How FinTech is transforming microfinance
The world is moving towards digitalization in the truest sense of the word. Digital payments are strengthening the movement. Staggering statistics are emerging that show just how much people are embracing fintech. According to a to study published by Mordor Intelligence, the Fintech market is expected to grow 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. fast.
Among others, digital commerce and mobile POS payments reach valuations in the billions. This increase in valuation shows how quickly fintech is being adopted. From banking to payments, Fintech has taken over the drudgery and is moving at the speed of a trend with deep impact.
Fintech is gradually making its way to revolutionize microfinance. It will be a success but it is important to know what changes it will bring with the revolution.
Microfinance and key regions associated with it
The very basis of the fundamentals of microfinance is to eliminate poverty. Therefore, transformation is more likely to occur in Asia-Pacific, Africa, and Latin America. People residing in these areas do not have many transactions and may not have a credit rating that can help them obtain a loan from conventional banking institutions.
In such cases, a number of lenders come to the fore, in order to serve these regions with the best of resources. However, with the growing popularity of microfinance institutions, people are rushing to avail loans. This has put pressure on microfinance institutions to reorganize their traditional structures and increase their productivity so that they can serve more people in less time.
Thanks to fintech, microfinance institutions have easy access to data, which helps them move beyond the traditional banking system towards efficiency and prediction.
How is microfinance developing?
Microfinance harnesses the true potential of technology. Many digital payment models are used by microfinance institutions to conduct same-day transactions. These institutions use the same methodology as fintech payment solutions to reach customers as quickly as possible.
Some of the best features that fintech offers to microfinance are described below:
The banking system was able to grab the first slice of the technology, and today people are doing their banking through the prowess of their smartphones. Indeed, the system for filling in forms and processing applications has been put online. In the same vein, the processes of microfinance institutions are moving online.
If a businessman wants to avail a loan, he can simply visit the microfinance institutions website 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. Microfinance institution lenders can easily review the application and decide whether or not the person is eligible for the loan. All this means fast processing of the request.
Online Status Check
Having an online system to track application status becomes convenient for loan seekers. Individuals can immediately find out what stage their application is currently in. If they find that their application is not performing well and is rejected, they can find out the reason.
Fintech contributes to increasing the transparency of microfinance institutions. Besides, they also bring timely approach to application which helps businessmen to avail a loan in the shortest possible time.
Eliminate 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 meet customer needs as soon as possible. However, there are waiting times and lots of verifications, making it difficult for borrowers to get a loan when they need it.
Moreover, even after putting in so much effort, they cannot be 100% sure that they will receive loans. In such cases, microfinance institutes come to the rescue and help them get loans easily. With the help of fintech, transaction to customer’s bank account has never been easier thanks to digital wallet solutions.
Mobile application for microfinance
The days are not far off when micro-financiers will take advantage of the prowess of the smartphone to increase their sales. The same revolution has already been observed in the banking system. People have been slow to switch to digital banking; however, once on board, they refuse to sign off.
With the help of microfinance mobile banking software, borrowers will be able to fill the form from anywhere and can receive loans easily. On the other hand, microfinance institutions will have a lot of user-generated data to analyze and review, in order to decide on the next business steps.
Thus, the microfinance mobile banking software is a win-win solution for lenders and borrowers.
Take away key
In a nutshell, it can be said that this new financial institution has the potential to attract a number of aspiring businessmen. Given the momentum, microfinance institutions will need to maintain the quality of service they offer and they need to make the best use of technology for this. As fintech extends its hands to amplify the potential of microfinance institutions, these institutions will only grow in value with technology.