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The global microfinance market size is estimated to grow by USD 166.95 billion, at a CAGR of 12.86% between 2023 and 2028. The market caters to the financial needs of low-income individuals and underserved communities by offering services like small loans and savings opportunities. Microfinance institutions (MFIs) are instrumental in bridging the gap for those excluded from traditional banking services. Market growth is fueled by various factors, including the rise of social media and digital connectivity, enabling broader outreach and engagement. Quick and easy access to credit further drives market expansion, empowering individuals to pursue entrepreneurial endeavours and improve their economic well-being. Moreover, there's a growing emphasis on cost optimization and scaling computation, enhancing operational efficiency and enabling MFIs to reach more clients effectively. As these trends continue to shape the market landscape, microfinance remains a crucial tool for fostering financial inclusion and sustainable development.
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The market addresses the financial needs of low-income populations worldwide, offering traditional banking services to underserved individuals and small businesses. Microfinance institutions (MFIs), like Grameen Bank, play a pivotal role in poverty alleviation and empowerment by providing payment solutions and fostering financial security. In regions affected by rural-urban migration, MFIs serve as lifelines for low-income households, offering digital payment systems for convenience. By lending to borrowers, MFIs empower customers to start or expand enterprises, contributing to economic empowerment and population growth. Market players continually innovate products to meet the evolving needs of customers, driving adoption and scaling computation for broader impact. As microfinance continues to thrive, it remains a vital tool in empowering low-income individuals and fostering inclusive economic growth.
Quick and easy access to credit is notably driving the market. They provide 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. They cater to such businesses by providing quick and easy access to credit.
In addition, the advent of these platforms enhanced the ease of obtaining loans. Hence, the popularity of these 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. These 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, these solutions and service providers are helping SMEs by strengthening access to credit and equity, which enables SMEs to invest. 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 market during the forecast period.
Lack of awareness of financial services is a significant challenge hindering the market. These 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 these work. 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 global 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 strategies.
Global 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.
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. These banks (MFBs) are referred to as general financial services, including loans, saving accounts, and insurance for people with low income. These 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 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 these 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 companies are contributing to the growth of the 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, these services help small borrowers borrow money with low creditability. Hence, easy access to microloans for startups and small individual borrowers is propelling the demand in APAC. This is fostering the growth of the market in the region during the forecast period.
The market research report provides comprehensive data (region wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2024 to 2028, as well as historical data from 2018 to 2022 for the following segments.
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The market plays a vital role in providing financial services to underserved populations, including small businesses and low-income individuals, who have limited access to traditional banking systems. By offering conventional banking services tailored to their needs, microfinance institutions contribute significantly to poverty alleviation and financial security. Payment solutions provided by these institutions facilitate transactions and promote economic empowerment, particularly in regions affected by rural-urban migration. With the advent of digital payment systems, microfinance is evolving to meet the changing needs of clients, ensuring accessibility and efficiency. Pioneered by institutions like Grameen Bank, microfinance has become a global phenomenon, offering a range of products aimed at fostering financial inclusion and driving socio-economic development worldwide.
Market Scope |
|
Report Coverage |
Details |
Page number |
162 |
Base year |
2023 |
Historic period |
2018-2022 |
Forecast period |
2024-2028 |
Growth momentum & CAGR |
Accelerate at a CAGR of 12.86% |
Market Growth 2024-2028 |
USD 166.95 billion |
Market structure |
Fragmented |
YoY growth 2023-2024(%) |
10.68 |
Regional analysis |
APAC, South America, North America, Europe, and Middle East and Africa |
Performing market contribution |
APAC at 45% |
Key countries |
Mexico, China, India, France, and Peru |
Competitive landscape |
Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks |
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 |
Market dynamics |
Parent market analysis, Market Forecasting, 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 market forecast period |
Customization purview |
If our market 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
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