In Indonesia, where 110 million people live on less than $2 a day, microfinance is a crowded, fractured field: More than 50,000 microfinance institutions (MFIs) operate there, reaching 50 million poor people. But what about the rest?
The Oregon-based antipoverty group Mercy Corps ventured a bold answer in May, when it bought a struggling Balinese bank and reopened it as a wholesale outfit exclusively serving MFIs. The mission of this "bank of banks" is to cut MFIs' costs and inefficiencies, and provide them with the capital, financial tools, and tech platforms they need to improve and expand their services.
"We wanted real impact," says CEO Neal Keny-Guyer, who argues that microfinance needs such evolutionary leaps to become a sustainable industry. The bank's first loans were disbursed in the fall, and efforts are under way to expand the model to China, Nepal, and the Philippines.