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Microfinance Mobile Advantages

It seems that the technological future lies in cell phones. Each Smartphone has more processing power than the computers that landed a man on the moon. They are a TV, radio, computer, game console, camera, diary, and lately they are also taking over the role of traditional banks and even cash. Specialized applications allow us to send and receive money, buy stocks, pay bills or even pay for groceries - all in one instrument that fits in our pockets. Technological advances has now made Smartphones cheaper than ever, and basic versions can be mass produced and distribute among third world countries.

But why would a villager in Uganda need a Smartphone for? Even in the modern world, physically going to the bank to perform certain actions is an ordeal; now imagine if the trip to the bank would have taken hours instead of minutes, only to be greeted by a long queue. Meanwhile, taking the day off to go to the bank instead of tending to your land literally takes food away from your family. After a long wait in line you get to the bank teller only to find out that your account has been chipped away slowly by various fees over which you have no control. You than decide to pull out what little you have left and vow never to go back, knowing that even submitting a request to close the account will perish the change you managed to salvage. Wouldn’t it be easier just to pull your phone out of pocket instead? Get frequent SMS’s about your account statues and being able to formulate the right plan according to you needs and resources with flexibility and ease without leaving your home and 24/7?

While at the present, the application of mobile banking is still somewhat limited, the potential is vast. Sure, the obstacles are significant – specifically when it comes to infrastructure and stability, but the rewards are even greater. Mobile banking can be a way of introducing microfinance to a larger crowd in developing countries, helping them get out of poverty while encouraging employment and growth in doing so. On top of the increased outreach, mobile banking can significantly reduce costs of MFI’s which will in turn manifest into better loan terms for the poor.

Already today, poor people in countries like Kenya are being introduced to the advantages of mobile banking through services like M-PESA; an increasing number regards it as a safe & fast way to send money home when needed. The move from transfer to loans seems only natural - it’s traceable, easy to review, transparent and quick. Through mobile banking, more people will be able to get loans and return them faster; giving them that extra inch that might push them into greater success.

For us, “regular” people in developed countries – mobile banking is already the present but for them it’s the future.

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