Technology Adoption by Rural Financial Institutions/ Micro Finance Institutions – Determinants, Status and Strategies

The pace of economic development in our country is largely dependent on inclusiveness of rural areas in this process. Rural financial institutions (RFIs) and microfinance institutions (MFIs) have become an integral part of the financial landscape, and can play an important role in this regard. Technology occupies a crucial position in the process of development in modern times. The RFIs/MFIs are also required to leverage the technology to remain relevant, competitive and financially viable. This has necessitated the use of available technology to increase their outreach and expand their business. However, the socio-economic features of their clients are quite different from those in urban areas. This requires these institutions to employ suitable strategies so as to ensure adoption of technology by their clients. This paper discusses various determinants like impact of government policies and infrastructure developments, which could potentially influence these institutions and aid the diffusion of technology. The strategies adopted by these institutions for expansion of technology and the use of payment system have also been discussed in the paper. It also provides some suggestions for adoption of technology by these institutions in the days ahead.