Rarely a day goes by without someone mentioning how financial inclusion can be boosted by new delivery channels. Yet for all the talk about reaching the “unbanked” and other low-income groups, it is banks, mobile operators, and retailers that have been experimenting with new delivery systems to reach the poor. As the group that is closest to the niche segment, microfinance institutions (MFIs) seem conspicuously absent from the discussion. Or are they? Based on research, it appears that while some experimentation is indeed occurring, significant obstacles remain.

This paper outlines ten challenges that are holding MFIs back from deploying alternative channels and provides a roadmap for MFIs—and broader stakeholders—who seek to overcome these hurdles. The paper concludes with a description of competitive advantages that MFIs have in this space to make them more effective in reaching low-income groups using innovative channels.

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