Fundación Microfinanzas BBVA

Microfinance in the digital age, challenges and opportunities

Imagen recurso tecnología

The leading microfinance experts on the continent gathered in Barcelona for the European Microfinance Summit (EMS), where for two days they shared their experience in order to identify the challenges and opportunities in the sector in the new digital age. This is one of the main challenges for the BBVA Microfinance Foundation, which, like the other organizations present, works in developing countries to improve the lives of disadvantaged sectors.

The new digital tools in the microfinance sector were precisely one of the topics at this summit. Due to the many challenges still remaining, the technology will be key to extending the reach of financial services and reducing costs.

According to BBVA Research, blockchain “is a public accounting system that is maintained via a distributed network of computers and without the need for any central authority or third parties to act as intermediaries”.

Indeed blockchain aroused particular interest among the participants because of its disruptive character and the current debate around this technology. Radoslav Albrecht, CEO of Bitbond, outlined some of its advantages at the EMS. These included greater reliability, profitability, efficiency and universality compared to current online banking methods.

The European leading microfinance experts at EMS 2017

Challenges for the development of the sector

Paradoxically, in countries with a high rate of financial exclusion there may be an oversupply in more accessible areas and particularly in cities. Perrine Pouget from the European Investment Bank (EIB) spoke about risk prevention and the consequences of overindebtedness and market saturation, and presented the main indicators used in the EIB for the early detection of these crises. To avoid these situations and protect customers’ interests –especially the most vulnerable–, the EIB also highlights the importance of adequate regulation and supervision.

Elsewhere, Luca Torre, CEO and co-founder of GAWA Capital, a company dedicated to capturing and managing socially responsible investment funds, outlined the advantages of investing in the microfinance sector with far-reaching social impact.

Measuring social impact as a strategic tool

Rodrigo Peláez, director of Impact Measurement at the BBVAMF, presented the foundation’s social measuring system for use as a management tool. “Measuring the economic and social development of our customers allows us to understand their situation and to see whether our work is aligned with our mission. All this knowledge enables us to improve our strategy”.

The BBVA Microfinance Foundation serves over 1.8 million vulnerable people in Latin America and promotes the social and sustainable development of these individuals through productive activities.

Rodrigo Peláez, MIDE director, in the European Microfinance Summit

Each year the Foundation publishes a social performance report with indicators for the purposes of assessing the work of all the institutions in the BBVAMF. It also includes some of the stories of the customers who have moved ahead thanks to microfinance.