A Technology Requirements and Governance Framework for Rural Microfinance

Governments and Financial Institutions in the emerging economies have recognized the enormous untapped potential of human capital at the “Bottom of the Pyramid,” for fuelling the growth of the economy, and have identified easy access to capital as a key factor in realizing this potential. Many of the central banks and financial services trade associations are also in the process of creating a regulatory and governance framework that is conducive for financial services players to fulfil the need and the potential of this market, at the same time minimising the risks for all stakeholders. The Microfinance sector is thus seeing a rapid expansion in terms of geographical reach, and an explosive growth in terms of the number of service providers and customers. Given that Information Technology (IT) is a critical enabler for this growth, there is a large rush of IT providers eager to service this market. This brings with it (a) the risk that inappropriate or substandard IT solutions are implemented, resulting in wastage of resources, and (b) the potential for misuse and fraud. This chapter makes a case for creating an IT requirements and governance framework at a policy level, in order to ensure that the needs of this market are properly serviced, and resources are optimally and efficiently deployed, so that the benefits of Information Technology flow through to the grassroots level.