The global microfinance market has shown consistent growth prospects from 2014 to 2030, according to ResearchAndMarkets. The report focuses on lending activities by both banks and non-bank entities, targeting small enterprises, solo entrepreneurs, and micro-enterprises. This trend emphasizes the role of microfinance in advancing financial inclusivity and supporting entrepreneurial ventures globally.
Emerging technologies such as generative AI, applied AI, machine learning, and blockchain offer significant investment opportunities. These technologies are expected to drive growth and alleviate challenges like inflation and shifting demand patterns.
Banks are expected to grow at a CAGR of 13.2%, reaching a market size of $295.5 billion by 2030. The non-banking segment is also set for robust growth, with an estimated CAGR of 11.2% over the next eight years.
Microenterprises have emerged as a vital driver of growth for MFIs. They serve as important mechanisms for economic progress and are increasingly becoming the focus of microfinance lending activities.
The industry is witnessing a high appetite for digital payment and financial technology. Mobile payments, in particular, are transforming the microfinance landscape, especially in African countries, despite existing challenges.
Blockchain-based solutions are filling the SME financing gap, while AI technologies are democratizing access to credit. These technologies are poised to transform the future of microfinance.
Despite the growth, the microfinance industry faces challenges such as data security concerns due to digitization and criticisms against the emergence of for-profit MFIs.
Image source: Shutterstock