HALIFAX, Nova Scotia – Tiny loans to the poor have opened an attractive new field for lenders and insurers, providing the perfect marriage of philanthropy and the promise of new clientele for the world's biggest banks.
"On the one hand it's a very logical area to focus on from a corporate citizenship point of view," said Gera Voorrips, program manager of Dutch financial services company ING Groep's microfinance support and a participant at the Global Microcredit Summit in this Canadian East Coast city.
"(And) there is of course this potential for future markets."
The summit, which ended on Wednesday, attracted more than 2,000 delegates to discuss problems and potential in a field that has been in the headlines since Bangladeshi banker Muhammad Yunus and his Grameen Bank microcredit lending group won the Nobel Peace Prize last month.
Representatives from banks and insurers mingled with microcredit groups and non-government organizations, showing off their growing involvement in a sector that aims to lift millions out of poverty, one tiny loan at a time.
"I really think that there's much more we can do to accelerate and expand the impact of access to financial services," said Robert Annibale, Citigroup's global director of microfinance.
Annibale said banks are getting involved in a variety of ways, from pioneering new technology to serve illiterate microcredit borrowers to backing loans given out by the microfinance institutions themselves.
In India, Citigroup's banking unit, Citibank, is working on biometric automated teller machines that use fingerprints as identification and vocal guides to help the illiterate.
Meanwhile British bank Barclays Plc wants to former partnerships with microfinance players in Africa.
"What we need to do is go into the other countries where Barclays is present and start to do some work on the ground and find out what's already out there," said Peter Kelly, Barclays' head of financial inclusion.
In Ghana, the bank has a program that gives local entrepreneurs who already collect and save money for market vendors, the chance to expand their services.
"Not everything will be for profit maximization, but what we're trying to do is help our businesses understand this new market," Kelly said. "I think we need to start to examine how we can blend this social and commercial approach."
Nobel laureate Yunus would like to see financial institutions take their microfinance approach further, directly to the borrowers themselves.
"I hope some day they will do it," he told Reuters in an interview.
Microcredits can be for loans as low as $50. They aim to help the poor to start or develop small businesses, aiming to pull them out of poverty and help them start a new life.