Microfinance Market Outlook - 2030
The global microfinance market was valued at $178.84 billion in 2020, and is projected to reach $496.90 billion by 2030, growing at a CAGR of 10.8% from 2021 to 2030.
Microfinance is a type of financial service that is provided to unemployed or low-income individuals or groups with no other access to financial services. The aim of these institutions is the simple service offering micro-loans to the world’s unbanked populations, such as savings, insurance, and payment products. The services in the market are designed to become affordable to poor and socially marginalized customers, households with a wide variety of high-quality financial products and services, and to help them become self-sufficient.
Rise in number of microfinance organization help emerging countries for reducing poverty and also improve the standard of living of the poor people, which is significantly driving the market growth. In addition, shift from traditional lending to micro finance and lesser operating cost & low market risk are some other factors propelling the microfinance market growth. However, high interest rate and shorter repayment time given by microfinance companies hampers the growth of the market. On the contrary, increased penetration of advance technology such as mobile banking, ATMs, POS, and others in micro finance sector across developing nations is a major factor anticipated to provide potential growth opportunity for the market.
The report focuses on growth prospects, restraints, and trends of the microfinance market analysis. The study provides Porter’s five forces analysis to understand the impact of various factors such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes, and bargaining power of buyers on the microfinance market outlook.
Segment Review
The microfinance market is segmented into provider, end user, and region. Provider covered in the study include banks, Micro Finance Institute (MFI), NBFC (Non-Banking Financial Institutions), and others. By end user, the market is segregated into small enterprises, micro enterprises, and solo entrepreneurs or self-employed. Region-wise, the market is analysed across North America, Europe, Asia-Pacific, and LAMEA.
Competitive Analysis
The report analyzes the top microfinance companies operating in the market such as Annapurna Finance (P) Ltd, Bank Rakyat Indonesia (BRI), Bandhan Bank, CDC Small Business Finance, Cashpor Micro Credit, Grameen America, Grameen Bank, Kiva, Madura Microfinance Ltd., and Pacific Community Ventures Inc. These players have adopted various strategies to increase their market penetration and strengthen their position in the microfinance industry.
COVID-19 Impact Analysis
COVID-19 pandemic has a moderate impact on the microfinance industry, as the outbreak has enabled lending activities including past-due or non-collectible loans to become an implicit part of the financial sector. Moreover, various microfinance institutes were stopped by the government due to growing number of patients across the globe. In addition, the European government also introduced various other digital platform for microfinance company to sell their products and to attract their customer, which positively impacts the growth of the market. This, in turn, has become one of the major growth factors for the microfinance market during the global health crisis.
By Provider
Banks segment accounted for the highest market share in 2020
Top impacting factors
Shift from Traditional Lending to Microfinance
With increase in penetration of smartphones and internet users across the globe, online financing has witnessed significant growth in the recent years. Microfinance is considered as one of the convenient and widely used option for lenders, as it provides instant affordability for applications. Multiple businesses and individuals have started filling applications online for taking loans in the recent years rather than getting into the time-consuming lending process. According to a report by industry body MFIN and KPMG, the entry of new-age Fintech (Financial Technology) has enabled the microfinance sector to fast-track its transition to a more efficient digital model to serve a larger population at lower costs. In addition, the ease of applying loans for borrowers and numerous other benefits for lenders, such as automated loan management, and rapid approval are shifting their attention toward digital microfinance, thus driving the market growth.
High Interest on Small Amount And Shorter Repayment Time Provided by Micro Finance
Microfinance institutes and micro lenders charge high interest rate for various different loan amounts, which is the major factor that hampers the growth of the market. In addition, microfinance majorly focuses on increasing their revenue, owing to which their repayment time is short and charges are high. Microfinance institute borrow large amount of money from various banks and other institutes, owing to which they charge high interest rate and shorter repayment time, which hampers the growth of the market. Furthermore, various microfinance institutes in majority of countries across the globe need to use private equity to raise capital because they are not allowed to collect savings, like traditional microfinance banks, as a way to fund loans which negatively impact the growth of the market. In addition, rise in strict government regulation on microfinance institute hampers the growth of the market.
By End User
Micro Finance Institute (MFI) segment will grow at a highest CAGR of 11.9% during 2021 - 2030.
Adoption of Advance Technology in Micro Financing
Surge in adoption of digital technology among the micro financial sector to create new channels for the people and to upsurge their revenue opportunity boosts the market growth. In addition, increased connectivity in the developing nations and technological innovations in various African and Middle East countries are expected to provide lucrative opportunity for the market growth. Furthermore, large penetration of advance technology in microfinance sector such as mobile banking, ATMs, POS, and others, in developing nations is providing future opportunity for the market.
For instance, the Indian Government has designed various programs of financial assistance for existing and potential MSMEs. These programs aim to provide budding MSMEs with financial help so that they can establish and/or grow themselves to achieve their full potential. Moreover, major players of the market are introducing new technology to upsurge their market share and to provide customers with enhanced experience, which is expected to provide future opportunity for the market.
By Region
Asia-Pacific would exhibit the highest CAGR of 11.2% during 2021-2030
Key Benefits For Stakeholders
- The study provides in-depth analysis of the global microfinance market share along with current trends and future estimations to illustrate the imminent investment pockets.
- Information about key drivers, restrains, and opportunities and their impact analysis on the global microfinance market size are provided in the report.
- Porter’s five forces analysis illustrates the potency of buyers and suppliers operating in the microfinance market.
- An extensive analysis of the key segments of the industry helps to understand the microfinance market trends.
- The quantitative analysis of the global microfinance market forecast from 2021 to 2030 is provided to determine the market potential.
Microfinance Market Report Highlights
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Analyst Review
Microfinance institutions globally provide financial and non-financial products & services mostly to low-income clients and unbaked population. The microfinance market is anticipated to witness robust growth in the emerging economies of LAMEA along with continued growth in the established market of Asia-Pacific. The growth is attributed to expansion of small businesses globally, improved interest rates, lending transparency, and lesser market risks. Increase in economic strength of the developing nations such as Singapore and India are expected to provide lucrative opportunities for the market growth.
The COVID-19 outbreak has a significant impact on the microfinance market and has accelerated the usage & adoption of microfinance in the market. In addition, though some states have classified the microfinance industry as an essential activity, the cash flows of borrowers may be affected due to the restrictions/lockdowns, thereby affecting their repayment ability, the rating firm said.
The microfinance market is consolidated with the presence of regional vendors such as Pacific Community Ventures Inc., Kiva, and CDC Small Business Finance. Some of the key players profiled in the microfinance market report include Annapurna Finance (P) Ltd, Bank Rakyat Indonesia (BRI), Bandhan Bank, Cashpor Micro Credit, Grameen America, Grameen Bank, Madura Microfinance Ltd. Major players operating in this market have witnessed significant adoption of strategies that include business expansion and partnership to reduce supply and demand gap. Major players are providing differentiated and innovative products with increase in awareness & demand for microfinance across the globe.
The Microfinance Market is estimated to grow at a CAGR of 10.8% from 2021 to 2030.
The Microfinance Market is projected to reach $496.90 billion by 2030.
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Factors such as rise in number of microfinance organization help emerging countries for reducing poverty and also improve the standard of living of the poor people drives the growth of the Microfinance market
The key players profiled in the report include Annapurna Finance (P) Ltd, Bank Rakyat Indonesia (BRI), Bandhan Bank, CDC Small Business Finance, Cashpor Micro Credit, Grameen America, Grameen Bank, Kiva, Madura Microfinance Ltd., and Pacific Community Ventures Inc, and many more.
On the basis of top growing big corporations, we select top 10 players.
The Microfinance Market is segmented on the basis of provider, end user, and region.
The key growth strategies of Microfinance market players include product portfolio expansion, mergers & acquisitions, agreements, geographical expansion, and collaborations.
subsegments of End User are small enterprises, micro enterprises, and solo entrepreneurs or self-employed.
Micro Finance Institute (MFI) segment will grow at a highest CAGR of 11.9% during 2021 - 2030.
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