[2013] JARAMILLO, Miguel. Latin American Innovations in Microfinance Technology. ELLA. Economic Development, Productivity and Finance, Policy Brief 1.

Since microfinance is based on small loans with no formal information and no real guarantees, technology plays a key role in lowering transaction costs and increasing profitability. In this Brief, we understand technology in a broad sense, not only focusing on technological advances in equipment, but in the personnel, processes and procedures that make use of these advances. This Brief provides an overview of how the microfinance business is organised at an operational level and the role that basic technologies have played in making it a viable activity in Latin America. We also show practices that, when coupled with an effective use of equipment, have been quite successful, contributing to the development of microfinance itself, and making microfinance a business of scale in the region, focusing on operations related to decentralised decision making, long-term client relationships and diversified products. Finally, we outline enabling factors that facilitated the adaptation of technologies and effective operations and the lessons learned in the process.