The Inter-American Development Bank’s Multilateral Investment Fund (MIF) has approved a $3.95 million grant for a program to promote innovative technology solutions that expand access to financial services in Latin America and the Caribbean.
The program, with a total cost of $10 million, will consist of a series of individual projects that directly increase access to finance, reduce operational costs, or help deliver new financial products. These projects will be designed and implemented by microfinance institutions.
Several rounds of calls for proposals —the first one in early 2010—, will help select individual projects based on their innovation and their capacity to achieve measurable results.
Institutions will initially be asked to submit project ideas. The selected institutions will get support from the program to develop a technology strategy and a project proposal. A second selection process will determine which of the proposals will be implemented.
The goal of the overall program is to provide first-time access to credit to 250,000 microentrepreneurs or low-income individuals.
“Technology can play a crucial role in extending the reach of financial services in the region” said MIF General Manager Julie T. Katzman. “Technologies such as mobile banking or simpler banking software applications can help reduce costs and reach more people. We hope this program will stimulate new thinking on innovative solutions and uses of technology that help truly massify the reach of microfinance institutions.”
The program was launched at the Inter-American Forum on Microenterprise (Foromic), held in Arequipa, Peru, with an open-microphone workshop where microfinance institutions shared their needs and concerns on the use of new technologies to expand access to financial services. Feedback gathered during the workshop is helping MIF define the selection criteria so the program meets the needs of the microfinance community.
A strong emphasis will be placed on capturing and sharing the knowledge obtained during the implementation of each project. Knowledge sharing will be promoted through an online community portal where institutions can present and discuss ideas, submit their project proposals, and share their experience executing their projects
The MIF, an autonomous fund administered by the IDB, has been a major supporter of microfinance innovation in Latin America and the Caribbean since 1993. The IDB is the main source of long-term financing for economic and social development in the region.