Growth for Good: Supporting microfinance expansion in APAC
For a region home to around 60% of the world’s unbanked population, microfinance institutions hold particular importance in Asia Pacific. They play a vital role in providing banking services to individuals and businesses without access to traditional banking channels.
Temenos supports their work through our Inclusive Finance solution, which is trusted by over 330 non-bank financial institutions, community banks, credit unions and challenger banks in 53 countries worldwide. This solution addresses the key business priorities of microfinance organizations. For a sector where speed is of the essence, preconfigured, market-specific functionality harnesses decades of expertise to allow rapid implementation in just weeks. It also allows tailored products, particularly loans, to be brought rapidly to market. And as customer needs change and evolve, it offers seamless omichannel experiences across channels.
Making an impact
As Managing Director for Asia Pacific, I feel inspired by the impact Temenos has on microfinance work in our region. For example, I recently found myself touched by our success story with Creditaccess Grameen, India’s largest microfinance institution with 4.6 million customers. Using our solutions, they have created products that cater to their customers’ needs, achieving 20-30% annual growth in the last 5 years. They are processing 90,000 loan applications and 3-4 million transactions every day. That’s a massive difference, particularly for Indian women, who make up 99% of Creditaccess Grameen’s customer base.
To give another example, in the Philippines around 65% of adults are unbanked. Cebuana Lhullier bank has had incredible growth in the Filipino market, with deposits growing 12 fold in the last 5 years. We’re working with them to manage accounts and transactions for 7 million Filipino customers with greater performance and efficiency, and to offer personalised products faster at lower cost. This will allow the bank to introduce affordable new lending products like motorcycle loans, attract new customers and grow sustainably towards an ambition of 11 million customers in the next five years.
The future for microfinance is exciting. The current size of the market is $228bn, by 2033 that will have increased threefold to $650bn. We will support this growth in the region by increasing our footprint in key Asian and Pacific markets.
Cloud and SaaS are the future
It’s worth considering the role Cloud and SaaS technology can play in making this rapid growth sustainable. With mobile banking set to become an ever more dominant channel, the elastic scalability offered by Cloud will become crucial to ensure cost efficiency given the unpredictable usage patterns in mobile banking. Equally, the processing power of Cloud will allow microfinance FIs to harness technology like AI and advanced data analytics. This will result in even faster speed to market, more agile product development and more seamless customer journeys. Finally, operating on Cloud offers up to 95% savings on carbon emissions compared to traditional on-premise solutions. This takes ‘efficiency’ and ‘sustainable growth’ far beyond a cost consideration.
Providing that wider benefit to communities and stakeholders feels an appropriate place to end. Our vision at Temenos is to power a world of banking that creates opportunities for everyone. That means making banking better; not just to make our clients smarter and more sustainable organizations, but also to address challenges in our world like the unbanked.
This is what our support for microfinance institutions is all about, and I look forward to continuing the journey in APAC for the benefit of all our stakeholders.