Inclusion – expanding the reach of microfinance One of the key challenges for microfinance has been providing access to financial services where it is unavailable, but needed the most. Expanding the reach of financial services, and finding new ways to do so cost efficiently, lie at the very heart of efforts to increase inclusion. The right channels can also create emotional connections, not just geographical ones. Making it easier for borrowers to connect with financial institutions in ways that they feel comfortable with, can build affinities with financial institutions which in turn, encourages participation and timely repayments. Mobile banking is an excellent example. The portability, affordability and ubiquity of mobile gadgets effectively put a bank in everyone’s pockets today. The numbers are telling. Half the global population use mobile internet. We spend 4 hours on the phone and use 12 apps in a single day. The tremendous success of mobile banking in Africa has been hailed as a transformative platform for greater financial inclusion. If providers leverage digital platforms well, finance can literally be at the fingertips of the unbanked. Leveraging on digital platforms can also create a virtuous cycle. Over time, such platform providers will accumulate a wealth of data on customer preferences and behaviour. This can in turn drive drive analysis for new product offerings in the future. This is of course, highly contextual and an effective delivery strategy will likely differ across countries, communities and cultures.

Led by innovation across the globe from Bangladesh to Brazil, microfinance has allowed previously excluded segments of society to grow incomes, build assets and ultimately improve their standards of living. With poverty eradication taking centre stage in the global public policy agenda, such in the United Nation’s Millennium Development Goals, these developments are welcome. Here in Malaysia, microfinance has been an important part of the development agenda. In 2006, the Bank introduced a comprehensive microfinance institutional framework to promote the development of a sustainable microfinance industry. This facilitated greater access to financing by micro-entrepreneurs with no collateral, supported by simple application procedures, minimal documentation and quick turnaround times. The microfinance landscape in Malaysia has evolved from being Government-driven into one with vibrant private sector participation. At the turn of the century, total financing outstanding of the sector stood at USD35 million (RM151 million). Since then, it has multiplied by more than 30 times to USD1.2 billion (RM5.2 billion) in 2016, collectively benefitting more than a million micro enterprises. Despite significant strides taken since the 1970s to develop more inclusive financial systems, including in the countries represented here today, our work in microfinance is far from complete. The full potential of microfinance is not realised until we observe direct linkages to welfare improvements in the micro segment and ultimately, sustainable growth. At the same time, microfinance is also evolving in an era of unprecedented technological change. Adaptability is key for microfinance to thrive and further propel itself forward.