Transformative Technology in Microfinance: Delivering Hope Electronically?

Abstract

Considered a lifeline, and a convenience, a mobile phone has now acquired another transformative dimension within the microfinance context.  As a result of the proliferation of mobile banking in emerging markets and developing countries, microfinance institutions (“MFIs”) have adopted similar technological enhancements to deliver microfinance products.  This paper will explore how emerging technology advances has altered the contours of microfinance, specifically mobile banking (also known as “m-banking”) which is utilized to facilitate efficient financial services to a vast number of people without access to the formal banking  system and financial services, otherwise known as the “unbanked”.  This discussion offers a snapshot of the current state of mobile banking, and examines the kaleidoscopic approach used by microfinance institutions through several auxiliary considerations.  Part I examines the underlying rationale in employing a cashless banking paradigm and illustrates how mobile banking is administered institutionally.  Part II seeks to highlight the regulatory considerations intractable within the mobile banking discourse, and is intended to provide a survey of the current regulatory landscape, and finally, Part III focuses on uncovering the consumer perspective, and calls for a conceptual refinement in the interconnection of the social context within mobile banking. This paper is not intended to be categorized as a comparative law piece; rather its primary objective is to provide a snapshot of how certain jurisdictions have embraced mobile banking platforms and their legislative response thereto.  This discussion is merely offered as part of a functionalist approach discourse currently adopted by regulators; as such this paper only offers a cursory perspective of emerging legal considerations within the mobile banking context as it relates to MFIs.