There is a common perception that microcredit is a post-Soviet story and that the main users of the service are those who do not have enough money to cover their minimum needs. In reality, this is not the case: In European countries, the microfinance market is used as an effective tool to reduce unemployment and help citizens belonging to disadvantaged groups to realise their creative and entrepreneurial potential. Traditionally, Eastern European countries borrow more frequently than continental European countries: 7% in Germany, 12% in France, 11% in Switzerland and 17% in the United Kingdom. In Poland and Hungary, for example, the lending rate is 100%, but it is important to note that loans to businesses account for 70% of the microfinance portfolio. The digitisation of financial processes is growing rapidly in Europe, with around 80% of all market participants having applications and offering services online.
The most promising regions in Europe are Poland and Spain. After the 2009 crisis, unemployment started to rise in these countries and loans became a convenient financial product that could be used to solve short-term problems such as mortgage repayments and business support. In Spain, MFIs continue to grow and many people deposit money into bank cards or PayPal wallets. As in all countries, money is paid out within 15 minutes on average and decisions are made with the help of artificial intelligence. In Poland, the situation is the same. Here, IT and digital tools are actively used to assess borrowers and loans are granted for a maximum of 30 days. Unlike in Poland, there are no restrictions on the annual interest rate and the market is not subject to supervision.
In the UK, microloans are one of the most popular financial products used by everyone, including students, pensioners and even start-ups. The latter, by the way, are attracted by the fixed interest rates, which encourage business and thus improve the UK economy. The interest rate on microloans in the United Kingdom is 0,9 % per day.
Germany is another progressive European country where people do not seek microcredit out of desperation. The loan amount is 110 euros and the client must have a stable income, reside in Germany with a passport and a bank account and, interestingly, must have evidence of electricity payments.
Nor is the US the last country in the world where microcredit is popular: There are more than 400 MFIs. The number of PDL loans has tripled and the average loan amount is $375. At the same time, the regulatory pressure on the market is the same , where the issue of capping interest rates is also frequently raised, but so far this initiative has not been successful. Russia is actively developing financial solutions and technologies, and mobile phone applications for microcredit are being created and developed, which are used not only by millennials, but also by other age groups.
Traditionally, the countries of Europe and the USA are characterised by a high level of development, including income levels.