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MFIs in a Changing Landscape: Survival of the Fittest?
New technology is altering the financial landscape. New entrants seeking large scale deployment are entering into the traditionally reserved market segment for microfinance institutions. A more complex and competitive environment requires new strategies, services, and partnerships. Microfinance providers need to become more sophisticated to stay relevant. Stagnation and reluctance to adopt new technology have been noted as dominant concerns in the most recent Microfinance Banana Skins survey. There is a perceived risk that faster-moving rivals will gain market share from MFIs if the industry does not evolve at a quick enough pace. “New, innovative players are rapidly entering and have potential to eclipse MFIs’ relevance, especially in Africa with mobile network operators”- remarked one global investor. In order to face these challenges, a greater understanding of the pros and cons of different partnership models is required. This includes a careful look at both incentives and risks along with the compatibility of underlying business models.
Can MFIs stay relevant in an increasingly complex and rapidly evolving technological landscape?
Can they innovate at the pace needed to contend with new entrants?
What are the principal barriers to innovation, both intra-organizational as well as inter-organizational?