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Yes! I want to support microfinance and empower people to work their way out of poverty.
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| Innovations in Microfinance Beyond Business as Usual
ACCION believes that microfinance is capable of reaching no fewer than the 500 million poor entrepreneurs whom the World Bank says could benefit from it. To do that, we must focus our efforts on a new business model for microfinance – one that emphasizes innovation and minimizes cost. ACCION staff members support 32 MFIs in Latin America, Africa, Asia and the United States, working in the four key areas of our new approach: - Diversified microfinance products. Economic opportunity may start with a microloan, but it does not end there. The entrepreneurial poor need access to a full suite of quality financial products, such as savings accounts, insurance, remittances and housing loans. ACCION staff are continually piloting and refining financial products that serve the needs of the poor more completely. Learn more about our microfinance products.
- Alternative delivery channels. In the developing world, accessing financial services is not as simple as finding a street-corner ATM. Where there may not be ATMs, however, you’re more than likely to find a local pharmacy or kiosk – both of which can serve as financial outlets. To overcome infrastructure challenges, ACCION is innovating around both new and existing distribution channels to find efficient ways to deliver – and expand – microfinance. Learn more about our work in alternative delivery channels.
- Better technology. Twenty-first century progress should not be limited to those of us in the developed world. ACCION is improving the quality and delivery of financial services for the poor by connecting technology—such as remote Internet access and point-of-sale devices – to microfinance providers, opening up new opportunities for effective and efficient financial services for all. Learn more about our work in technology.
- Risk management. When a mother of three has no collateral for a loan to purchase her first sewing machine, character counts. ACCION experts continue to fine-tune credit scoring tools for MFIs, so that loan officers can quickly and accurately assess potential clients’ financial risk – and reward.
Together, these four components are designed to radically enhance efficiency and expand the variety of products and services available to the world’s poor. Successful implementation of this new business model will require challenging widely accepted paradigms of microfinance (like the central role of the loan officer) and approaches, as summarized in the table below.
A New Business Model for Microfinance | Dimension | Traditional Model | New Business Model | Target Market | Microenterprise | Low-income households | Core Product | Working capital loans and other business credit | Full financial services (savings, remittances, insurance, education, etc.) | Delivery Channel | Branches | Retail outlets, payment systems, (ATMs, POS, cards, cell phones) | Relationship Manager | Loan officer | Promoters | Organizational Structure | Decentralized | Centralized | Credit Underwriting | Integrated, personalized, high-touch services | Specialized functions, increased automation | Risk Management | 6th sense, experience, deliquency - zero tolerance | Statistical modeling, risk-based pricing | Technological Platform | Personalized MIS & applications (if automated) | Common, networked systems, standardized software |
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