Digitalisation of Financial Services and its Impact on the Relationship between Microfinance Institutions and their Clients in Zimbabwe

Abstract

This article presents the impact of financial service digitalisation on the relationship between microfinance institutions and their customers. The study reveals challenges currently faced from digitalisation of financial services and clients‘ readiness for a full digitalisation of financial services. The rate of technological advancement in the context of the Fourth Industrial Revolution (4IR) left microfinance institutions without an option but to embrace digital financial technology to allow their clients to enjoy financial services without visiting banking halls. The impact of financial services digitisation on the relationship between microfinance institutions and their clients remains a topic of controversy that has been inconclusive in the scholarly discourse. To contribute to this ongoing debate, this research adopted a mixed method approach in which a sample of 110 microfinance clients were selected through convenience sampling for responding to questionnaires, while 10 loan officers and 10 microfinance clients were chosen through convenience sampling for responding to interview questions. Findings of the study reveal that some clients are not yet ready for full digitalisation but, rather, for a blended approach where traditional banking runs in tandem with digital financial services. The study also establishes that digitalisation of financial services positively affects   the relationship between microfinance institutions and their clients, However, microfinance institutions need to use the blended approach. The study recommends microfinance managers to allow the existence of traditional banking and digital financial technology side by side. Financial education is also the need of the hour if majority of microfinance clients are to adopt digital financial services.