{"id":12142,"date":"2019-06-21T09:35:21","date_gmt":"2019-06-21T09:35:21","guid":{"rendered":"https:\/\/habiletechnologies.com\/?p=12142"},"modified":"2022-07-22T10:45:37","modified_gmt":"2022-07-22T10:45:37","slug":"how-fintech-is-transforming-microfinance-institution-in-australia","status":"publish","type":"post","link":"https:\/\/wiki.cloudbankin.com\/index.php\/2019\/06\/21\/12142\/how-fintech-is-transforming-microfinance-institution-in-australia\/","title":{"rendered":"How FinTech Is Transforming Microfinance Institutions In Australia"},"content":{"rendered":"

Donna Cleeland from Australia was a single mother to three young kids. When her husband left the family, she was left without access to a bank account or a regular job to support her family. This led to major life complications. Add to it the demands of running a stable household, and the situation seemed precarious for Donna.
\nThis is when she heard about small finance loans from credible lenders here in Australia. Till date, she has availed of 5 such loans up to $2000 to pay for basic comforts for her kids \u2013 including a washing machine that would\u2019ve otherwise taken a year to arrange funds for.
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\nThis is the power of microfinance providing a positive impact to families and companies across Australia. New research shows that microfinance truly embodies the synonym of \u2018Small is big\u2019 here in Australia. An instance is the NAB support of micro enterprise businesses. Such financial support has helped raise $44 million<\/a><\/span><\/strong> in revenues and led to employment of 300 deserving individuals in the last 5 years.
\nIn Australia, we see microfinance rapidly transforming with shifting customer preferences and evolving market demands. This is where fintech comes in as a viable solution to improve the underlying objectives of financial inclusion for all<\/p>\n

Fintech in Australian microfinance domain<\/strong><\/h3>\n

In the present economic scenario, Fintech or financial technology, has gathered immense popularity. It aids financial organizations, with a quicker and effective delivery of financial services to customers.
\nA consumer can judge the impact of this term, when he sees all traditional banking activities now possible on a smartphone in a few taps. Thus, detailed information is at his fingertips, without stepping out to inquire about it. That\u2019s the actual impact of Fintech for the new age customer of today.
\nFintech is leading to a dramatic shift in the traditional business model of microfinance organizations. The rapid proliferation of smartphones ensures that the regular activities of microfinance are now transformed. These include credit approvals, disbursement, tracking, payments, and remittances.<\/p>\n

You May Also Like: 51 Best Fintech Blogs And Forums Worth Following<\/a><\/p><\/blockquote>\n

What part of the demographics is impacted by microfinance?<\/strong><\/h3>\n

Latin America, Africa, and Southeast Asia were the key recipients of the benefits of microfinance. The field emerged as a need to alleviate poverty and improve the economic conditions of those people or institutions who typically couldn\u2019t get a loan from a traditional lending institution like a bank. However, with increasing popularity, we see many lenders opening up operations here in Australia too.
\nSome of the key demographics that are impacted positively by fintech include the \u2018bottom of the pyramid\u2019 people or businesses. For them obtaining loans through regular lending channels will be impossible. We see a lot of commercial players emerging in order to serve the needs of these people who find it difficult to get good loans from banks.<\/p>\n

How Fintech helps here?<\/strong><\/h3>\n

While Australia has 98.90%<\/a><\/span><\/strong> of its population with a bank account, many out of this remain unbanked due to many reasons like geographic barrier or tech limitations.
\nWith fintech, the concept of financial inclusion pervades far and wide across the expanse of the continent. Through bank agent networks, people in remote or rural areas can now operate bank accounts through smartphones or feature phones. This way more and more people can now come under the banking ambit and build a suitable credit profile to help them successfully apply for the various loan products on offer.
\nSpeaking of credit scores, this is also an area where fintech can deliver massive gains to the microfinance institutions. It is obvious that these institutions cannot use the same yardstick as traditional banking institutions to lend money or determine creditworthiness. With fintech, alternate credit worthiness checks become easier with solutions driven by AI-based algorithms. Such tools will consider factors like social media profile, utility bill payment history and its promptness, and area of residence. Based on these factors, the microfinance institutions can assess whether a person is good enough to be disbursed a loan or not.
\nSuch alternative models of working have enabled the microfinance institutions to reach out to the crucial category of small businesses that employ other people but are yet not able to access credit to grow their business and generate employment. These borrowers don\u2019t strictly come under the purview of the working of microfinance (which is primarily catering to individuals rather than businesses). However, the underlying principle is similar. Small businesses who haven\u2019t built a credit profile now need not be troubled by lack of credit scores in order to secure a loan. Credit scoring algorithms brought about by fintech helps in delivering the right assessment of a person\u2019s creditworthiness.
\nAdvantages<\/strong><\/p>\n