Discussion Recommendation on the Usage of Digital Channels

Recommendation on the Usage of Digital Channels

Technology is the only way forward because without adopting technology, the microfinance institutions will not only lose the competitive edge over their competitors but also unable to take benefit of the opportunities which technical advancements can provide to the micro-finance institutions. With the latest technologies, the cost of the operation of the microfinance institution can be educated up to a lot of extents, for instance, recording the data using the latest technologies will reduce the expenses which the financial institutions spend on recording data manually. Not only manual data storage requires huge space and storage cost but also handling manual data is a complex task which results in a decline in profitability & overall efficiency of the financial institutions.

Through the latest technologies not only various tasks will be become automated but also the performance, efficiency and profitability of the Microfinance institutions will increase up to a lot of extents. The analytics software can be utilized for understanding the needs & preferences of the clients and the microfinance institutions will have the opportunities to serve their clients more efficiently. The latest analytic software has the potential to provide such information to the microfinance institutions which they might unable to gather manually. So one of the key benefits of using digital channels is that microfinance institutions can better serve their clients (Nayak, 2014).

There are 32 banks out of 39 in Egypt that are providing internet banking services. It means that in order to stay in the competition, the microfinance banks would have to use the digital channels. The percentage of customers who use e-wallet is nearly 30% which provides the opportunity to the microfinance institutions to implement digital channels so that the customers can get the benefit. When the customers are going to get convenience through technology than the clients of the microfinance institutions will definitely increase. There are many customers who use social media websites. Microfinance institutions can use the sites to get feedback from the clients so that they can serve them according to the feedback of the customers (Nayak, 2014).

Many case studies have shown the positive impact of digital finance. Many small entrepreneurs have taken benefit from mobile money. The transactions which are done through digital finance Services (DFS) are 25% less expensive than traditional transactions. Although there are many opportunities which the DFS provides to their clients; however, DFS raises many new problems as well, such as Security issues, network coverage in rural areas and inconvenient opening hours etc.  In rural areas, the perception of the DFS is not satisfactory. It is recommended to the relevant authorities to resolve the hurdles which are causing problems for the implementation of digital finance services. If the above-discussed hurdles are mitigated or controlled, then there are many opportunities from which both Microfinance institutions and their clients can take benefit.

 References of Recommendation on the Usage of Digital Channels

Nayak, B. B. (2014). The Synergy of Microfinance: Fighting Poverty by Moving beyond Credit. SAGE Publishing India.