Microfinance Institutions and Banks in Europe: The Story to Date

Interactions between MFIs and banks occur naturally in Europe. However, these interactions are not always voluntary; the national legislative frameworks shape the partnerships and strategies observed in different countries. Obviously, both banks and MFIs are impacted by these interactions. On one hand, MFIs integrate mainstream banks into their business models. On the other hand, banks revise their operating strategies in response to the growing role of MFIs on the financial market in Europe.

The aim of this study is to draw a relevant picture of MFI-bank partnerships in Europe. It analyzes why MFIs and banks collaborate, the challenges they encounter and possible paths for improvement of their cooperation. To do so, the study focuses on the patterns emerging from fifteen case studies of purposely selected MFIs and banks in ten European countries. 

The study is structured as follows:

• Review of the methodology used in the study;
• Description of the identified partnerships between banks and MFIs in Europe, including both downscaling and upscaling strategies;
• Presentation of main results through the lens of the emerging trends illustrated by the case studies - the results are framed in contrast to patterns observed in developing countries;
• Overview of alternative models of collaboration initiated by MFIs with crowdfunding and peer-to-peer platforms, microinsurance and transfer companies, etc.;
• Look at the road ahead for MFI-bank cooperation and agenda for further research.