one thing that is apparently visible is the lack or minimal use of technology. Most of them seem to use too much of paper in their operations. A paper-less environment seems an idea too far fetched from reality.

Before we look at developing technologies that will be aid Microfinance operations, we have to go back to basics of economics to find the desired characteristics of the technology that needs to evolve.

As E.F. Schumacher points out in his essay ‘Peace and permeance’ (1973), we need technologies (in any sphere) which are:

• Cheap enough so that they are accessible to virtually every one
• Suitable for small-scale application and
• Compatible with man’s need for creativity

Let us evaluate these points and look at how these needs fit in for the Microfinance and how far we are from building Micro-technologies with these characteristics.

The technology solutions that are developed need to be cheap so that everyone can access it. This is a barrier that seems very tough to break. The solutions that are available now are too costly for any small microfinance institutions to start using them. The problem with a costly technology is also the fact that they are relatively more complex. So even with the organizations using these technologies, there is a very little understanding at all the levels of employees. Only a few who deal with the technology team seem to understand it.

Also, the technologies that are used have to be suitable for small-scale applications. This would help in experimentation which would help in improvements happen to the system at a faster rate.

Both the above characteristics above lead to the most important characteristic that is needed in a micro-technology: Need for the technology to be compatible with man’s need for creativity. A cheaper system which would be suitable for small-scale application would help all the stakeholders in the system understand the technology, experiment with ideas and come up with more creative use. This would help us stop looking at technology as typing '7132' in an application for starting loan opening operation which is an insult to the self-respect and creativity of any individual.

For too long has a privileged few understood the technology that is used for microfinance. Even the other-wise privileged few like CEOs and CFOs of the MFIs have not understood these technologies. It is the duty of the people who understand and are involved in building the current systems to help everyone move towards the agenda mentioned above. These needs are pretty much same for technology in any sphere, but the need is more for the Microfinance at this instant as technology can create a whole new difference in deciding the next phase of this sector.