Transformation of the Business Model of a Microfinance Organization when Introducing Products Atypical for the Sector

Abstract

The article examines the deep restructuring of the business model of microfinance organizations (MFOs) that arises when expanding the product portfolio through the introduction of solutions atypical for the sector, primarily mortgage lending. The aim of the study is to identify the mechanisms, driving forces, and constraints of such a transition based on a comparative analysis of regulatory and market conditions in the USA, Europe, and Kyrgyzstan. The methodological basis includes a systematic literature review on business model innovation, comparative analysis, and an instrumental case study using the materials of one Kyrgyzstani MFO. The findings show that the launch of a mortgage line operates not as stepwise optimization but as a trigger for a radical shift affecting key elements of the model: the value proposition, the structure of customer segments, the configuration of critical resources, the contours of the risk management system, and funding sources. It is established that in developed jurisdictions (USA, Europe) regulatory requirements are the primary constraint, whereas in the context of emerging markets (Kyrgyzstan) technological readiness and access to long-term capital become decisive. The author’s hypothesis regarding the transformation of MFOs into a hybrid banking architecture is supported by the case analysis. The results presented may be useful to managers of financial institutions, regulators, investors, and researchers focusing on the evolutionary trajectory of the microfinance sector.