Approximately 25% of microfinance organizations (MFOs) risk exiting the Russian market due to their inability to comply with new legislative requirements. Starting March 1, Russians obtaining loans online from microfinance companies will be required to verify their identity using biometrics — a measure introduced to protect against fraud. However, not all players in the MFO market are prepared for these changes, as implementing the service costs at least RUB 30 million ($386K). Consequently, smaller companies may shut down or be absorbed by larger market participants.
The microfinance market is entering a period of qualitative changes, a long-overdue step, notes Igor Rastorguyev, Lead Analyst at AMarkets.
“The introduction of mandatory biometric identification from March 1, 2026, represents a fundamental shift in operational principles. We see that the primary goal here is to protect citizens,” the expert believes. “According to the Central Bank of Russia, in 2024 alone, the volume of thefts from accounts increased by 74%, reaching a record RUB 27.5 billion ($354 million). MFOs, as the most widespread and fastest online channel, were an ideal target for fraudsters, and biometrics effectively closes this channel for them. Yes, it requires investment, but what is at stake is the security of citizens’ savings.”
Of course, the market expects natural consolidation, the analyst predicts. According to various estimates, the costs of the direct integration with the Unified Biometric System range from RUB 15 to 30 million ($193K to $386K). For small companies with an annual turnover of less than RUB 50 million ($644K), this is a significant burden.
“However, it is important to understand here: it is not the strong or the weak that are leaving, but those who are unwilling to operate in the new, more technologically advanced and transparent reality. The Central Bank has already proposed support measures to facilitate adaptation, and for smaller players, there is the option of delegated identification, where the cost of a single identity check is only RUB 4–19 (5–24 cents). These are entirely workable mechanisms,” Igor Rastorguyev asserts.
There are concerns that some clients might turn to illegal lenders who will simply ignore any new law.
“But I believe this is a temporary factor. People quickly adapt to security and convenience,” the analyst concludes.
Approximately 50 million users currently have access to simplified biometric authentication, and surveys indicate that about 45% of borrowers are willing to use it. Over the past two years, the number of microloan applications has nearly doubled, suggesting strong market demand. As a result, rather than collapsing, the market is expected to undergo restructuring. According to forecasts, by the end of 2028, up to one-third of companies may exit the market, while those that remain are expected to become more resilient. Most importantly, consumers will have greater assurance that loans cannot be issued using their passport data without their knowledge. According to the analyst, this represents the systemic level of protection that has been lacking.