Microfinance: Key market research findings
- APAC dominates the market geographically
- Projected increase in private sector banks
- Key vendors – Albaraka, ASA, Banco do Nordeste, Bandhan Financial Services, and Fundación de la Mujer
Technavio’s market research analysts predict the global microfinance market to grow at a CAGR of around 16% between 2016 and 2020. The growth in the market is driven primarily by the adoption of better risk management practices in banks. Banks are increasingly deploying automated portfolio monitoring to assist them in keeping up-to-date about the credit flow of their client segment and enable them to take appropriate steps with immediate effect. Furthermore, this helps minimize the risks involved in lending to microenterprises, thus, propelling better revenues and profits. By 2020, APAC will continue its dominance over the global microfinance market by occupying close to 71% of the overall market space. Strong growth prospects due to rapid industrialization, increased production volumes, technological progress, and the adoption of credit bureaus in line with the principles of regulatory authorities are factors that will fuel growth in the microfinance market in APAC during the forecast period.
The new industry research report from Technavio discusses in detail the key drivers and trends responsible for the growth of this market and its sub-segments.
“Increase in private sector banks across emerging markets is an ongoing trend in the market. Many private banks are providing greater incentives to incur switching costs that are required to pursue new businesses in the microenterprise market. Microenterprises are considered to be strategic sectors for most private banks across various geographies, making it more competitive,” says Amit Sharma, Lead Analyst, ICT, Technavio Research.
The lack of proper marketing knowledge about foreign markets, business practices, and financial information are two of the key problems that lead to reduced foreign sales in different geographies. Microenterprise players from several emerging countries are unaware of the wide variety of financing options offered in the market. As a result, they end up resorting to the unorganized sector of the financing market leading to the stagnation of banking revenues.
Albaraka, ASA, Banco do Nordeste, Bandhan Financial Services, and Fundación de la Mujer are the prominent players in the global microfinance market. The microenterprises sector faces several constraints such as the availability of adequate and timely credit, high cost of credit, collateral requirements, and access to equity capital and rehabilitation of sick enterprises. These challenges have compelled microenterprises to depend on banks and financial institution to generate working capital financing for the expansion of activities within businesses. Access to timely and low-cost finance has remained a crucial challenge for the microenterprises sector because it is considered a high-risk segment for financing. The market is expected to witness a huge number of new entrants as the sector has tremendous potential to boost employment and GDP levels.
A more detailed analysis is available in the Technavio report, Global Microfinance Market 2016-2020.
We can customize reports by other regions and specific segments upon request.
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