Microfinance for Bankers and Investors: Understanding the Opportunities and Challenges of the Market at the Bottom of the Pyramid » (New Edition)

Elisabeth Rhyne is managing director of the

Center for Financial Inclusion at ACCION

International, where she works to bring

together leaders in financial services to address

challenges facing the microfinance industry

today. ACCION International is a leading

microfinance organization that provides

microloans, business training, and other financial

services to low-income people starting

their own businesses. Rhyne is the author of

four previous books on the subject, including

Mainstreaming Microfinance.

Double Bottom-Line Business…

Socially Responsible Success

As an industry with annual growth rates of 30 percent over the

past six years, microfinance is becoming one of the best avenues

for achieving what every investor wants: sustainable investment

opportunities for long-term growth and dramatic increases in

market share.

Technological advances make it cheaper to reach more and more

customers. The purchasing power of low-income people is increasing.

These and other factors make the time ripe for the private sector to

invest in the growth of the millions of people at the bottom of the

pyramid.

Microfinance for Bankers and Investors is the first guidebook for

entering and profiting from this emerging market. This practical

road map offers:

• Facts and figures demonstrating the outstanding

  opportunities in this sector

• Success stories from Citibank, Visa, Sequoia Capital,

  and other major companies

• Best practices and key insights from today’s top players

  in microfinance

The impressive global growth of microfinance is one of the few

bright spots in today’s difficult financial-sector landscape. Microfinance

for Bankers and Investors provides businesses an opportunity to

engage in a double bottom-line business and provides the insights they

need to tap into a market that has yet to reveal its full potential.

Elisabeth Rhyne is managing director of the

Center for Financial Inclusion at ACCION

International, where she works to bring

together leaders in financial services to address

challenges facing the microfinance industry

today. ACCION International is a leading

microfinance organization that provides

microloans, business training, and other financial

services to low-income people starting

their own businesses. Rhyne is the author of

four previous books on the subject, including

Mainstreaming Microfinance.

Preface vii

Introduction xiii

Part 1 Understanding Clients, the Market, and the Opportunities

1 The BOP Market Up Close (and Personal) 3

2 Who Serves the BOP Market-and Who Doesn't? 11

3 Four Critical Challenges in the BOP Market 18

4 Products for the BOP Market 27

5 Three Products: Insurance, Housing Finance, and Remittances 34

Part 2 Models and Corporate Choices

6 Corporate Choices 47

7 Commercial Banks as Microlenders 57

8 Partners at the Last Mile: Retailers, Banking Agents, and Insurance Companies 66

9 Models of Financing Inclusive Finance 77

Part 3 The Emerging Industry of Inclusive Finance

10 Building the Infrastructure for Inclusive Finance: The Enabling Environment 95

11 Credit Bureaus and Credit Scoring 103

12 Last-Mile Technologies 111

13 The Technological Base: Payment Systems and Banking Software 120

14 Building the Market for Investing in Microfinance 126

Part 4 Socially Responsible Returns

15 Approaches to Social Responsibility 139

16 Client Protection and Proconsumer Inclusive Finance 148

17 Measuring the Social Bottom Line 158

Cases 1 Banking Models

ICICI Bank: Shaping Inclusive Finance in India 167

Citigroup Fosters Commercial Relationships with Microfinance Institutions 175

Banco Pichincha and the Service Company Model 181

Banco Bradesco: Twenty-First Century Postal Banking 188

Cases 2 New Players: Retailers, Insurers, and Telecoms

Banco Azteca: A Retailer Surprises Mexico's Financial Giants 195

Vodafone: A Bold Move into Financial Services for Kenya's Poor 204

G-Cash: Filipinos Text Their Way to Mobile Banking 209

Cases 3 Industry Developers

Visa: SocialBenefit Systems That Benefit Everyone 219

Temenos: Creating Core Banking Systems for Microfinance 226

Creditinfo: First Credit Bureau in Kazakhastan 231

Cases 4 Financing Models

MF Analytics and Citibank: The Securitization of BRAC Loans 239

Credit Suisse: Bringing Compartamos to the Market with a Successful IPO 245

Sequoia Capital: Private Equity and Indian Microfinance 252

Cases 5 Social Responsibility

ANZ Bank: If the Mountain Will Not Come to Us, Then We Must Go to the Mountain 261

Equity Bank Goes to Schools 266

Triodos Bank and the Global Reporting Initiative 272

Acknowledgments 279

Endnotes 281

References 299

Index 317