Technavio Announces Top Three Trends Impacting the Global Microfinance Market Th...

Jul 2016
Global, July, 07 2016 - Technavio’s latest global microfinance market report highlights three key emerging trends predicted to impact market growth through 2020. Technavio defines an emerging trend as something that has potential for significant impact on the market and contributes to its growth or decline.

“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 probability of defaulting in this sector is high because most microenterprise players do not have adequate knowledge of basic business techniques such as supply, distribution, procurement, sales, and marketing. However, if this is taken care of, the ways in which the sector can boost employment and GDP levels are manifold,” said Amit Sharma, one of Technavio’s lead industry analysts.

Technavio’s market research study identifies the following three emerging trends expected to propel the global microfinance market:

  • New credit scoring approach and collaboration in global marketplace
  • Increase in private sector banks across emerging markets
  • Leveraging modern technologies
  • New credit scoring approach and collaboration in global marketplace

Microenterprises have become globalized over the past decade with a high focus on a range of cross-border activities, including international trade; international investment; and participation in strategic alliances, partnerships, and networking arrangements with proper working capital management. Collaboration through various business networks among banks is one of the most popular and growing trends among the most profitable microenterprises. This can be done can be in two ways, collaboration through online business networks and platforms. Also, banks are forging partnership with different vendors and suppliers located across different geographies. Manufacturers that are a part of this trend are paving the way to success on the global scale, as around two-thirds of the largest and profitable microenterprises are engaged in these deals.

Increase in private sector banks across emerging markets

Many private banks provide greater incentives to incur switching costs needed to pursue new businesses in the microenterprise market. Large private firms have been one of the key driving trends for innovation that has increased the global growth for the microenterprises segment in emerging countries that is either unserved or underserved. The primary aim of these private banks is to not only to develop unique products, business solutions, or services but also commercialize themselves and convert innovative microenterprises into viable business ventures with a sustainable edge over others. Private sector banks consider this as an excellent business opportunity and are increasingly expanding their reach in the emerging markets. Private banks have better infrastructure, faster processing, attractive schemes, and costs offered on products. Therefore, they are preferred over state-owned banks.

Leveraging modern technologies

The microenterprise segment often does not have knowledge or proper understanding of the products and lacks awareness of various sources of financing. These hamper the banks' revenues. To deal with this, banks are innovating and developing new products that are simple and easy to market. With increased technological innovations, Internet portals and smartphones will emerge as the new ways of marketing in the near future. This would enable borrowers to enquire about products and features at their convenience and allow them to make more informed decisions.

Source : Business Wire

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