Optimists often cite microfinance as a "development success story," but realists know the truth - it suffers from high interest, misrepresentation of repayment rates, poor risk management, and insufficient scale. (More on the "dirty little secrets" of microfinance at the excellent MicroCapital blog.)

Similar unrequited optimism is often true for information technology - there's a lot of talk about the benefits of computers, PDAs, cell phones, the Internet, etc. when it comes to development. Take off the rose-colored glasses, however, and you'll notice a slew of defunct telecenters and failing IT-for-development projects, where the absence of business plans/models couldn't overcome the innovative application(s) of technology.

Don't get me wrong - there ARE a lot of legitimate success stories in both microfinance and IT for development. But I think each sector could learn a lot from the other in order to scale up successfully and attain the kind of development outcomes to which they are often attributed.

This intersection of microfinance and technology hasn't been explored enough, but it got a start last Tuesday when about 50 people attended a Microfinance Technology Fair organized by USAID, Chemonics, and QED here in Washington. Attendees saw first-hand how technology is being applied to microfinance. Demonstrations of a cell phone transfer system (G-Cash), hand-held POS device (RTS), PDA loan software (PortaCredit), and an open-source MIS (MIFOS) highlighted the afternoon. (Full disclosure: the organizers were kind enough to invite yours truly to help introduce these presenters.) While I loved seeing the technologies in action, I have some reservations about their ability to take microfinance to the next level without additional work: