The world is moving towards digitalisation in true sense. Digital payments are strengthening the movement. Staggering statistics are coming to the fore that are pointing at the extent to which people are embracing fintech. According to a study published by Mordor Intelligence, the Fintech market is likely to expand at a compound annual growth rate of 13% by 2024 with North America being the largest market and Asia Pacific being the fastest-growing market.
Among the others, digital commerce and mobile POS payments are reaching valuations worth billions. This increase in the valuation shows how fast the fintech is being adopted. From banking to payments, the Fintech has taken over drudgery and is moving as fast as a trend with a profound impact.
Fintech is gradually making its way to revolutionise microfinance. It will be a success but it is important to know what changes will it bring with the revolution.
Microfinance and the Key Regions Associated with it
The very basis of microfinance fundamentals is to eliminate poverty. Hence, the transformation is more likely to happen in Asia Pacific, Africa, and Latin America. People residing in these regions don’t have much of a transaction and may not have a credit score that can help them avail a loan from the conventional banking institutions.
In such cases, a number of lenders are coming to the fore, in order to serve these regions with the best of the resources. However, with the growing popularity of microfinance institutions, people are rushing forward to avail loans. This has been putting pressure on the microfinance institutions to revamp their traditional structures and increase productivity to be able to serve more people in lesser time.
Through fintech, the microfinance institutions have easy access to data, which is helping them move beyond the traditional banking system towards efficiency and prediction.
How is Microfinance Expanding?
Microfinance is leveraging the true potential of technology. Numerous digital payment models are used by the microfinancing institutions to carry out transactions on the same day. These institutions have been using the same methodology as the fintech payment solutions to get to the customers as fast as they can.
Some of the best features that fintech is offering to microfinance are as discussed below:
The banking system was able to grab the early slice of the technology, and today, people are banking through the prowess of their smartphones. This is because the form filling and application processing system has gone online. On similar lines, processes of microfinance institutions are moving online.
If a businessman wants to avail a loan, he can simply visit the website of the microfinance institutions and go to the form section. He can download the form easily and fill in all the required details. Once these details are done, he can submit the form and get an appointment. Lenders in the microfinance institutions can easily review the application and decide whether the person qualifies for the loan or not. All of this means quick processing of the application.
Online Status Check
Having an online system to track the status of the application becomes convenient for loan seekers. Individuals can immediately know the stage that their application is currently in. If they see that their application is not performing well and is being rejected, they can know the reason.
Fintech helps in increasing the transparency of microfinance institutes. In addition, they also bring in a timely approach to application, which helps businessmen avail loan in the least possible time.
Eliminating Boundaries Separating Lenders and Borrowers
The banking system is a huge business with a number of customers. They also have a number of employees to take care of the needs of customers in the least possible time. However, there are wait times and a lot of verification, which makes it difficult for borrowers to avail loan at the time they require.
Besides this, even after they put in so many efforts, they cannot be 100% sure that they will receive loans. In such cases, micro finance institutes come to the rescue and help them get loans easily. With the help of fintech, the transaction to the customer’s bank account has been easier than it ever was, on account of digital wallet solutions.
Mobile App for Microfinancing
Days aren’t far when micro-financers will leverage the prowess of smartphone to increase their sales. The same revolution was once observed in the banking system. People took time to move to digital banking; however, once they are onboard, they refuse to go offline.
With the help of microfinance mobile banking software, borrowers will be able to fill the form from anywhere and will be able to receive loans easily. On the other hand, microfinance institutions will have a lot of user-generated data to analyse and review, in order to decide on the next business steps.
So, microfinancing mobile banking software is a win-win for both–lenders and borrowers.
In a nutshell, it can be stated that this new financial institution has the potential to attract a number of aspiring businessmen. Given the momentum, microfinance institutions will have to upkeep the quality of service that they offer and they have to make optimum use of technology for the same. As fintech extends its hands to amplify the potential of microfinance institutions, these institutions will only grow in terms of value with the technology.