The microfinance industry has always relied on technology. And there are two primary benefits that the industry gets from technology:
- Cutting the costs of transactions to be competitive and offer customers affordable services.
- Bringing the services to where the customers are.
The traditional method of service delivery is to have the customer come to the service provider. One of the ongoing trends is to use technology to turn this procedure.
Adopting new technologies to cut costs
One technology that is proving very useful in cutting costs and bringing services closer to the end user is blockchain. The specific ways it is helping to make services affordable including or significantly cutting the budget that goes into storing, processing and securing user data. It is the first open source technology to do this so effectively.
Also, the technology supports the creation of user profiles and movement of value across international borders at low costs. What’s more, the technology supports robust smart contract applications.
The other technological change that is affecting the effectiveness of microfinance is the spread of mobile devices. With ownership of mobile phones being very high even in the poorest regions of the globe, service providers have focused on changing the device into a powerful point of financial service delivery.
A move to P2P lending
Oliver lives in London, UK, and has money in a bank account but does not need it immediately. However, he does not mind making more money through what he has in the account. Meanwhile, Manu, a small trader in Mumbai, India has struggled to meet the needs of his growing clientele. He lacks the capital to expand his business.
Manu would find Oliver’s idle money very helpful. In return, Oliver will have a share in the profits Manu makes. But for the transaction to happen between the two, they have to learn about each other, and most important tools to facilitate the transaction must be available.
And that is where microfinance is moving – to an era where individuals and businesses can get financial services from other individuals and business entities. Technology is providing tools for matching borrowers and lenders. And even more important – the tools for creating contracts that execute accordingly.
The market potential
Meanwhile, the market for microfinance is significant. Globally there are over 1.7 billion people who cannot access financial services from traditional service providers. But these people do create value through small scale economic activities.
Some estimates put the value that is generated by the world’s unbanked and underbanked to be in the range of close to $400 billion. There are many players within the space offering a variety of services. AssetStream is a new P2P lending platform with a keen interest in keeping in touch with current trends.
How to become a part of microfinancing trends
There are limited ways for an ordinary person to invest in the microfinance industry. AssetStream offers you that opportunity in their ongoing token crowdsale. Sign up and claim your part.
Disclaimer: This is a guest article. The views, opinions and positions expressed within it are those of the author alone and do not represent those of Cryptopolitan. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.
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