Making Micro and Small Business Finance Profitable: An e-finance Initiative

This presentation traces the evolution of International Finance Corporation's (IFC) financial market strategy in micro and small business lending - from relationship lending to "mass-customized" financial services. This new approach to financial services:

• Adopts a "package" approach to distributing a range of financial services, thereby becoming a payment intermediary linking many businesses;
• Applies consumer finance techniques to the small business sector;
• Relies significantly on financial and information technologies to develop/manage new products and services.

The financial system displays two levels of intervention through:

• Creation of basic infrastructure accessible to all financial institutions in a country;
• Advancing individual financial institutions (FIs) to serve small and micro businesses.

Further, the presentation provides details on:

• Credit scoring technology to advance IFC's strategy for micro and small business markets;
• IFC's e-finance/mobile banking pilots;
• IFC's new role as:
  • Investor;
  • Coach;
  • Knowledge manager;
  • Gate keeper.

Finally, the presentation suggests leveraging IFC's analytic skills and experience to become a pro-active partner in developing sustainable financial institutions serving the SME market. It lists the following three events that shall provide support to the IFC/World Bank's initiatives:

• Global credit bureau initiative;
• International credit scoring conference;
• E-finance roundtables.