Endnotes

¹ Snowball sampling is a special non-probability method used when the desired sample characteristic is rare. It may be extremely difficult or cost prohibitive to locate respondents in these situations. Snowball sampling relies on referrals from initial subjects to generate additional subjects. While this technique can dramatically lower search costs, it comes at the expense of introducing bias because the technique itself reduces the likelihood that the sample will represent a good cross section of the population. See: < a href="http://www.statpac.com/surveys/sampling.htm">http://www.statpac.com/surveys/sampling.htm

² For limitations from thecustomers’ point of view, see Langenbucher, (2005).

³ Discussion of information and communication technology, especially management information systems, in microfinance can be bewildering. This paper provides a brief description of various technologies. For more detailed descriptions, check at least the following three key websites that have compiled a collection of articles and publications to guide readers and provide more detailed descriptions of these technologies. They are: CGAP Technology Resource Center at www.cgap.org/technology/, Microfinance Gateway at www.microfinancegateway.org, and Microsave at www.microsave.org

⁴ There are comprehensive reviews of various software developed for management information system that are posted in Technology Resource Center of CGAP: http://www.cgap.org/technology/

⁵ For a detailed list of ICT innovations in financial services, see Claessens, Glaessner and Klingebiel, (2001), Ivatury, (2005) and Waterfield, (2004). Note that some of these applications are implemented by commercial banks, hence not all users are necessarily all microfinance institutions serving poor people. Information on how many users are serving rural areas and how many of them reach poor people is not available.

⁶ The virtual exchange was entitled “Serving small depositors: meeting demand while managing costs” and was carried out during December 5 – 9, 2005.

⁷ CGAP Technology Center: www.cgap.org/technology

⁸ Mongolian Statistical Yearbook 2003, National Statistical Office (NSO) of Mongolia

⁹ Population and development indicators 2002. For example, population density in the capital Ulaanbaatar and other major cities is 75 times higher than in Selenge, the highest density aimag.

¹⁰ XAAN bank does have branch offices in all soum centers. However, their outreach has been limited to salaried employees, pensioners, businesses that are engaged in trade or service with quick turnover. There is a limited outreach to small scale herders (especially those with less than 300 head of livestock) and micro-enterprises that do not have collateral.

¹¹ XAC means “Golden Fund for Development” (pronounced HAS as in HAT)

¹² Goviin Ehlel, then the second largest non-bank financial institution, was established by Mercy Corps in December 1999 with funding from USAID and received its license in March 2000.

¹³ Exceptions: three branches are opened at soum level because they are equal to aimag center in terms of market size, infrastructure development, likelihood to have a larger population concentration and ability to meet the outreach plan required for a branch office.

¹⁴ By law, a minimum number of 20 members are required to form a cooperative.

¹⁵ At the moment, financial projections have been made for up to one year. It is difficult to project beyond one year because the soum market conditions are not predictable.

¹⁶ In soums where there is no mobile banking, rural people come to receive services from the branch offices at the aimag center. In total, XacBank is serving people in 170 soums.

¹⁷ Two references are particularly useful, Cracknell, (2004) and Waterfield, (2004).

¹⁸ There are few other smaller companies which sell POS terminals, but they are not the exclusive dealer of any international supplier and the size of their transactions is small.

¹⁹ The founder of the company had worked in DataCom, one of the two main internet service providers in Mongolia. She has a strong experience in IT and has been interested in applying IT for financial services. Her first product was internet banking model, which was developed while she was working in DataCom.

²⁰ The price for a simple POS terminal (Vx510) supplied by other smaller companies is quoted as $600 (one with dial up and LAN). Nobody is selling wireless POS.

²¹ Customers who were waiting in the banking hall while their loan applications were reviewed, were invited for an interview. There was no refused case. It was in the banking hall of XacBank in the afternoon during a work day.

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Comment(s)

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1. Pratyush Agarwal
   (posted 12 June 2009 / 03:20:06 PM)
   
   A very good paper! It recognizes and abridges the technological usage for the bank. But, It has not dealt on the possibilities of using land-line phones, a prevalent technology in rural areas.