Sevak Solutions is a non-profit which is researching practical means of using the latest technologies to improve the feasibility of delivering sustainable financial services to the rural poor … especially needed in places with lower population densities.

Microfinance has mostly flourished in higher-density rural and urban environments and has struggled to develop in lower population density locations. This is due to the critical need to keep the operational transaction costs low in order to keep the microloan interest rates low. Operational cost management is a critical issue when you are dealing with small loan transaction amounts on a high volume. Think how much more work would be involved in servicing a single $100, viagra 000 loan to one business (with monthly payments) vs. 1,000 loans of $100 each (with weekly payments.) Over a period of 90 days, the single larger business loan requires 4 customer interactions (1 loan disbursal and 3 loan payments.) Over 90 days, the microloans require 14,000 customer transactions (1,000 loan disbursals & 13 loan repayments for each of the outstanding loans.) So, you can imagine the need to keep the cost of each customer interaction/transaction as low as possible for microloans!

Sevak Solutions has been building what they call a Remote Transaction System which uses wireless technology (think: cell/mobile phones) to turn individuals into mobile ATMs and bank branches. This would allow a bank employee (or an agent) to interact/transact with customers in remote locations in a seamless manner. I understand that Omidyar Network has funded a trial of this technology in Africa to prove its viability.

I think that mobile technology, while initially gaining interest for low population density scenarios will also be invaluable as it is applied to other higher density market segments.