Financial Inclusion 2015: Four Scenarios for the Future of Microfinance

This note details a scenario-building exercise that CGAP undertook to help anticipate and prepare for the global demographic, political and technological changes that will shape the future of microfinance.

The note divides developing economies into two groups, namely, large, emerging market countries that have experienced rapid growth and financial systems development, such as Brazil, Russia, India and China, and low-income countries that have weak economic growth, deep poverty, and unstable governments.

Four trends that could help or hurt financial access are wireless technology, activist governments, new international actors and international regulation. The note states that the growing pressure that demographics will place on cities, labor markets and immigration patterns will be the most important trend affecting access to finance. The client base for services globally over the next several years will be younger, more urban, more connected and informed. The note concludes that in the coming decade, the international community should:

• Facilitate technology to reach the low-end of the retail market;
• Balance market development;
• Ensure that microfinance tempers poverty alleviation with sustainability;
• Facilitate international regulation that includes poverty alleviation in its framework.