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The microfinance market size is estimated to grow at a CAGR of 12.86% between 2023 and 2028. The market size is forecast to increase by USD 166.95 billion. The growth of the market depends on several factors such as the emergence of social media associated with growing digital connectivity, quick and easy access to credit and increased focus on cost optimization and scaling computation
This microfinance market report extensively covers market segmentation by type (banks and non-banks), end-user (small enterprises, solo entrepreneurs, and micro entrepreneurs), and geography (APAC, South America, North America, Europe, and Middle East and Africa). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2018-2022.
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Our researchers analyzed the data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
Quick and easy access to credit is notably driving the market growth. Microfinance provides quick and easy access to credit, unlike traditional financial institutions, which may take more than a day to complete the paperwork for the loan application. If the financial institution accepts the application, it may take another few weeks or months before the credit is authorized and transferred. Many banks have policies that restrict them from providing loans to certain businesses, such as restaurants and clinics. Microfinance caters to such businesses by providing quick and easy access to credit.
In addition, the advent of microfinance platforms enhanced the ease of obtaining loans. Hence, the popularity of microfinance platforms is increasing. Owing to such factors, the market in focus is expected to witness growth during the forecast period.
Rapid growth in APAC is an emerging trend shaping the market growth. Microfinance institutions, including P2P lending, crowdfunding, and invoice trading, are growing in APAC due to the presence of several SMEs. The number of SMEs has increased significantly in Asian countries. For instance, the number of SMEs in China was approximately 18.07 million by the end of 2018. Similarly, according to the data published by the Ministry of Micro, Small and Medium Enterprises (MSMEs) of India, as of March 2020, there were 63.3 million (6.33 Crore) SMEs present across India. The growing number of SMEs in APAC is increasing the demand for micro-financial services for business growth.
Moreover, microfinance solutions and service providers are helping SMEs by strengthening access to credit and equity, which enables SMEs to invest in growth. Moreover, growing Internet penetration, coupled with the use of smartphones, is encouraging people in APAC to use P2P lending and crowdfunding platforms. This is expected to propel the growth of the global microfinance market during the forecast period.
Lack of awareness of financial services is a significant challenge hindering the market growth. Microfinance institutions are majorly beneficial for low-income groups. However, the MFIs face major challenges due to the lack of awareness among the population about financial services. Moreover, MFIs are the most common source of financial services in low-income and developing countries where the literacy rate is limited. This results in a lack of knowledge about financial services among the group or population. Most MFI customers do not have sufficient knowledge of how microfinance works. Many of them don't even understand the loan process.
On the other hand, many MFI representatives at the field service level do not know the rules and regulations. As a result, lack of awareness is becoming a key challenge in microfinance operations, which negatively impacts the growth of the global microfinance market during the forecast period.
The market research report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.
Global Microfinance Market Customer Landscape
Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
Access Microfinance Holding AG - The company offers microfinance-established new MFIs together with other partners and transformed existing non-bank microlending institutions into full-service microfinance banks.
The research report also includes detailed analyses of the competitive landscape of the market and information about 20 market companies, including:
Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.
The banks segment is estimated to witness significant growth during the forecast period. Microfinance banks (MFBs) are referred to as general financial services, including loans, saving accounts, and insurance for people with low income. Microfinance banks are majorly established by individuals, groups of individuals, community development associations, private corporate entities, or foreign investors.
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The banks segment was the largest segment and was valued at USD 75.88 billion in 2018. These banks significantly target economically poor clients, low-income households, and unbanked people, including the most vulnerable groups such as women, youths, physically challenged, and informal sector operators, such as micro-entrepreneurs and subsistence farmers. In developing countries, such as India and Nigeria, people from low-income groups prefer to avail the services of microfinance banks. The primary motive for the formation of RRBs was to offer end-to-end development to the rural economy. Moreover, the need to provide easy credit and offer small loans to customers without any collateral further increases the preference for MFBs among people. Owing to such factors, the adoption of banks is expected to increase microfinancing, which, in turn, will drive the growth of the market in focus during the forecast period.
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APAC is estimated to contribute 45% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. The increasing penetration of the Internet and smartphones, the rapid growth of social media, the increasing number of SMEs and startups, the rising adoption of online platforms for lending, and the presence of global and regional vendors are contributing to the growth of the microfinance market in APAC. The number of SMEs has increased significantly in APAC.
Moreover, major financial institutions decline to lend to startups due to a lack of credit information or poor credit history. In such cases, microfinance services help small borrowers borrow money with low creditability. Hence, easy access to microloans for startups and small individual borrowers is propelling the demand for microfinance in APAC. This is fostering the growth of the market in the region during the forecast period.
The regional microfinance market was significantly impacted by the COVID-19 pandemic in 2020. However, the regional microfinance market started to rebound in 2021 as vaccination efforts picked up steam throughout APAC. Fintech solutions and mobile banking are becoming increasingly popular because of the sector's rapid digital revolution, which has been accelerated by the pandemic. A resilient and inclusive microfinance landscape exists in the region due to several major growth factors, including sustained vaccination distribution, regulatory backing, and technology innovation. Owing to such factors, the regional market is expected to grow significantly during the forecast period.
The microfinance market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2018 to 2028.
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Microfinance Market Scope |
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Report Coverage |
Details |
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Page number |
162 |
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Base year |
2023 |
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Historic period |
2018 - 2022 |
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Forecast period |
2024-2028 |
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Growth momentum & CAGR |
Accelerate at a CAGR of 12.86% |
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Market Growth 2024-2028 |
USD 166.95 billion |
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Market structure |
Fragmented |
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YoY growth 2023-2024(%) |
10.68 |
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Regional analysis |
APAC, South America, North America, Europe, and Middle East and Africa |
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Performing market contribution |
APAC at 45% |
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Key countries |
Mexico, China, India, France, and Peru |
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Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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Key companies profiled |
Access Microfinance Holding AG, Accion International, Al Amana Microfinance, AL BARAKAH MICROFINANCE BANK, Annapurna Finance P Ltd., Asirvad Microfinance Ltd, Bandhan Bank Ltd., CDC Small Business Finance, DEVAID Ltd., FINCA International Inc., GENTERA S.A.B. de C.V., Grameen Foundation, IndusInd Bank Ltd., Kiva Microfunds, Kotak Mahindra Bank Ltd., Opportunity International, Pacific Community Ventures, PT Bank Rakyat Indonesia Persero Tbk, Stichting BRAC International, and IGP Advantag AG |
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Market dynamics |
Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for the forecast period |
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Customization purview |
If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized. |
We can help! Our analysts can customize this market research report to meet your requirements.
1 Executive Summary
2 Market Landscape
3 Market Sizing
4 Historic Market Size
5 Five Forces Analysis
6 Market Segmentation by Type
7 Market Segmentation by End-user
8 Customer Landscape
9 Geographic Landscape
10 Drivers, Challenges, and Trends
11 Vendor Landscape
12 Vendor Analysis
13 Appendix
Research Framework
Technavio presents a detailed picture of the market by way of study, synthesis, and summation of data from multiple sources. The analysts have presented the various facets of the market with a particular focus on identifying the key industry influencers. The data thus presented is comprehensive, reliable, and the result of extensive research, both primary and secondary.
INFORMATION SOURCES
Primary sources
Secondary sources
DATA ANALYSIS
Data Synthesis
Data Validation
REPORT WRITING
Qualitative
Quantitative
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