With financial inclusion and cashless transactions as goals set by the government, technological development is the crucial answer to the challenge posed by last mile access in India. In the creation of a comprehensive financial inclusion therefore use of technology, digital access technology in particular, could be the answer to the riddle.

The challenge for the financial institutions like microfinance institutions (MFIs) that are specially designed to deal with the masses is even more acute. Not only do they have to deal with physical access issues like roads that vanish during the monsoon, hostile terrain that can only be negotiated by hiking, they also have to face qualitative issues of various hues like, non-functional literacy and total lack of awareness. Taken together they create a formidable barrier to the functioning of the MFIs.

However, things have started to turn around with a) the rapid development in the digital technology and development of various apps suitable for use in this sector, and b) the government’s initiative in linking even hostile terrain through digital connections. The government initiatives like Aadhar has made the task even easier by facilitating KYC and direct transfer of benefits.

According to MFIN data, total number of microfinance accounts increased 21.9 per cent to reach 9.33 crore. NBFCs took a lion’s share. Gross loan portfolio (GLP) reached Rs 1,87,386 crore with year on year growth of a whopping 38 per cent. The growth is ascribed to increased awareness of benefits accruing from institutional finance and of course, the ease of transaction resulting from digital technology.

In the completely paper based system, the turn around time was considerable due to the paperwork involved in the process of application and approval. In the current technologically evolved scenario, documents are getting uploaded digitally making centralized processing fast and easy. Tracking of disbursements and repayment flow has also turned easier and faster making the whole process a win-win for both the institutions and the customers.

A large number of MFIs have turned their entire disbursement process completely digital and cashless. In so far as repayment flow is concerned, the process of digitization is progressing in fits and starts, as the penetration of smart phones in the hands of the customers has yet to pick up momentum specially among the more poorer of the target segment as the hardware has yet to become affordable for them.

Be that as it may, the fact that the digital technology in the hands of the MFIs has enabled them to break through the issue of access and faster turn around of loan disbursement is undeniable. With tab based technology creation of awareness, a major component in the financial inclusion mission, has also become less dependent on the skills of MFI staff. With awareness content loaded tabs, the process of training is also becoming smoother, more homogeneous and less dependent on staff specific training skill.

Going forward and with digital platform based payment facilities, it is further expected that cash transactions would be minimised to such an extent that even where carrying cash is difficult MFIs will not be hindered from spreading their operations. This is expected to happen as the progress of digital technology has reached a stage where most of the paperwork can be done digitally and the delivery of services can also take the same route. Therefore, with such progresses in technology, it’s now just a matter of time before the MFIs get to reach the saturated coverage level in the country.