Nonbankers

Nonbankers is a broad term used to describe individuals or firms that provide financial services or credit without holding a banking license. In practice it includes nonbank financial institutions (NBFIs) such as microfinance institutions, leasing companies, consumer finance firms, moneylenders, mutual funds, and insurance or fintech firms that offer lending, payments, savings, or asset-management services. The designation can also refer to informal or unaffiliated actors that extend credit or process payments outside traditional banks.

Role and activities

Nonbankers often fill gaps left by traditional banks, extending credit to borrowers with limited credit history, small businesses, or underserved populations. They may offer consumer loans, microcredit, leasing, factoring, remittance services, payment processing, asset management, or insurance products. Because they typically operate outside conventional deposit-taking and payment rails, they may rely on different funding sources, such as wholesale markets, securitization, or customer deposits if they are regulated as depository entities.

Regulation and risk

Nonbankers are generally subject to regulatory regimes that differ from those governing banks and can be more fragmented, spanning securities, insurance, consumer finance, or payments regulators. This can create gaps in supervision and increase vulnerability to liquidity shortfalls, run risk, or credit losses. Systemic risk can arise through shadow banking channels when funding, liquidity, and risk transfers are opaque.

Global context

Nonbankers play a substantial role in many financial systems, especially in promoting financial inclusion and competition. In some economies, fintech lenders and nonbank credit providers are prominent, while in others macroprudential and consumer-protection measures aim to address credit risk and transparency in nonbank activities.