The microfinance market size is expected to grow from US$ 274.3 billion in 2023 to US$ 528.7 billion by 2031; it is anticipated to expand at a CAGR of 8.6% from 2023 to 2031. Shift from traditional loaning to microfinancing is expected to boost the market.
Microfinance Market Analysis
The microfinance industry is embracing technological advancements to enhance its services and reach. This includes the use of mobile banking, digital payments, and innovative financial technologies. These microfinance market trends enable greater accessibility, efficiency, and convenience for both microfinance institutions and their customers. There is an amplified focus on social impact and sustainability within the market.
Microfinance Market Overview
- Microfinance refers to the terms of financial services to individuals or groups with low incomes who are typically excluded from traditional banking systems. It aims to focus on the financial needs of marginalized populations, especially women and the marginalized population, by offering small working capital loans, microloans, or microcredit. However, microfinance institutions (MFIs) may also provide other financial services such as money transfers, insurance, and savings accounts.
- The primary objective of microfinance is to improve access to financial services for those who are financially excluded, promoting self-sufficiency and economic independence. It plays a crucial role in empowering individuals and communities by providing them with the means to start or expand their businesses, manage risks, and build financial resilience.
- Microfinance is particularly important in developing countries, where a considerable measure of the population lacks access to formal credit or savings. By offering tailored financial and non-financial services, microfinance institutions contribute to poverty alleviation, economic development, and the achievement of the United Nations' sustainable development goals.
- The market has experienced steady growth in recent years, this growth reflects the increasing recognition of the importance of financial inclusion and the positive impact that microfinance can have on individuals and enterprises.
Strategic Insights
Microfinance Market Driver
Shift from Traditional Loaning to Microfinance to Drive the Microfinance Market
- The market has witnessed a significant shift from traditional lending to microfinance, driven by several factors. This shift has brought about positive changes in the financial landscape, particularly for individuals and groups with low incomes who were previously excluded from accessing formal financial services. One of the major factors of the shift to microfinance is the aim to promote financial inclusion.
- Traditional lending institutions often have strict eligibility criteria and require collateral, making it difficult for low-income individuals to access credit. Microfinance institutions, on the other hand, focus on providing financial services to the financially underserved, enabling them to access small loans, microcredit, and other financial products.
- Microfinance is recognized for its potential to alleviate poverty and contribute to sustainable development. By providing individuals with the means to start or expand their businesses, microfinance helps create income-generating opportunities, reduce unemployment, and improve living standards. This social impact has attracted attention and support from governments, international organizations, and impact investors, further driving the microfinance market growth.
Microfinance
Market Report Segmentation Analysis
- Based on provider, the market is segmented into banks, micro finance institute (MFI), non-banking financial institutions (NBFI), and others. The banks segment is expected to hold a substantial microfinance market share in 2023.
- Banks are traditional financial institutions that offer a wide range of financial services, including loans, savings accounts, and other banking products. In the context of microfinance, banks play a significant role in providing financial services to low-income individuals and microenterprises. They may offer microcredit, micro-insurance, and other financial products tailored to the needs of the underserved population.
- Banks often have a broader customer base and extensive infrastructure, making them an important segment in the market. Microfinance institutions are specialized organizations that provide financial services to low-income individuals who have inadequate access to traditional banking services.
- MFIs focus on financial inclusion and aim to empower the financially underserved by offering micro-loans, microcredit, savings accounts, insurance, and other financial products. They often target marginalized populations, including women, rural communities, and small-scale entrepreneurs, which is further anticipated to boost the microfinance market growth.
Microfinance market Share Analysis by Geography
The scope of the microfinance market report is primarily divided into five regions - North America, Europe, Asia Pacific, Middle East & Africa, and South America. Asia Pacific (APAC) is experiencing rapid growth and is anticipated to hold a significant microfinance market share. The region's significant economic development, growing population, and increasing focus on financial inclusion across diverse economies have contributed to this growth. APAC's emerging markets, characterized by a large unbanked population and a growing entrepreneurial culture, have presented substantial opportunities for microfinance institutions and non-banking financial institutions (NBFIs) to expand their services and reach previously underserved communities.
Microfinance
Market Report Scope
The "Microfinance Market Analysis" was carried out based on provider, end-user, and geography. In terms of provider, the market is segmented into banks, micro finance institute (MFI), non-banking financial institutions (NBFI), and others. Based on end-user, the market is segmented into small enterprises, micro enterprises, and solo entrepreneurs or self-employed. Based on geography, the market is segmented into North America, Europe, Asia Pacific, the Middle East & Africa, and South America.
Microfinance
Market News and Recent Developments
Companies adopt inorganic and organic strategies such as mergers and acquisitions in the market. The microfinance market forecast is estimated based on various secondary and primary research findings, such as key company publications, association data, and databases. A few recent key market developments are listed below:
- In February 2024, Ericsson and Telenor Microfinance Bank (TMB) further strengthened their partnership and shared commitment to promoting financial inclusion and empowerment in Pakistan. The two companies have recently signed a multi-year extension of their partnership, with the objective of enhancing the financial services provided by easypaisa and expanding the range of offerings within the fintech sector. This partnership aims to leverage the expertise and resources of both companies to drive the growth and accessibility of financial services for individuals and businesses in Pakistan.
[Source: Telefonaktiebolaget LM Ericsson, Company Website]
Microfinance
Market Report Coverage & Deliverables
The market report on “Microfinance Market Size and Forecast (2021–2031)”, provides an detailed analysis of the market covering below areas-
- Market size & forecast at global, regional, and country- level for all the key market segments covered under the scope.
- Market dynamics such as drivers, restraints, and key opportunities.
- Key future trends.
- Detailed PEST & SWOT analysis
- Global and regional market analysis covering key market trends, key players, regulations, and recent market developments.
- Industry landscape and competition analysis covering market concentration, heat map analysis, key players, recent developments.
- Detailed company profiles.
Report Coverage
Revenue forecast, Company Analysis, Industry landscape, Growth factors, and Trends
Segment Covered
Provider, End-user, and Geography
Regional Scope
North America, Europe, Asia Pacific, Middle East & Africa, South & Central America
Country Scope
This text is related
to country scope.
Frequently Asked Questions
The key players holding majority shares in the market are Bandhan Financial Services Pvt. Ltd.; CDC Small Business Finance Corp.; Cashpor Micro Credit; Grameen America Inc.; and KIVA.
The market is expected to reach US$ 528.7 billion by 2031.
The market was estimated to be US$ 274.3 billion in 2023 and is expected to grow at a CAGR of 8.6% during the forecast period 2023 - 2031.
Increased focus on social impact and sustainability is anticipated to play a significant role in the market in the coming years.
Shift from traditional loaning to microfinance and lower operating costs and reduced market risk are the major factors that propel the market.
- Bank Rakyat Indonesia (BRI)
- Annapurna Microfinance Pvt. Ltd.
- Bandhan Financial Services Pvt. Ltd.
- CDC Small Business Finance Corp.
- Cashpor Micro Credit
- Grameen America Inc.
- KIVA
- Madura Microfinance Ltd.
- Pacific Community Ventures
- ESAF Small Finance Bank
The Insight Partners performs research in 4 major stages: Data Collection & Secondary Research, Primary Research, Data Analysis and Data Triangulation & Final Review.
- Data Collection and Secondary Research:
As a market research and consulting firm operating from a decade, we have published many reports and advised several clients across the globe. First step for any study will start with an assessment of currently available data and insights from existing reports. Further, historical and current market information is collected from Investor Presentations, Annual Reports, SEC Filings, etc., and other information related to company’s performance and market positioning are gathered from Paid Databases (Factiva, Hoovers, and Reuters) and various other publications available in public domain.
Several associations trade associates, technical forums, institutes, societies and organizations are accessed to gain technical as well as market related insights through their publications such as research papers, blogs and press releases related to the studies are referred to get cues about the market. Further, white papers, journals, magazines, and other news articles published in the last 3 years are scrutinized and analyzed to understand the current market trends.
- Primary Research:
The primarily interview analysis comprise of data obtained from industry participants interview and answers to survey questions gathered by in-house primary team.
For primary research, interviews are conducted with industry experts/CEOs/Marketing Managers/Sales Managers/VPs/Subject Matter Experts from both demand and supply side to get a 360-degree view of the market. The primary team conducts several interviews based on the complexity of the markets to understand the various market trends and dynamics which makes research more credible and precise.
A typical research interview fulfils the following functions:
- Provides first-hand information on the market size, market trends, growth trends, competitive landscape, and outlook
- Validates and strengthens in-house secondary research findings
- Develops the analysis team’s expertise and market understanding
Primary research involves email interactions and telephone interviews for each market, category, segment, and sub-segment across geographies. The participants who typically take part in such a process include, but are not limited to:
- Industry participants: VPs, business development managers, market intelligence managers and national sales managers
- Outside experts: Valuation experts, research analysts and key opinion leaders specializing in the electronics and semiconductor industry.
Below is the breakup of our primary respondents by company, designation, and region:
Once we receive the confirmation from primary research sources or primary respondents, we finalize the base year market estimation and forecast the data as per the macroeconomic and microeconomic factors assessed during data collection.
- Data Analysis:
Once data is validated through both secondary as well as primary respondents, we finalize the market estimations by hypothesis formulation and factor analysis at regional and country level.
- 3.1 Macro-Economic Factor Analysis:
We analyse macroeconomic indicators such the gross domestic product (GDP), increase in the demand for goods and services across industries, technological advancement, regional economic growth, governmental policies, the influence of COVID-19, PEST analysis, and other aspects. This analysis aids in setting benchmarks for various nations/regions and approximating market splits. Additionally, the general trend of the aforementioned components aid in determining the market's development possibilities.
- 3.2 Country Level Data:
Various factors that are especially aligned to the country are taken into account to determine the market size for a certain area and country, including the presence of vendors, such as headquarters and offices, the country's GDP, demand patterns, and industry growth. To comprehend the market dynamics for the nation, a number of growth variables, inhibitors, application areas, and current market trends are researched. The aforementioned elements aid in determining the country's overall market's growth potential.
- 3.3 Company Profile:
The “Table of Contents” is formulated by listing and analyzing more than 25 - 30 companies operating in the market ecosystem across geographies. However, we profile only 10 companies as a standard practice in our syndicate reports. These 10 companies comprise leading, emerging, and regional players. Nonetheless, our analysis is not restricted to the 10 listed companies, we also analyze other companies present in the market to develop a holistic view and understand the prevailing trends. The “Company Profiles” section in the report covers key facts, business description, products & services, financial information, SWOT analysis, and key developments. The financial information presented is extracted from the annual reports and official documents of the publicly listed companies. Upon collecting the information for the sections of respective companies, we verify them via various primary sources and then compile the data in respective company profiles. The company level information helps us in deriving the base number as well as in forecasting the market size.
- 3.4 Developing Base Number:
Aggregation of sales statistics (2020-2022) and macro-economic factor, and other secondary and primary research insights are utilized to arrive at base number and related market shares for 2022. The data gaps are identified in this step and relevant market data is analyzed, collected from paid primary interviews or databases. On finalizing the base year market size, forecasts are developed on the basis of macro-economic, industry and market growth factors and company level analysis.
- Data Triangulation and Final Review:
The market findings and base year market size calculations are validated from supply as well as demand side. Demand side validations are based on macro-economic factor analysis and benchmarks for respective regions and countries. In case of supply side validations, revenues of major companies are estimated (in case not available) based on industry benchmark, approximate number of employees, product portfolio, and primary interviews revenues are gathered. Further revenue from target product/service segment is assessed to avoid overshooting of market statistics. In case of heavy deviations between supply and demand side values, all thes steps are repeated to achieve synchronization.
We follow an iterative model, wherein we share our research findings with Subject Matter Experts (SME’s) and Key Opinion Leaders (KOLs) until consensus view of the market is not formulated – this model negates any drastic deviation in the opinions of experts. Only validated and universally acceptable research findings are quoted in our reports.
We have important check points that we use to validate our research findings – which we call – data triangulation, where we validate the information, we generate from secondary sources with primary interviews and then we re-validate with our internal data bases and Subject matter experts. This comprehensive model enables us to deliver high quality, reliable data in shortest possible time.
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