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The microfinance industry in India has become an integral driving force, including unserved people by the existing financial service providers. You will not believe India’s microfinance industry is dominated by more than 3000 microfinance firms. These companies are trying to bridge the gap between financially excluded people and financial service providers.
The impact of technology on the microfinance industry is serious for discussion. With the various technological assistance advent, the sector has seen unprecedented growth over the last few years. Digital technologies are spreading across the globe quickly and are making inroads into all realms of human life. These technologies are expanding new opportunities, creating new engagement, and increasing efficiency for individuals and businesses.
The best thing about the microfinance sector is that it quickly adopts technological progression and changes in the financial industry. The increased connectivity and technological innovations enable a range of developmental advantages and digital dividends, stimulating growth and opportunities and improving service delivery.
With every passing time, microfinance has been evolving continuously. In this case, the inclusion of technology has a significant impact as it will help to deliver numerous financial services like savings, insurance, and low-cost payment infrastructure. Let us now check out the impact of technology on the microfinance sector below.
• Payment integrations
Microfinance firms have utilized technology in several ways to get a more comprehensive and adequate position in the market. With the assistance of a payment integration system, they can promote better and more effective loan repayments and the utilization of mobile wallets. In other words, with the help of technical assistance, they can make the repayment process much more accessible and hassle-free.
• Recent Channels
It is another significant thing behind the success of microfinance. New sectors like distribution networks and mobile operators will assist financial products and services at a more affordable cost to the financially excluded population.
Another noticeable and positive impact of technology on the microfinance industry is analytics. The digital progression has assisted microfinance ventures in entering a new age of analytics.
The progression of different technologies also enhances security features. Due to this, many microfinance companies are now adopting technologies to improve security and compliance.
• Global Expansion
With the help of technology, microfinance institutions can now easily reach the global market. Technology allows them to take their products or offerings to a larger scale. Additionally, they can also concentrate more on the clients and their requirements than the products and processes. All of these are possible due to the impact of technology.
Technology has many features that help the microfinance industries. Some of them are as follows.
• Customer centricity
Digital technology allows financial service providers to adequately serve the financially excluded people with a customer-centric approach.
• Reducing operational risk
Through technology, clients have the flexibility to repay loans through their mobile phones.
• Partnerships and collaboration
Partnerships and collaboration between people and tech companies can assist in changing the financial services industry.
Thus, it is needless to say that the impact of technology on the microfinance industry is immense. The progression or growth of this sector depends on digital progression. That is why microfinance institutions are now adopting technology for their betterment.