What is the best way for very poor people to borrow money? Can formal, regulated financial institutions reach the poorest and achieve financial sustainability? Research by the UK Overseas Development Institute in Bangladesh, Thailand, Peru, Colombia and Bolivia, casts doubt on the efficacy of formalisation – the transformation of an NGO-based microfinance institution into a formal bank – and suggests that it is far from the perfect solution. If financial sustainability succeeds at all, it may only do so at the cost of denying the poorest parts of society access to financial services.