Banking at the Base of the Pyramid: A Microfinance Primer for Commercial Banks

Commercial banks have tremendous potential to service the microfinance market profitably. Branch networks, access to capital, and qualified human resources all provide banks with the fundamentals to launch and grow successful microfinance operations. Over the past decade, many banks have entered the microfinance market and several banks have recently shown promising results in terms of profitability and growth in this market segment. While their strategy and operations share many elements of traditional, nonbank microfinance operations, innovative practices and models are emerging. The purpose of this primer is to provide a concise summary of the issues and options facing bankers when designing and implementing microfinance programs.

Accompanying the Microfinance Primer is "Banks in Microfinance: Guidelines for Successful Partnerships", a microNOTE written for USAID staff who are considering approaching banks to develop microfinance programs. It is intended to help donors, bank advisors, and other strategic partners to make better-informed decisions about whether and how to approach a bank to offer support for implementing or expanding a microfinance program, and how to ensure success for such an endeavor. The Related link for this document can be found below.