Digital Transformation in Microfinance: Impacts on Outreach and Efficiency

Abstract

Microfinance institutions (MFIs) have been instrumental in improving financial inclusion among underserved communities. However, traditional approaches are often limited by high costs, operational inefficiencies, and geographic inaccessibility. Digital transformation, encompassing tools like mobile banking, artificial intelligence (AI), blockchain, and big data, has addressed these challenges, enhancing outreach and efficiency. This article explores the transformative impact of digital technologies on microfinance, supported by empirical data and case studies from global and regional perspectives. Challenges such as digital illiteracy, cybersecurity risks, and infrastructure limitations are discussed, alongside future trends in digital microfinance.