CGAP - Mobile banking services are beginning to revolutionize the way people in developing countries manage their money, creating opportunities for microfinance institutions to substantially improve their services. Although widespread m-banking services are currently only present in a few countries, a new CGAP Focus Note, Microfinance and Mobile Banking: The Story So Far shows how microfinance institutions (MFIs) can link into existing m-banking services to make it more convenient and cost-effective for customers to borrow and repay loans. Still, for those MFIs located in countries without an existing m-banking service, most will find it too expensive, time-consuming, and complex to develop a service on their own.
The study, which examines the intersection of mobile banking and microfinance in countries both with and without existing m-banking services (Bolivia, Cambodia, Kenya, Malawi, Mongolia, Pakistan, Tanzania, and the Philippines), found that giving customers the flexibility to make loan payments and deposits using their mobile phones typically shortens group meetings and decreases cases of theft and fraud.