In the recent years digitalization has been the main trend across industries and sectors. Digital payments are among the main tools that help to facilitate this process and support the popularization of innovative technologies. The new opportunities that Fintechs worldwide are offering to clients have increased the extent to which people are embracing the new market players and services they provide. A Mordor Intelligence study suggests that the Fintech market is expected to expand at a compound annual growth rate of 13% by 2024. Today, companies dealing with digital commerce and mobile payments are already reaching valuations of millions, which suggests that the speed of Fintech adoption is continuously increasing. From digital banking to transactional space, the solutions developed by Fintechs are becoming far more successful than the traditional banking solutions in place. In particular, the ecosystem of microfinance is transforming with the revolutionary approach that Fintechs bring.

Microfinance is a category of financial services that targets individuals and small businesses that have a restricted access to conventional banking and related services. Therefore, among the main aims of this domain is onboarding those who were previously excluded as customers and providing them with the necessary financial coverage. A classic example of microfinance is issuing loans to individuals with a credit score that prevents traditional banking institutions from taking them as clients. The amount of people that became willing to obtain loans on such terms skyrocketed in a short period of time, putting pressure on microfinance companies to improve their infrastructure and capabilities to serve more customers.

Microfinance has pursued the path of expansion by leveraging the potential of innovative technologies out there. They employ various digital payment systems to execute same day transactions. These companies have adopted the same models that Fintechs use for optimizing operation and providing an excellent user experience to the customers.

Below is an overview of the useful features that microfinance is borrowing from Fintech.

Fast Processing

Just like the ones in the banking sector, microfinance institutions operate online. This means that form filling and application processing have become simple, comprehensive and rapid. Clients can complete all the necessary procedures online, even through their smartphones, which provides greater convenience.

If one needs to get a loan, all he needs to do is visit the website of the microfinance institution and go directly to the form section. He can then download, fill out and send back the form with all information required to process his request. Lenders will review all the details and make their decision whether the individual qualifies for the loan accordingly. The entire process usually does not take longer than a couple of business days.

Online Status Check

Loan seekers can now enjoy a useful feature of online application status check. This allows them to get a real-time update on the stage their application is on and find out the reason in case it has been rejected.

Fintech technologies are very useful for increasing transparency in microfinance and allow institutions and lenders to review client applications in a short period of time, which greatly speeds up operation.

Attention to Every Customer’s Needs

The number of customers in the banking system is huge, as well as the number of employees that are there to process requests as fast as possible. Yet, there is still an issue of waiting times and numerous verification steps, which often results into borrowers failing to get loans on time due to low attention to individual cases. Moreover, there is no guarantee at all that one will receive the funds he has requested.

In microfinance all of this is avoided as these institutions have a higher processing capacity and are able to issue loans to those who need them in a short timeframe.

Mobile Apps for Microfinancing

As mentioned before, microfinance has expanded the opportunities of individuals by allowing them to operate through their mobile devices. By leveraging the power of smartphones, microlending institutions have gained the ability to onboard more clients than traditional banks and issue loans to those who have limited access to banking services.