The impact of innovation and technology on microfinance sustainable governance

Abstract

Technical or social innovation, concerning also the creation and commercialization of new products, strategies and management, has a deep actual - and especially trendy - impact on microfinance institutions (MFIs), contributing to reshape their business model, with an impact on their overall risk profile. Innovation is mostly an opportunity even for MF risk mitigation, considering its pervasive impact on risk factors. This original analysis is addressing, in a multidisciplinary and innovative comprehensive way, apparently weakly related topics such as MF governance, and IT issues, within recessionary cycles. This hardly investigated frontier faces key trendy issues, which are likely to deeply reengineer the relationship among different stakeholders, as it has already happened, on a different and more sophisticated scale, with traditional banking. To the extent that technology (with access to Internet, social networks, cashless electronic payments, etc.) reshapes the equilibriums among different stakeholders, it is likely to have important – albeit under-investigated - corporate governance consequences, softening the conflicts of interest among stakeholders and reinforcing the business model, making it more resilient during recessions, with positive externalities on both sustainability and outreach.

The Role of Mobile Banking in the New Digital Financial Framework: A Literature Review

“…And being bank presence often limited to urban or highly populated areas, MNOs' extensive network may enhance bank efficiency in traditionally underserved areas at much lower cost (Ky et al, 2019, p. 6-7). In fact, if traditionally, banks provide cash-in/cash-out services via ATMs and bank branches, these solutions are too expensive to set up in markets that have low-income or low-density populations (Moro Visconti and Quirici, 2014).…”

“…Transactions are fast and easily done, around the clock, from anywhere in the world. These activities are more and more important for people who want to get information on their bank account or make a transaction as soon as possible(Moro Visconti and Quirici, 2014). Rapid development of mobile technologies enables clients to do these bank operations from their mobile phones.…”

The digital transformation of microfinance institutions: an empirical analysis

“…This suggests that digitization and social missions can harmonize. The existing body of literature also highlights the positive relationship between the application of digital solutions and the managerial capability of financial institutions (Moro Visconti and Quirici, 2014;Mora and Prior, 2018). Therefore, integrating digital…”

“…This suggests that digitization and social missions can harmonize. The existing body of the literature also highlights the positive relationship between the application of digital solutions and the managerial capability of financial institutions (Moro Visconti and Quirici, 2014; Mora and Prior, 2018). Therefore, integrating digital solutions into the business model proves to be a promising solution to solve the cost-related problems, which subsequently enables a higher level of profitability as well as lower interest rates.…”

Microfinance vs. traditional banking in developing countries

“…According to Moro Visconti and Quirici, (2014), technical or social innovation, also concerning the creation and commercialisation of new products, strategies and management, has a deep actual -and especially potential -impact on MFIs. This contributes reshaping their business model, with an impact on their overall risk profile.…”