Ericsson Shares Insight On 'Disrupting' Microfinance System To Benefit Millions Of SMEs

Though Microfinance – the provision of small, short-term loans – is a labor-intensive business that has traditionally been reliant on personal relationships between lenders and clients, Ericsson said that a new data-driven era has begun.

Ericsson identified that as a result of technology backwardness  the Microfinance industry has tended to be a local, small-scale activity, with its growth hampered by a dearth of reliable credit information about applicants.

But the growing use of mobile phones, digital services and mobile money accounts is beginning to fill that vacuum.

Mobile operators are teaming up with banks, financial tech companies, and data analytics specialists to use the data they have on customers to gauge their credit risk and offer microfinance products to some who would otherwise lack any proof of their ability to repay a loan.

The Future of Microfinance
This latest Mobile Financial Services Insight Brief explores how new digital technologies and services are enabling microfinance to scale in a way that wasn't possible using the sector's traditional distribution model.

It also discusses the steps a microfinance provider should take in order to gain a competitive edge and win market share while also enjoying economies of scale.

The Insight can be downloaded from its website.