Beyond Payments: How Fintech Firms Use Microfinance Licenses to Expand Their Offerings
The microfinance sector has traditionally been the domain of specialized lenders focused on serving the underbanked. However, in recent years, a new trend has emerged - fintech companies are increasingly acquiring microfinance banking licenses to expand their capabilities.
According to Eric Ntumba, the acting CEO of Baobab Microfinance Bank, this strategic move by fintechs is driven by their desire to go beyond just being payment platforms. "Most fintechs present themselves primarily as payment platforms. However, once they obtain a microfinance banking licence, they can also lend. Thus, they become relevant competition as they are equipped to perform the same regulatory activities we do," Ntumba explained.
The advantages for fintechs are clear. By obtaining a microfinance ...
