Current situation
NGOs generally prevail, but in a different situation according to each country
A general tendency towards upgrading can be detected in regulated and supervised institutions, whenever legislation so permits. This process occurs both because their traditional outlet for growth is being occupied by regulated and supervised financial institutions and because donors are prioritising their support for institutions that have already been regulated or are undergoing the regulation process. The importance of NGOs tends to decrease in these areas.
However, in those countries that have a very poorly developed microfinance industry or one that has still not been organised, or where governments consider financial intermediation with microenterprises to fall outside the country's financial system, NGOs prevail and, in some cases, attract savings without being supervised, which constitutes a latent risk.
Public first-tier banking has an uneven presence and results
The success stories involving public banks dealing directly with microenterprises, where positive value added is contributed to the system, are very scarce, regardless of the geographical region, with relevant cases mainly in Latin America and Asia.
Distribution is revealing itself to be the key to banking penetration
Major progress has been made in recent years in the approach financial institutions have adopted towards the population in general and towards microenterprises in particular. Accordingly, on the one hand there has been an expansion in the traditional banking distribution channel involving branch offices and service points; on the other hand, technology and communications are allowing and facilitating both the extension and popularisation of the figures of representative agents, basically retail outlets in a range of businesses, and direct remote interaction with customers. Highlights in these cases are ATMs, point-of-sale terminals and mobile phones.
This approach will have a positive impact enabling institutions and geographical areas to make inroads in the incorporation of customers at a much faster rate than in the past, and most especially in rural settings, where there are the greatest shortfalls regarding the provision of financial services. The process is taking hold more firmly in Asia and Africa, and, to a relatively lesser extent, in Latin America.
