Impact of Technological Advancement on Microfinance Institutions in India

Abstract

The goal of this paper is to study the impact of digital technology on the functioning of Microfinance Institutions (MFIs) in India in the context of operational effectiveness, regulatory compliance, financial sustainability, social inclusion, and service differentiation. It is based on secondary data research conducted from 2010 to 2025, noting the mobile banking and AI innovations alongside data analytics technology and how these innovations aid in expanding the outreach of MFIs while helping in the empowerment of the disregarded class such as women by offering customised and clear-cut financial services. There is a clear dichotomy of growth and client satisfaction on one hand and structural digital divides and digital illiteracy as a primary concern on the other. This research emphasises on leveraging technology to drive social change in India and to promote technology within regulations and build a strong, inclusive, and competitively resilient microfinance ecosystem in India.