Integrating fintech and innovation in microfinance: Transforming credit accessibility for small businesses
1 University of Potomac, Virginia Campus, USA.
2 Independent Researcher, Dallas, TX, USA.
3 Independent Researcher, USA.
4 Independent Researcher, Lagos Nigeria.
Review
International Journal of Frontline Research and Reviews, 2024, 03(01), 090–100.
Article DOI: 10.56355/ijfrr.2024.3.1.0032
Publication history:
Received on 02 October 2024; revised on 09 November 2024; accepted on 12 November 2024
Abstract:
The integration of fintech in microfinance is transforming credit accessibility for small businesses, especially those traditionally underserved by conventional financial institutions. Fintech solutions offer innovative pathways for microfinance institutions (MFIs) to streamline lending, reduce operational costs, and enhance credit risk assessment, making it easier and faster for small businesses to obtain funding. This review explores how digital lending platforms, blockchain technology, mobile wallets, and artificial intelligence (AI) are reshaping the microfinance landscape. By leveraging digital platforms, MFIs can simplify loan application processes and expand financial services to remote or unbanked areas, where small businesses often lack the collateral or credit history required by traditional lenders. Blockchain and smart contracts enhance transparency, security, and trust in transactions, while AI and machine learning provide advanced methods for assessing creditworthiness using alternative data. These innovations enable MFIs to adopt a more inclusive approach, reaching small businesses with customized financial solutions and enabling responsible lending practices. This review examines case studies from diverse regions to highlight the transformative effects of fintech integration on credit accessibility for small businesses, demonstrating tangible improvements in financial inclusion and economic resilience. Despite these advancements, challenges remain, including data privacy concerns, regulatory issues, and technological barriers in under-resourced areas. Addressing these issues through collaborative partnerships, regulatory frameworks, and digital literacy programs can maximize the impact of fintech-driven microfinance. Ultimately, integrating fintech into microfinance has the potential to drive sustainable economic growth, empowering small businesses to thrive and fostering a more inclusive financial ecosystem. This review advocates for continued innovation and supportive policies to strengthen fintech's role in advancing credit accessibility for small businesses globally.
Keywords:
Fintech; Microfinance; Credit Accessibility; Small Businesses; Review
Full text article in PDF:
Copyright information:
Copyright © 2024 Author(s) retain the copyright of this article. This article is published under the terms of the Creative Commons Attribution Liscense 4.0