This paper argues that efficient and cheaper methods of providing financial services, such as electronic banking (e-banking) services should also be offered to microfinance clients. The paper:
* Presents an overview of the microfinance industry in the Philippines, as well as the recent developments of commercialization, competition and innovations in microfinance products and service delivery.
* Presents the following two cases of existing models wherein technological innovations of electronic banking are used to serve microfinance clients:
o The use of mobile telephones through the ââ?¬Å?short messaging servicesââ?¬? (SMS);
o The distribution of ââ?¬Å?automated teller machineââ?¬? (ATM) cards to microfinance clients.
* Takes a closer look at the implication for regulation particularly by the Bangko Sentral ng Pilipinas (BSP).
* Discusses the direction of policy, existing relevant regulations and rules.
The paper concludes that:
* Innovations undertaken by microfinance institutions (MFIs) in the Philippines consider the unique characteristics of poor and low-income clients;
* Innovations in the field of electronic banking will more effectively and appropriately reach the needs of this market;
* The following factors promise a bright future insofar as reaching the poor through electronic banking is concerned:
o The regulatory approach of the BSP,
o The receptiveness of the existing market as well as the potential users of the e-banking products;
* By carefully managing all these factors, the future will open wide opportunities for expanded outreach and usage as well as increased diversification of services.
