Fintech (e.g. mobile phone banking, blockchain, peer-to-peer, machine learning) is triggering an existential crisis for microfinance, said Prof. Karl Dayson, University of Salford, Manchester, at an EIB Institute seminar.

“At a time when microfinance providers are facing a crisis of legitimacy, innovators are seen as the good guys and regulation favours tech firms over finance firms”, he said. “Fintech offers a service people want and huge potential cost savings over legacy systems,” he added.

For Prof. Dayson, microfinance faces four futures: incorporation (chase sustainability and  go up-market), marginalisation (gradual decline and growing irrelevance), residualisation (focus on those most at risk and who have least access to the internet ) or reawakening via greater collaboration around technology and processes, with enhanced moral purpose to offset big data risks.

Click here for the presentation