Innovation in Microfinance From Rapidshare_4 pdf

Information Technology Innovations That Extend Rural Microfinance Outreach 177 ments in branch networks, can turn offices from a cost centre into outlets that generate profit. Additionally, the data that is collected through these electronic transactions can then be used to lower the cost of capital through improved portfo- lio reporting, faster capital turnover, market segmentation, investments, and secu- ritisation. Consortium Model The consortium approach enables members to contribute resources such as time, money, expertise, and credibility in a way that no individual member could achieve alone. This approach has had tremendous success in creating industry standards, protocols, and shared software solutions in both the technology and formal financial sectors. Visa International, Bluetooth, Apache, and the Fair Isaac 3 data consortium are private sector examples of successful collaboration among competitors that has expanded markets and services for all consortium members. The primary example in the microfinance industry today is the Hewlett Packard (HP) led MFT 4 initiative that resulted in the remote transaction system (RTS), a front-end delivery solution available under an open source license. This is a major step forward for the industry, eliminating duplication in devel- oping delivery channel systems, sharing lessons from implementing last mile solu- tions, and gaining the momentum necessary to serve as a catalyst. Other collabora- tive open source initiatives are underway to develop a core management informa- tion system and standard credit bureau management system, both being led by the Grameen Technology Center. The anticipated results of these efforts is a common public good—open source software licences 5 that can create new business oppor- tunities by using the technology or providing support services. The consortium model lends itself to sharing credit and transaction histories that can be used to assess risk and build scoring models for underserved customer profiles. Although a common practice in formal finance, there has been little or no sharing of customer data for building scoring models in microfinance. Supporting an industry serving a billion customers will require a significant shift from time- intensive customer screening processes towards high-volume decision making processes, which is achievable only with automated scoring. Electronic transac- 3 The Bluetooth consortium created the Bluetooth standard for hardware devices to transfer data over a short range wireless connection. Apache is an open source web server application created by the Apache Group, which later became the Apache Software Foundation. Fair, Isaac and Company, Inc. is a leading developer and producer of credit scoring tables and associated products. They created a consortium of banks in the US to provide their data to help build and test these products, which the members can then use in their credit businesses. 4 Microfinance Development Team. 5 Open source software in essence is free to anyone that wants to use it as long as they adhere to the restrictions outlined in the licence. 178 Laura I. Frederick tions increasingly provide the data that makes scoring models possible. The next step requires a willingness and commitment among microfinance institutions to share data sets and develop mutually useful scoring based on country, regional or customer profiles. Aggregated Outsourced Services Model An institution that can afford only one information technology (IT) staff member, or even a small team, assumes a great deal of risk. This person or persons will not always be available due to sickness, vacation, outside obligations, and other priori- ties. In addition, information technology has become complex and broad, often requiring considerable specialisation, making it difficult to be a generalist in the field. It is unrealistic to rely on one person or a small team to help an institution analyse all ICT options available, or to expect a team to remain up-to-date on the technology of greatest value to the business. IT staff in an organisation are usually so focused on day-to-day operations that they have little time to think strategically. By outsourcing certain IT activities such as application or database manage- ment, network support, end of day processing, or backing-up and archiving tasks, internal IT departments do not require deep or broad skill sets. Also, outsourcing enables the internal team to focus on optimising business value and on the strate- gic thinking that the institution requires from those who are familiar with opera- tions as well as technology. Outsourcing discreet activities can lower overall ex- penses while simultaneously allowing the microfinance institution to apply its limited resources to its core business, such as improving product portfolios and providing higher quality customer service. Strengths and Weakness of Collaboration Although these models of collaboration have proved successful for microfinance institutions, they are not without risks. The key is managing risks effectively, which requires commitment and attention. Collaboration will expand opportunities for everyone involved: to make them work successfully they must be well- managed with incentives properly aligned from the start. Building a delivery channel network requires time and resources to determine the criteria or profile for the channel partner, conduct due diligence, build relation- ships and establish working agreements with good partners. Policies and their enforcement must be established regarding liability, liquidity management, secu- rity of handling cash, customer service levels, reconciliation, settlement, compen- sation, training, support, and quality control. Cultural differences in customer bases can be a problem, making market research on client behaviour essential throughout. The regulatory requirements of working with third-party agents must be understood, adhered to and in some cases changed. Institutions should follow international standards and precedents to make sure all risks are properly ad- Information Technology Innovations That Extend Rural Microfinance Outreach 179 dressed. In countries lacking laws regarding third-party agents, such guidelines can help establish standards. Creation and management of a consortium is time-consuming, especially in the early stages when commitments are made regarding working principles, overall objectives, and exit strategies for all participants. To be successful, the potential impact and value of the final results must be aligned with the objectives of all members of the consortium. A common vision and guiding principles for working together are an essential starting point, but relationships are truly built by promot- ing the principles and dedicating time and attention to them. Outsourced service models also require due diligence to identify the partner with the right technology and the highest possible quality of service. If the tech- nology provider is not committed to the results of the MF providers, the relation- ship is unlikely to be viable. Outsourced ICT services create dependency on exter- nal partners if the business is to survive as it grows in complexity. This position may be uncomfortable for institutions that are accustomed to operating independ- ently. This makes due diligence on vendors critical. Clear contracts defining the responsibilities and commitments of each entity are essential. All these partnership models contain the potential risk of falling apart before gains are realised. The most effective means of managing this risk is to require, from the start, a clear understanding of the intended purpose or benefits of the collaboration, authentic commitment to the process, and agreements or covenants to guide the work. Given this risk, the most common driver of collaboration is cost savings. Many microfinance providers cannot afford to create new IT solutions or to pay for the infrastructure required to expand operations, especially into rural areas. This key resource driver provides the essential rationale for overcoming the challenges and risks of collaboration. Collaboration provides a higher likelihood that institutions can obtain access to the most appropriate technologies without commitments to on-going development and investment in specialised expertise. Additionally, collaboration makes it possible for institutions to leverage fully their investment in information communication technology. In summary, collaboration enables MF providers to use technology creatively to expand operations without incurring the full cost of ownership. Examples of the Potential of Information Technology Partnerships in Rural Microfinance Outreach Operating in rural areas is difficult and expensive given low population density, long distances and travel time that lower staff productivity and raise costs or risks associated with moving cash, limited market access, and lower savings and bor- rowing capacities. Historically, telecommunication and power infrastructure is underdeveloped in rural areas. Each of these factors increases costs. Furthermore, the traditional space-based model of growth by expansion, by establishing more branch offices, is capital intensive and expensive to maintain, requiring higher 180 Laura I. Frederick transaction volumes to be sustainable. This cost structure limits the areas into which microfinance providers can expand, making it very difficult to reach rural populations. This section provides examples of the three models that are overcom- ing these barriers. Model 1: Delivery Channel Networks Several emerging IT solutions to support alternative delivery models demonstrate the potential to contribute to the scaling-up of microfinance. Most noteworthy is the creation of merchant networks using PoS and mobile solutions or ATM networks to expand access to cash transactions, payment and other financial services. Addition- ally short messaging systems (SMS), interactive voice response (IVR), and internet banking options make it easier and more convenient for customers to access account information, apply for new products or services, and perform financial transactions. All of these options offer different benefits and cost structures must be analysed to determine the strategic value of each in the local context. A growing number of businesses are working to build solutions that support use of third party delivery channels. FERLO, a technology company in Senegal, has established separate private merchant networks for three cooperatives using PoS devices for prepaid services. Teba Bank in South Africa has pilot-tested a PoS solution enabling salaried workers and pensioners to purchase items, top-up airtime and make cash withdrawals through a merchant network. SMART Communications in the Philippines began in 2004 to offer remittance services – Smart Money and Smart Padala—using SMS messaging. MABS, a USAID pro- ject in the Philippines, is working with four rural banks, members of the rural bankers association, and two telecommunications companies, including SMART Communications and also GLOBE, which offers G-Cash, that have developed a chain of outlets to pilot test loan payment and remittance services using SMS messaging via mobile phones. In a recent study of microenterprise borrowers in the Philippines, 93% 6 had a mobile phone or a family member with one, making this approach viable. In Latin America, a growing number of cyber centre networks offer services to microfinance service providers, small and medium sized enterprises or other busi- nesses interested in delivering products and services to customers in urban slums (‘barrios’) and rural villages, creating yet another type of channel. Major banks in Brazil have developed nearly 30,000 points of service in every municipality in the country, making it possible to open accounts and access savings, credit, money transfers, insurance, government benefits, bill payment and other services. By combining technology (in this case PoS devices and PCs) at postal and lottery outlets and retail shops such as groceries stores, drug stores and butchers, the 6 Of these, 68% had a mobile phone and the other 25% had a family member with a mobile phone. Information Technology Innovations That Extend Rural Microfinance Outreach 181 banks now serve every town in Brazil, some of which can be reached only by plane or boat. Vodafone is working with its African subsidiaries, Safaricom in Kenya and Vodacom in Tanzania, to transmit financial transactions through cellular net- works. Safaricom and Vodacom airtime shop dealers will use either a mobile phone or a point of sale device in the store to complete transactions. Vodafone’s subsidiaries leverage a bank partner for clearinghouse services and work with FAULU, an MFI, to pilot test the solution with their customers. Using their chain of airtime shops as outlets, Vodafone affiliates will offer loan payments to pilot test the initiative, which will be extended to include bill payments, checking credit information, and transmission of loan requests. The technology leverages Voda- fone’s SMS platform as well as mobile phone and PoS technology. HP, in conjunction with the MFT consortium, has been working with three MFIs in Uganda to pilot-test a remote transaction system (RTS) that leverages web services, smart cards, and PoS devices. The technology supports loan pay- ments, savings deposits, transfers, and withdrawals offline and online. An MF partner, Uganda Microfinance Union (MFO), has used the solution to build a net- work of independent third-party merchants in operation since January 2005. 7 ICICI Bank in India has built a network of 1500 village kiosk operators who re- sell ICICI’s insurance products. Operators were selected who had an existing business with a physical location, demonstrated an entrepreneurial attitude, and were respected and trusted in the community. The kiosk consists of a personal computer with an internet connection, a printer and a web camera. ICICI Bank built a web-based application for entering insurance requests as well as an online banking interface. The operator network is also a disbursement location for money orders paying out insurance claims. ICICI plans to offer other types of financial transactions through this network. The operators are free to use the equipment and connection to offer, and charge for, other services important to the community. In all these scenarios an agent takes or gives cash, making these outlets cash in- put or output points. The agent model relies on liquidity management by the agent as well as the capacity to manage cash surpluses or shortages. In essence, the third-party merchant model rotates cash in rural areas and electronically in the capital city, limiting the movement of cash between urban and rural areas. Through these points of access customers can put cash in, take cash out, or con- duct cashless transactions, which helps the rural poor to manage their liquidity. An alternative example of a delivery channel is the strategic partnership of echange, LLC and Centro AFIN. 8 Centro AFIN is a private institution that con- tributes to the development and consolidation of the financial industry in Latin 7 See Janine Firpo, “Banking the Unbanked: Issues in Designing Technology to Deliver Financial Services to the Poor” in this volume. 8 Centro AFIN was founded in 2002 and is comprised of ACCION International, FINRURAL, BANCOSOL, CAF, DGRV, ECOLF Peru, FONDESIF, AGROCAPITAL and FUNDA-PRO, all of which are involved in microfinance. 182 Laura I. Frederick America and the Caribbean, primarily by providing professional development services. Through an Inter-American Development Bank (IADB) grant, echange developed two e-learning courses. One is CD-ROM-based, coupled with facili- tated discussions designed for loan officers dealing with delinquency manage- ment. The second is an on-line customer service course for branch managers, which incorporates facilitated chat sessions and web-based tools for launching a customer service initiative. Through this partnership, AFIN can offer MF providers affordable, high qual- ity, results-based training without having to develop the courses themselves. In addition, the MF employees do not have to leave their places of work, can incor- porate their learning into their workflow, and apply course content immediately. Through this training method, MF providers can ensure the quality of the content and course delivery, have direct knowledge of participant progress, and measure performance improvements quickly. In an institution trying to expand rapidly, services that ensure staff are well equipped to perform their jobs is very important. Distance learning, especially through a strategic partnership such as this, provides that possibility. Model 2: Consortium In August 2002 HP convened a group of eight public and private organisations 9 interested in scaling up the delivery of microfinance services. The group’s form and process was influenced by the approach Dee Hock used to launch the Visa International model in the 1960s. Early conversations led the consortium to a breakthrough that could be shared with the entire microfinance industry, acknowl- edging that a cross-industry approach would be required. This group envisaged a next generation transaction processing infrastructure that could connect individual customer transactions with global financial systems, creating a true last mile link. The key requirements were that it adhere to existing data standards, be affordable, scalable and ultimately accessible to all interested parties. The consortium worked for nearly three years following a methodical process of business analysis, identification of requirements and technology specification, followed by development and testing. RTS is now available under an open source license issued by Sevak Solutions, a non-profit corporation created by the MFT consortium to hold the technology as intellectual property and provide coordination and leadership for its development. In addition, Sevak is working on national transacting systems to support stronger and deeper rural financial systems to serve the poor. Grameen Foundation, through Grameen Technology Center, a member of the MFT consortium, is leading two further efforts to develop open source applica- 9 Microfinance Development Team – ACCION International, Bizcredit, echange, FINCA International, Freedom from Hunger, Grameen Technology Center, Hewlett Packard, and Pride Africa. Information Technology Innovations That Extend Rural Microfinance Outreach 183 tions that scale up microfinance service delivery. One is building a core manage- ment information system that will facilitate easy localisation, flexible configura- tion and still connect with the larger financial system. Mifos, as it is called, will be available for local installation, client-server, or web based usage. They have or- ganised a product development group of MFIs to help define requirements and pilot-test the technology. The second application, developed in collaboration with PlaNet Finance, will help create dedicated microfinance credit bureaus. The pilot country is Morocco, where nearly two dozen MFIs are testing the service and the technology. Both of these initiatives adhere to and propagate industry standard data protocols. Broader collaborations being defined will include alignment with a number of large micro- finance institutions or networks as well as local vendors for localisation and im- plementation. A key advantage of open source solutions is that they move companies away from making money on software licences towards business models that deliver technology. Open source development holds out the promise of creating shared knowledge for the key players in automating microfinance operations 10 that can create a common framework to support new models of access. Investments in development of software solutions are still required, but at a lower cost that ex- cludes marketing and intellectual property protection costs. This benefits the entire industry, not just one institution. Companies that have built their business strategy around open source solutions will also be motivated to support on-going development. The overall social return on investment for the main sponsors of an open source solution is generated by its broader use. A primary goal of the open source work that the MFT and the Grameen Technology Center have undertaken is to help the industry establish a set of low-cost, adaptable solutions that will eventually produce a shared, integrated, and flourishing network of financial institutions serving the poor. Model 3: Aggregated Outsourced Services A broad range of technologies is available to improve microfinance operations and services. Consequently, an MF provider could not afford to have all the required expertise in-house, especially where IT skills command a premium. While generic skills such as network administration are readily available locally, others, such as financial MIS expertise, require specialised skills that are harder to find. MF provid- ers that plan to scale-up operations in a sustainable manner will need alternative means to support their information technology. If only a few institutions in one area outsource these services, the aggregate effect could be sufficient to build a viable local support business. Such a firm can provide more sophisticated and reliable services at a lower price than each institution could previously sustain on its own. 10 Dailey, James and McKiernan, Lynn, “The Case for Automating Microfinance With An Open Source Architecture,” The Grameen Technology Center, 2003, p. 25. 184 Laura I. Frederick The types of aggregated services well suited for outsourcing include: hosting services, application or database management, and local area network (LAN) sup- port, as well as external telecommunication services to create a wide area network (WAN) for sharing information across an organisation. Through reliable connec- tivity, the location of the servers – in the offices of the MFI, the application sup- port team, or a hosting provider – becomes less relevant as long as users and the technical team can access the system, offering more flexibility and better data management. MF providers that can reliably access IT solutions through an aggre- gated model will have lower capital and recurring costs, the opportunity to up- grade software more seamlessly, and more management time to build the business. The power of an electronically connected organisation is measured best through improved risk management, efficient information sharing, employee coordination, greater productivity, lower communication costs, and lower IT management costs. For organisations that are regulated, a connectivity strategy is imperative in order to determine accurately and easily their financial condition on a daily basis and for on-time reporting. Being fully connected through a wide area network is a requirement for any institution that wants to leverage front-end delivery tech- nologies, such as PoS devices, ATMs, SMS messaging or interactive voice re- sponse systems. Telecommunication companies such as Bushnet in Africa are working to ex- tend wireless infrastructure deep into rural areas by using appropriate, leading- edge technology that is accessible and affordable for any size of microfinance provider. In 2004, Bushnet helped four microfinance providers in Uganda to implement wide area networks, connecting more than 50 branches across the coun- try. Some of these institutions are NGOs that are becoming regulated, which is the primary rationale for their investment in technology. In addition, Bushnet offers local area networking services, reliable hosting or backup services, and some application support for its RTS partners in Uganda. Established local technology firms with reliable services are usually a better investment of limited IT re- sources than MF providers that try to maintain the skills and necessary environ- ment in-house. Opportunity International Bank of Malawi (OIBM) uses the Temenos eMerge management information system. In-house IT staff support and manage new ini- tiatives, but they outsource end-of-day processing and application management support services to Bastion. Using a remote connection, Temenos eMerge experts in South Africa oversee processing and back-up activities of the servers in Ma- lawi. The OIBM IT staff can leave the office at a reasonable hour assured that the system will be ready to go in the morning. Bastion support is quickly available if problems arise that the in-house team cannot handle or if new functionality is accessed. Bastion also trains new OIBM IT personnel. This arrangement is cheaper and more reliable than maintaining the expertise in-house. A final example, Microbanx, offers an MIS application—COBIS—to custom- ers off site. Pricing is based on the number of active client accounts rather than the user license fees traditionally charged by software vendors. Microbanx offers a Information Technology Innovations That Extend Rural Microfinance Outreach 185 full range of services including application hosting, management, data security, reliable power, data back-ups, mirroring 11 and connectivity for all branches for a monthly fee with no upfront capital investment. Microbanx’s offices (and servers) in Ecuador serve customers throughout Latin America and the US. This applica- tion service provider (ASP) model significantly reduces internal IT skill require- ments, especially at branches, and provides a flexible information infrastructure that can easily be scaled up. Beyond this handful of examples, an informal mapping exercise by CGAP counted at least 63 financial institutions in 33 countries using ATMs, PoS, mobile phones or PC banking to serve poor people. Of these, 46 are universal banks. While there is still much to be learned and proved, especially regarding sustain- ability, a trend has been established. Considerable effort is required to scale up and replicate these pilot efforts. Challenges and Opportunities for IT to Improve Rural Microfinance Outreach The promise of technology to make breakthroughs in delivering microfinance is quite encouraging in spite of near-term obstacles. The greatest barrier to informa- tion technology is generally its cost. A key element of models described here is the leverage of existing and emerging infrastructures, such as chain outlets, tele- communications or even electric power. Sharing infrastructure reduces costs, fa- cilitating delivery of financial products and services to rural areas. Sharing these services incurs minimal risks compared to the dependence on similar services such as roads and water. Our collective challenge remains reducing the cost of transac- tions so that institutions can process small transactions profitably in remote areas. While many IT pilot projects have been conducted over the last 10 years in the microfinance industry, adoption and adaptation of these models has been limited. The cause is simply a lack of awareness about the initiatives and the technology. Those institutions that are aware do not have the expertise to explore or apply the ideas. In some cases a lack of understanding about technologies coupled with a fear of exposing this knowledge gap restrains progress. In other cases, a lack of resources to fund research or a pilot initiative is the excuse. As is typical to all industries, there are early adopters and innovators followed by far greater numbers that are risk averse and doing “business as usual”, even when indicators show that the market is changing. Funds for researching and developing new business mod- els, products and partnerships, additional advocacy and education are required to overcome these barriers and facilitate more rapid adoption of these three models of collaboration. 11 Mirroring is the replication of a server for faster recovery in the event that information or applications on the main server are lost or damaged. 186 Laura I. Frederick To date, no regulatory body has completely blocked the use of third-party mer- chant networks to deliver financial services. Each institution should examine local regulations to determine whether this type of partnership model can be used. Gen- erally, if the formal financial sector is leveraging these types of partnerships and IT solutions, it should be possible for a microfinance provider to make a plausible case to do likewise. This regulatory due diligence should be part of the exploratory and design phase of the initiative. In addition, if an institution follows the risk management principles for e-banking and related resources provided by the Basel Committee 12 on Banking Supervision (2003) as a framework for their delivery services model, the auditors, investors and regulators are likely to be comfortable. Products and Transaction Volume Transaction volumes are low and outreach-per-customer is relatively expensive in rural areas. Reaching “the last mile” requires a diversity of new products and a range of services that can be delivered through a single access point online and offline. A limited range of financial transactions, such as loan payments and sav- ings deposits alone, will not cover the capital and recurring costs of the delivery channel. Additional transactions, such as utility or pension payments, purchasing of airtime, or even health care or e-government services, can be added to cover the costs of the delivery channel in remote areas. The more points of access and diver- sity of products an institution can create to increase frequency of usage raises the overall value of a shared network, justifying the initial capital investments. To be truly competitive, MF providers must shift their thinking from being a provider of products to being a provider of services for an array of activities that people at the bottom of the pyramid engage in nearly every day. These services must be provided when and where people want them, not where it is most conven- ient for the provider. These services may include purchasing raw material or agri- cultural inputs, paying for health services or insurance, educational and communi- cation services, e-government or business development services, pension or re- tirement opportunities, household goods, and home improvements. Technology Cellular and wireless infrastructures are opening wide possibilities for alternative service delivery models. However, there are still a number of challenges such as poor fixed telecommunication lines outside capital cities, limited reach of wireless networks, low bandwidth, and high usage fees. In 2001, the number of mobile phones surpassed the number of fixed lines globally, and there are more mobile phones in developing countries than in industrialised countries. The growth of internet access is somewhat slower but steady, demonstrating exponential growth 12 www.bis.org/publ/bcbs98.htm, www.bis.org/publ/cpss68.htm. [...]... services in industrialised countries It is an answer that focuses on the role of technology in achieving scale in microfinance Defining the Problem, Identifying a Potential Solution The MFT started their weekly conference calls in August 2002 by exploring the state of the microfinance industry What obstacles kept the industry from achiev2 The Microdevelopment Finance Team (MFT) included participants from. .. The costs of building the infrastructure to support this enabling technology is beyond the capacity of individual MFIs A growing number of microfinance practitioners and leaders are beginning to embrace concepts supported by these lessons – namely, that reaching significant scale in microfinance is likely to require changes in existing business operations and procedures, in standardising the collection...Information Technology Innovations That Extend Rural Microfinance Outreach 187 since 2000 Growth has been concentrated in industrialised countries, but is gaining momentum elsewhere In South Asia, Latin America, the Caribbean, the Middle East and in North Africa internet access is surpassing mobile phone access.13 Growth has been primarily in urban areas, widening the communication... solution on existing business processes, without first rethinking those procedures, can increase rather than diminish the cost and complexity of doing business Information technology provides the opportunity to update and introduce innovative business processes Through such innovation, technology can be a lever that creates the potential for an industry to achieve dramatic increases in scale 3 Complete... Expensive to own and operate Requires integrated systems Maintenance and replenishing cash is costly Security issues (including transport of cash) 17 Seminar Summary Report, “Information Technology as a strategic tool for microfinance in Africa,” AfriCap, November 2004, p.47-48 Information Technology Innovations That Extend Rural Microfinance Outreach 191 Table 1 (continued) Technology Mobile Branches... provides much of the impetus for IT innovations However, the true power to scale up lies not in the technology, but in the new business models and partnerships that technology enables Reaching significant scale and increasing outreach to rural areas occurs only through collaboration to resolve issues, thinking differently about them, and making innovations in the way financial products and services are... 2002 Information Technology Innovations That Extend Rural Microfinance Outreach 189 ing an IT solution is not like managing any other project because technical and organisational risks must be managed aggressively to stay on time and within budget Paying for this expertise from the outset saves money in the long run; not having expertise in place causes problems, delays, budget increases and puts institutional... lessons from a combination of results generated by the pilot in Uganda, similar initiatives conducted in other countries, and analysis of both the microfinance and finance industries Conclusions based on these lessons pushed the team to think in new ways Technology Combined with Business Process Change Yields the Greatest Return A powerful lesson that emerged from the three pilot projects is that overlaying... Global Multisector Initiatives at Hewlett-Packard 1 McKinsey & Company, 2005 196 Janine Firpo The outcome of the consortium’s work was unexpected Results came from a combination of multi-sector inquiry, research into other global initiatives, and findings on the ground in Uganda The financial analysis conducted at the conclusion of the pilots pointed to a new direction that microfinance could take... asked themselves With financial support from the United States Agency for International Development (USAID) and HP, this consortium engaged in three pilot projects in Uganda to determine the role technology could play in increasing the reach of microfinance * Janine Firpo (jfirpo@semba.com) is the founder of SEMBA Consulting and chair of Sevak She led the activity described in this paper while she . Seminar Summary Report, “Information Technology as a strategic tool for microfinance in Africa,” AfriCap, November 20 04, p .47 -48 . Information Technology Innovations That Extend Rural Microfinance. essential to ex- panding the sector to new heights. Results-based development and training should be required: investments in training create business value, as do investments in in- formation technology major step forward for the industry, eliminating duplication in devel- oping delivery channel systems, sharing lessons from implementing last mile solu- tions, and gaining the momentum necessary