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Mona Kapoor

Digital platforms advance financial inclusion in India by closing the financial service gap for rural populations

Article

Chandra Kanthayadav was first inspired to open her business during the Festival of Rakhi one year in her hometown of Raipur, India. The popular Hindu festival is a celebration of the love between siblings and close friends, symbolized by people tying special woven bracelets called rakhis on their loved ones’ wrists. She saw how other shops in her community had great success during the festival, so she decided to open her own stall to sell rakhis and other items. Chandra quickly sold out of her inventory during that first festival and in the next festival after that.

Recognizing an opportunity to build a permanent business, Chandra opened a storefront adjacent to her family home and began searching for a way to stock her store with everyday household goods and seasonal items. At first, she borrowed from her family, friends, and other informal sources to pay for her inventory, but the higher interest rates and inconsistent availability of these informal loans prevented her from reaching her goals. Chandra found a better solution when she learned she could get funding through a more formal channel.
<h2>The power of financial services for women in India</h2>
Microcredit, small loans for low-income entrepreneurs, gives women in rural India access to the financing needed to strengthen their businesses and earn their own income. Chandra first took a group loan from Sub-K with women in her community that she’s known for over 17 years. Sub-K, a partner of Accion, is a financial provider focused on reaching underserved populations in India, especially focusing on women entrepreneurs in rural areas. Chandra has continued to work with Sub-K to purchase her inventory, eventually quadrupling her store inventory (stock) value from 5,000 rupees to 20,000 rupees. Next, she plans to expand her store to make room for increased inventory.

Sub-K celebrated their 10th anniversary in August this year. Over the past decade, they’ve helped millions of women like Chandra realize their entrepreneurial dreams, in turn instilling confidence, expanding financial literacy and stability, and improving household conditions for women and their families. As Chandra’s business continues to grow, she feels more respected in her community, and her success helps her provide for her children’s education. To reach more underserved micro, small, and medium enterprises (MSMEs) and individuals, Sub-K has launched a new digital financial tool called SARTHI.
<h2>Advancing financial inclusion through technology</h2>
[caption id="attachment_22266" align="alignright" width="146"]<img class="size-medium wp-image-22266" src="https://content.accion.org/wp-content/uploads/2020/09/Sub-K-SARTHI-platform-146x300.png" alt="" width="146" height="300" /> <em>Sub-K’s fintech platform called SARTHI, which stands for Seamless Advanced Resourceful Tech-driven Hybrid Interface.</em>[/caption]

Sub-K uses an extensive agent network to <a href="/finding-a-new-way-to-reach-the-last-mile-in-india" target="_blank" rel="noopener noreferrer">reach micro, small, and medium entrepreneurs in rural areas</a> who lack access to traditional banks. The company recently launched their new SARTHI fintech platform to complement this model and provide entrepreneurs with the tools they need to manage and grow their businesses. SARTHI will offer products like MSME credit, digital microloans, and health insurance that customers can access on their own mobile devices or with assistance from Sub-K’s staff and agents. SARTHI is integrated with multiple banks and third-party partners to provide customers with a wide variety of products and payment choices and quick application processing.

“This platform marks a major milestone in our digital transformation journey. We genuinely believe that the future is digital, and we are committed to bring a large segment of the excluded population into the mainstream by effectively leveraging the power of fintech,” says Sasidhar N. Thumuluri, Sub-K managing director and CEO. SARTHI was developed with advisory services provided by Accion through a <a href="/mastercard-and-accions-partnership-to-unlock-millions-of-underserved-microbusinesses" target="_blank" rel="noopener noreferrer">global partnership between Accion and Mastercard</a>.

Small businesses like Chandra’s are the backbone of the Indian economy, and they need financial services to weather challenging times and succeed in the future. We are proud to support Sub-K in their efforts as they move to the next chapter of advancing financial inclusion. Victoria White, the managing director of Accion’s Global Advisory Solutions, says, “Sub-K’s proven commitment to reaching last-mile customers, their expansive reach through their agent network and bank partnerships, and their demonstrated embrace of digital technologies made them an ideal partner for our efforts with Mastercard to help microbusinesses benefit in a digital economy. The launch of this platform is an important milestone in that effort.” By investing in digital tools that help microentrepreneurs build better businesses and better lives, we can bridge the financial services gap in rural India and bring financial inclusion to more people.

Banking goes digital to reach rural entrepreneurs

Amy Stewart

Understanding customers’ needs, while critical, is only half the battle in the push for financial inclusion

Over the past decade, human-centered design methodologies have made their way from Silicon Valley to the financial inclusion sector. These methodologies, which are based on deep customer understanding, blue sky ideation, and rapid prototyping, have been touted as the silver bullet to address ongoing access and usage problems at the base of the pyramid, particularly with regard to digital financial services. <a href="https://www.cgap.org/sites/default/files/CGAP_Insights_into_Action_final.pdf" target="_blank" rel="noopener noreferrer">Initial results were promising</a>: in collaboration with leading design firms, institutions were able to develop innovative product concepts and prototypes grounded in the realities of customers’ lives.

However, these products haven’t always been as successful as expected. Many products do not ultimately gain traction with customers, and others are discontinued as institutional priorities shift. Some institutions have focused on customer needs but overlooked real operational and business constraints. Others miss the complexities surrounding customer behavior and financial decision making and inadvertently solve the wrong problem.

The need for digital, customized and responsive financial products and services is greater than ever. The economic fallout from COVID-19 has disproportionately affected those without the access, resources, or network to weather the storm. Innovative financial products can help people to recover from the crisis and restart in the new normal.

<img class="wp-image-22353 alignright" src="https://content.accion.org/wp-content/uploads/2020/09/accionGraphics_Aug26_Key-Tenets.png" alt="Key tenets of innovation: feasibility, desirability, and viability" width="461" height="332" />Innovative digital products must balance customers’ needs with organizational capacity and should be built upon a solid business case to ensure that the product is sustainable in the long term. This trifecta of desirability, feasibility, and viability seems intuitive but is not easy to implement — institutions must navigate competing priorities, limited resources, and tradeoffs between each area. <a href="https://www.accion.org/to-succeed-innovative-financial-products-must-be-desirable-feasible-and-viable/" target="_blank" rel="noopener noreferrer">Our latest white paper</a> explores the interplay between desirability, feasibility, and viability, and shares lessons learned from our recent experiences <a href="https://www.accion.org/achieving-financial-health-in-mexico-and-chile" target="_blank" rel="noopener noreferrer">working with five financial services providers and fintechs in Chile and Mexico.</a> With the <a href="https://www.accion.org/accion-and-metlife-foundation-announce-expanded-partnership-to-advance-financial-inclusion" target="_blank" rel="noopener noreferrer">support of MetLife Foundation</a>, we are working with these institutions to design and launch behaviorally informed products that build customers’ financial capabilities and ultimately improve their financial health.

A few key takeaways from the paper:
<ul>
 	<li><strong>There are many ways to learn from your customers</strong>: In-depth field interviews are an important channel for understanding people’ lives, but they can be time-consuming and aren’t always feasible — particularly during a pandemic. Customer data is a rich and often underutilized resource to identify trends and user pain points. We start our customer understanding with data analysis to build hypotheses that we can later test and refine through user research, in-person where possible, or remote.</li>
 	<li><strong>The most valuable feedback will come post</strong><strong>-product</strong> <strong>launch</strong>: No research or data analysis is as valuable as customer engagement with an actual product. Even prototyping has its limits: customers may sit and look at an application for an hour with an interviewer, but in reality, they may only have five minutes to use the product during their daily lives and experience constant interruptions, connectivity challenges, and competing demands for their time. Financial institutions should seek to go to market quickly with a minimum viable product, build in robust feedback loops, and plan for ongoing improvements.</li>
 	<li><strong>Consider innovation you can sustain: </strong>In the quest for innovation, institutions often feel they must ‘go big’ and develop completely new, groundbreaking solutions. But these products often don’t make it past pilot because the gaps required for long term success are too large. Innovative products often require new skills, updated technology, or new partnerships. A more feasible product can still be innovative without requiring a full-blown overhaul of the institution. It is critical to assess operational and technological capabilities from the start, understand the implications of proposed product design, and actively plan to address gaps. Incremental innovation can be just as powerful to drive customer usage and growth.</li>
 	<li><strong>Build a business case from the beginning: </strong>In the product design process, some design efforts prefer to focus on the idea before considering business case implications. While helpful to think out the box, we’ve found this can be dangerous. Without a business case, product ideas may never get the buy-in to move to pilot; or worse, they may lead the institution to invest time and money in products that don’t make business sense. It is not enough to create a product that customers love — it must drive growth, reduce costs, or generate revenue. We always start with a preliminary business case at the concept stage and then flesh out a detailed projection of user growth, revenue, break-even analysis, and assumptions.</li>
</ul>
Innovative ideas will not help customers reach their goals or recover from the pandemic if they cannot be implemented and scaled. In the long run, products that truly drive financial inclusion are those that balance desirability, feasibility, and viability. For customers, this approach translates to more intuitive financial products and services that are aligned with their behaviors and help build their financial health. For financial service providers, this approach leads to innovative products that are sustainable, use internal resources efficiently, and achieve business goals. Learn more about how we created sustainable and innovative products in Mexico and Chile by reading our paper, <a href="https://www.accion.org/to-succeed-innovative-financial-products-must-be-desirable-feasible-and-viable/" target="_blank" rel="noopener noreferrer">To succeed, innovative financial products must be desirable, feasible, and viable.</a>

Built to last: How to turn innovative ideas into scalable products

Federico  Gomez Romero

Despite the challenging circumstances, this may be the best time for your fintech startup to accelerate growth in Brazil

Brazil has been hit especially hard by the COVID-19 pandemic, and the crisis is changing every aspect of society. Now that the most obvious and immediate effects have set in, we are beginning to see what the mid- and long-term consequences will be in the country.

I strongly believe that fintech will be one of the sectors that will emerge from this crisis both reinvigorated and transformed. As a fintech entrepreneur, you have the chance to rebuild a better Brazil.
<h2>Transforming uncertainty into new opportunity</h2>
It’s not a surprise that the macro landscape looks grim right now. The economy is <a href="https://blogs.imf.org/2020/06/26/outlook-for-latin-america-and-the-caribbean-an-intensifying-pandemic/" target="_blank" rel="noopener noreferrer">expected to contract around 9 percent</a> this year, and although analysts predict a positive rebound next year, the main players in the financial sector are still in shock. As a consequence of increased payment deferrals for loans, the current level of non-performing loans is unknown and financial institutions are navigating in the dark. The CEO of Itau referred to their strategy around managing these loans as <a href="https://www.fool.com/earnings/call-transcripts/2020/05/06/itau-unibanco-holding-sa-adr-itub-q1-2020-earnings.aspx" target="_blank" rel="noopener noreferrer">"more an art than science.”</a> I cannot find a better phrase to describe the current situation of the traditional financial sector. Amid all of this uncertainty, it is clear that fintech players will be better positioned to recover from the economic downturn if they can use alternative data sources to access updated financial information.

Those tech companies who already have access to real-time data will have an added advantage due to <a href="https://www.businessinsider.com/brazil-moves-forward-with-open-banking-2020-5#:~:text=The%20Central%20Bank%20of%20Brazil%20has%20released%20open%20banking%20regulation,the%20customer%20agrees%2C%20per%20Finextra." target="_blank" rel="noopener noreferrer">an open banking regulation released by The Central Bank of Brazil</a>, which will be fully implemented next year. In addition to the data they already have, fintechs will benefit from accessing additional information from their clients that allows them to provide a better, more personalized service. At the same time, the opportunities for fintechs to partner with banks will increase as banks seek to connect to third party providers and enrich their businesses.

But negatively hit sectors aren’t the only place where tech startups can find opportunities to offer financial services to the underserved. For example, agriculture is <a href="https://www.world-grain.com/articles/13958-record-soybean-shipments-forecast-for-brazil" target="_blank" rel="noopener noreferrer">posting record results</a>, and some industries within the gig economy, like last-mile delivery, are also growing more than ever before. There is a huge potential to layer digital financial services in these and other thriving sectors.
<h2>Data is king</h2>
Fintech companies are in an advantageous position when they have rich and timely data needed to make the right business decisions. And those data-driven companies that build strong relationships with customers by solving problems that aren’t financial — before embedding fintech solutions — are in an even better position. In the past, <a href="https://www.forbes.com/sites/vikasraj/2019/11/20/platform-fintechs-are-cominghow-should-startups-respond/#742436bb2b0f" target="_blank" rel="noopener noreferrer">we have explored how super-platform tech companies are doing this</a>, and now this approach is expanding across multiple sectors. For example:
<ul>
 	<li><a href="https://terramagna.com.br/" target="_blank" rel="noopener noreferrer">Terra Magna</a> has spent years building a huge database of farming regions and crop performance using high-tech satellite images. With a unique knowledge of the business, it is now starting to provide responsible financing to farmers.</li>
 	<li><a href="https://www.loopa.digital/" target="_blank" rel="noopener noreferrer">Loopa</a> is a startup that provides a free platform to MSMEs for credit card reconciliation, allowing them to have a better understanding of their business and solve cashflow inefficiencies. That type of relationship with customers is the one that provides infinite possibilities to add financial services.</li>
 	<li>Finally, <a href="https://www.smartmei.com.br/" target="_blank" rel="noopener noreferrer">SmartMEI</a>, one of our portfolio companies, is building solutions for the future of work. They understand the needs of a workforce that is changing every day and have built targeted financial products for an evolving workplace. The company started by providing simplified accounting services and has grown to offer a full suite of products.</li>
</ul>
<h2>But who is investing right now?</h2>
At the onset of the pandemic, capital immediately dried up for entrepreneurs. Many investors had to concentrate their efforts on helping their portfolio companies stay afloat, and others were too wary of the situation to keep investing. As Nigel Morris, partner of QED Capital, recently said in an episode of <a href="https://www.accion.org/a-great-company-going-into-covid-is-invariably-a-great-company-coming-out" target="_blank" rel="noopener noreferrer">VentureKast</a>, “We are going to see fewer tourists involved in VC in the fintech space.” The ones that will keep betting on the sector — and that have already restarted actively investing — are the true fintech specialists.

So, the big question is: who should you pitch your startup to in Brazil? Many great investors come to mind. This complete <a href="https://www.contxto.com/en/brazil/venture-capital-brazil-2020/" target="_blank" rel="noopener noreferrer">cheat sheet recently published in Contxto</a> lists some of the most active equity investors divided by industry and stage.
<h2>Don’t miss the chance to grow your startup, with some caution</h2>
The pandemic, despite all its negative connotations, is creating a temporary blue ocean for many fintechs. Now may be an excellent moment to fundraise and accelerate growth, but you should consider a few things before doing so:
<ol>
 	<li><strong>Don’t be afraid to be selective.</strong> Choose your customers wisely and make good use of your data collection and analysis capabilities.</li>
 	<li><strong>Mind your unit economics.</strong> This is a moment to grow, but definitely not at all costs. Bear in mind that this is a time ruled by uncertainty. The less you burn, the more runway to have to survive through the storm. VCs are certainly looking at this before investing.</li>
 	<li><strong>Valuations are coming down.</strong> Early-stage valuations in Brazil reached astronomical levels in recent years, and now it’s not uncommon to see up to 30 percent cuts. Believe it or not, this could be a good thing for your startup as you can align incentives with your investors and reduce the risk of a down round in later stages.</li>
 	<li><strong>Banks will catch up.</strong> This blue ocean won’t last forever, and open banking will facilitate access to information for all players. Start preparing for what will come after COVID-19, whether or not you work directly with banks.</li>
</ol>
<h2><strong>Accion Venture Lab is here to help the ecosystem grow</strong></h2>
Accion Venture Lab’s mission is to support innovative companies that help the financially underserved. We are always working to grow the fintech ecosystem — even outside our portfolio. This the first in a series of blog posts and webinars we will be hosting in the coming months, made possible by support from FedEx, to help the Brazilian fintech ecosystem thrive through the COVID-19 crisis. We invite you to follow along and <a href="mailto:accionventurelab@accion.org">reach out</a> if there is any way we can support you.

Now is the time for fintechs to accelerate growth in Brazil

Priya Punatar

<p>After conducting user research, interviewers document observations, facts, quotes, and impressions shared by customers. As the information grows, key themes, patterns, and relationships start to emerge. We learned that people often feel stressed and alone in managing their finances and financial challenges, and that <a href="https://www.accion.org/five-reasons-small-merchants-arent-using-financial-services-in-chile" target="_blank" rel="noopener noreferrer">microentrepreneurs tend to keep track of their finances mentally</a>. These insights highlight the drivers of customer behavior and were used to guide the product concepts.</p>
<p>With Caja Popular Cerano, we conducted a co-creation session with potential users, empowering them as active participants in the design process. Typically, co-creation works the best when you have a very narrow problem you are trying to solve. In this instance we worked with small groups of youth to explore how financial service providers could build better trust relationships with young customers. Through co-creation sessions, participants discussed how trust emerges from healthy relationships, and developed a marketing campaign with the hashtag #FinancialLoveExists.</p>
<h3>Test products with customers in the field to see how they really react</h3>
<p>Speaking with customers will only get you so far in developing a sustainable product. Institutions should quickly move to translate insights into prototypes, giving form to product ideas so that they can move out of the office and into the reality of customers’ lives. Initial prototypes should be “quick and dirty,” allowing teams to explore and get feedback on many options before investing in detailed design and development. Prototyping is an opportunity to gather customer feedback and to assess their behavior. Beyond asking for reactions, likes, and dislikes, we also ask customers to share how, when, and where they would use the prototyped product.</p>
<p>As opposed to early prototypes, which are usually drawn or presented on paper, later-stage ‘usability’ prototypes are close to final fidelity and allow customers to interact with and explore the product flows. Ideally, these prototypes are hosted on the final technology platform and can be tested in a user’s environment. Interviewers simply provide the customer with the prototype and see how they interact – this helps the team get a sense of whether the product is intuitive, how long it takes to complete certain tasks, and what additional features might be required.</p>
<p>For example, microentrepreneurs reviewing the Organizame mobile application told us that when inputting the price of their products into the application, it would be useful to have the option to choose whether that particular product is sold with VAT (value added tax) or not. The development team is now working to build out this option.</p>


Brief

<em>Photo caption: By keeping desirability, feasibility, and viability in mind in product innovation, Accion worked with institutions across Latin America to develop scalable and sustainable products, including a financial health portal with </em><a href="https://www.accion.org/fintech-founders-have-a-formula-for-building-financial-health" target="_blank" rel="noopener noreferrer"><em>Destácame</em></a><em> in Chile. </em>

The financial services landscape is crowded with a wide array of offerings, but vulnerable and low-income people across the globe still struggle to find products that are designed to meet their needs. This gap has been amplified though the economic fallout from COVID-19, which has disproportionately affected those without the access, resources, or network to weather the storm. Now more than ever, low-income populations need customized and responsive financial products and services to recover from the crisis and restart in the new normal.

To address this gap, in recent years many financial service providers have turned to human-centered design (HCD) methodologies to better understand their clients’ wants, needs and aspirations, hoping to update their product offering and drive usage. While many organizations have this goal, very few have been able to deliver on it. Many human-centered products are based on thoughtfully designed and innovative ideas, but ultimately do not end up gaining traction with customers or are disbanded when institutional priorities shift. Sometimes institutions focus on customer needs but overlook real operational and business constraints. Others design from the board room, without taking into account the customer’s life and the complexities around financial decision making and end up solving for the wrong problem. To be sustainable, innovative digital products must balance the customer’s needs with organizational capacity and should be built upon a solid business case to ensure that the product is supported in the long term.

Accion, <a href="https://www.accion.org/accion-and-metlife-foundation-announce-expanded-partnership-to-advance-financial-inclusion" target="_blank" rel="noopener noreferrer">in partnership with MetLife Foundation</a>, is committed to delivering high quality, affordable solutions for the billions of individuals who are still underserved by the financial sector. We do this by working alongside financial institutions to design, build, launch and optimize innovative products, services, and experiences for low-income customers that are desirable (wanted by and useful for clients), feasible (achievable given the institution’s operations, technology and resources), and viable (make business sense)—so that the products make it from concept to commerce.

<img class="wp-image-22353 alignleft" src="https://content.accion.org/wp-content/uploads/2020/09/accionGraphics_Aug26_Key-Tenets.png" alt="Key tenets of innovation: feasibility, desirability, and viability" width="436" height="314" />

This paper outlines how financial institutions can develop innovative and sustainable financial solutions. It draws on our recent experiences working with financial services providers and fintechs in <a href="https://www.accion.org/achieving-financial-health-in-mexico-and-chile">Chile and Mexico</a> over the last two years to design and launch behaviorally-informed products that build customers’ financial capabilities and ultimately improve their financial health. While the products were not specifically designed to respond to the impacts of COVID-19, they aim to build resiliency to financial shocks and enable users to pursue opportunities over time.

This paper will cover how we leverage human-centered design and a strong focus on behavior to create more desirable products, how we evaluate institutional capacity to ensure feasibility, and how we get the business model and KPIs right to ensure the product is viable and justifiable for the business for the long term—even during economic shocks. For customers, this approach translates to more intuitive financial products and services that are aligned with their behaviors and help build their financial health. For financial service providers, this approach leads to innovative products that are sustainable, use internal resources efficiently, and achieve business goals.

<em>Using this approach in Chile, we developed a business management application with </em><a href="https://www.accion.org/this-new-app-is-helping-small-business-owners-build-financial-health-and-resilience" target="_blank" rel="noopener noreferrer"><em>Organizame and Banigualdad</em></a><em>, a financial health portal with </em><a href="https://www.accion.org/fintech-founders-have-a-formula-for-building-financial-health" target="_blank" rel="noopener noreferrer"><em>Destácame</em></a><em>, and a crowd-funding platform for microentrepreneurs with </em><a href="https://redcapital.cl/" target="_blank" rel="noopener noreferrer"><em>RedCapital</em></a><em>. In Mexico, we developed a savings product for youth with </em><a href="https://www.accion.org/young-people-in-mexico-need-finance-that-fits-their-lives" target="_blank" rel="noopener noreferrer"><em>Caja Popular Cerano</em></a><em>, and a supply chain finance product with </em><a href="https://www.ahorrosbienestar.com/" target="_blank" rel="noopener noreferrer"><em>Caja Bienestar</em></a><em>. </em>
<h2>Desirability — are we solving customer problems?</h2>
To combat the persistent issue of dormant accounts, financial service providers must design <strong><em>desirable</em></strong> products that people will want to use, that are intuitive, and that will generate value. Desirable products solve customer problems, and to identify the right problem, institutions need to go to the customer. HCD methodologies stress talking to and observing potential customers to gain perspective and empathy for their lives. We’ve found it just as important to analyze how customers make decisions — both consciously and subconsciously — and how they behave, using qualitative and quantitative data.
<h2>How can we ensure products are desirable?</h2>
<h3>Conduct client-centric user research that seeks to understand customer behavior</h3>
We begin every design process by conducting user research to understand what customers want and <em>why</em> they act the way they do. Interviewers are trained to take note of physical and emotional reactions, feelings, and expressions as well as customer surroundings, observing their daily lives and understanding their broader context.

While social distancing measures make in-person interviews difficult, we found that this can also be done remotely.  In Mexico, the team conducted remote video interviews with youth customers, and found that they were still able to capture non-verbal cues and build trust. Questions explore underlying attitudes that inform client decision-making. We listen closely to understand when participant behavior may have been affected by emotion, stress, or biases. This process helps us to ensure that we are building products that accommodate client realities, will align with how customers actually behave, and will make their lives easier.

To succeed, innovative financial products must be desirable, feasible, and viable

How an early-stage startup can approach brainstorming, testing, and prioritizing new product opportunities.

Toolkits and Guides

Launching a new product is a feat that can occupy a large share of time, energy, and resources — and for an early-stage company, it's a very consequential decision to make. It’s imperative to take an objective, thoughtful approach when considering new products to build and launch. A well-executed plan can help a product gain traction, attract lifelong customers, and help you instill confidence in your team and approach.

We’ve built our new resource, <a href="https://content.accion.org/wp-content/uploads/2020/09/0820_New-Product-Approach_vF2.pdf" target="_blank" rel="noopener noreferrer">A Startup’s Guide to New Product Developmen</a>t, to assist you along your journey. This guide will touch on:
<ul>
 	<li>Understanding your core customer and their needs</li>
 	<li>Brainstorming potential products across your core customer segments</li>
 	<li>Defining and estimating the impact of potential new products</li>
 	<li>Determining the effort required to get there</li>
 	<li>And, ultimately, choosing and prioritizing your product roadmap moving forward</li>
</ul>
Be on the lookout for an extended guide that covers the full process, from post-product decision to launch, coming in the next few months.

A startup’s guide to new product development

Yanina Seltzer

<h3><strong>Using</strong><strong> data, behavior, and design to build clients’ financial health</strong></h3>
<p>Creating products that build underserved customers’ financial health requires that providers become more familiar with their customers’ financial goals and behaviors. This means that financial institutions need to move away from product-centric approaches to become customer-centric.</p>
<p>Providers can become customer-centric by combining these three areas:</p>
<ol>
<li><strong>Data:</strong> Examine available transactional, market, and business data to reveal user patterns and behavior and build solutions that leverage that knowledge,</li>
<li><strong>Behavioral Science:</strong> Use principles of behavioral science to better understand customer decision-making and overcome barriers to action, and</li>
<li><strong>Design Thinking:</strong> Employ design thinking to build empathy with customers, and understand the context of their lives, needs, preferences and habits.</li>
</ol>
<p>These three ways of developing products and services are independently valuable and can achieve even greater success when leveraged together.</p>
<h2>Data</h2>
<blockquote><p>Institutions need to store data responsibly and protect client information.</p></blockquote>
<p>Most providers have a wealth of internal and market <strong>data</strong> that they can leverage to better understand their customers. For example, transactional data can reveal how seasonal patterns and demographic characteristics relate to product use, repayment, churn, and retention. Providers can use this data to better target and schedule service promotions, reminders, and support interventions. For example, <a href="https://www.accion.org/after-immigrating-to-chile-she-built-a-new-life-for-herself" target="_blank" rel="noopener">Destácame</a> — a digital platform that financially empowers its users by raising their awareness of their financial data and improving their access to financial products — uses customer data to target product offers.</p>


<p>Using data to inform services and products can result in a variety of business benefits. A <a href="https://www.slideshare.net/CGAP/projecting-impact-of-nontraditional-data-and-advanced-analytics-on-delivery-costs" target="_blank" rel="noopener">Consultative Group to Assist the Poor (CGAP) study</a> found that using digital data to explore more scalable delivery methods could reduce the marginal costs of delivering a small loan by up to 30 percent. Accion noted in <a href="https://content.accion.org/wp-content/uploads/2018/09/Big_Data_Paper_R07_Spreads-6.pdf" target="_blank" rel="noopener">Unlocking the Promise of (Big) Data to Promote Financial Inclusion</a>, organizations with greater access to data are more likely to succeed. Investing in the use of data during initial product design can also help organizations save over time. <a href="https://www.youtube.com/watch?v=O94kYyzqvTc&amp;feature=youtu.be" target="_blank" rel="noopener">Design</a><a href="https://www.youtube.com/watch?v=O94kYyzqvTc&amp;feature=youtu.be" target="_blank" rel="noopener"> expert</a><a href="https://www.youtube.com/watch?v=O94kYyzqvTc&amp;feature=youtu.be" target="_blank" rel="noopener"> Susan Weinschenk</a> claimed that “fixing an error after development is up to 100 times as expensive as it would have been before development.”</p>
<p>Furthermore, data can also be used to predict future behavior. Amazon uses predictive analytics to restock inventory and <a href="https://hbr.org/2016/11/how-predictive-ai-will-change-shopping" target="_blank" rel="noopener">predict customer purchases</a>, which reduces costs and delivers value to customers. Similar approaches to data analytics are allowing financial service providers to predict when users might need credit or a repayment pause, or when they could benefit from a savings product. In these instances, offering the right product at the right time can help build customers’ financial health.</p>
<p>Moreover, data analytics can inform providers on what to consider in developing new products or features when targeting new customer segments. In Tanzania, <a href="https://www.accion.org/how-to-use-data-to-transform-financial-services" target="_blank" rel="noopener">an Accion partner wanted to refine an existing product that had not been performing well</a>. By analyzing its transactional data, our partner was able to re-segment its customer base and identify a large sub-segment that had not being adequately served by either the partner or their competitors. The provider then tailored the product specifically for this newly identified sub-segment. Providers must invest in information storage and mining capabilities in order to reap these benefits.</p>
<p>Another institution, <a href="https://www.accion.org/expanding-the-benefits-of-a-growing-digital-economy-in-indonesia-and-india" target="_blank" rel="noopener">Annapurna Finance Pvt. Ltd.</a> (AFPL), uses geographic information systems (GIS) around each of its branches to highlight the density of the population as well as economic activity. They also use a credit bureau report at the pin code level to understand the rates of indebtedness and delinquency in the regions that AFPL serves. Cross-referencing this data helps AFPL to better understand the needs of potential customers and to identify products and services to best serve them. For example, AFPL can then provide more targeted financial and technical support to these clients to strengthen their entrepreneurial skills.</p>


<p>Analytics can be supplemented by qualitative research to uncover meaning behind the data. Increasingly, designers are working with businesses to discover and leverage their findings regarding customers’ motivations, habits, and preferences to inform product and operational decisions.</p>
<h4>Table 1. The business case for data</h4>
<p><img class="alignnone wp-image-22273" src="https://content.accion.org/wp-content/uploads/2020/09/FHtable1-e1599082660588.png" alt="" width="900" height="675" srcset="https://content.accion.org/wp-content/uploads/2020/09/FHtable1-e1599082660588.png 1438w, https://content.accion.org/wp-content/uploads/2020/09/FHtable1-e1599082660588-300x225.png 300w, https://content.accion.org/wp-content/uploads/2020/09/FHtable1-e1599082660588-768x576.png 768w, https://content.accion.org/wp-content/uploads/2020/09/FHtable1-e1599082660588-1024x768.png 1024w" sizes="(max-width: 900px) 100vw, 900px" /></p>
<h2>Behavioral science</h2>
<p><strong>Behavioral science</strong> is being applied across the world to help individuals and organizations achieve their goals and organizational outcomes. Behavioral science emphasizes that humans are not robots. We are impacted by the environment and context in which we make decisions. How information is presented and phrased (and who delivers it) impacts how customers make decisions and behave.</p>
<p>According to the Organization for Economic Co-operation and Development (OECD), there are <a href="https://www.oecd.org/gov/regulatory-policy/behavioural-insights.htm" target="_blank" rel="noopener">200+ institutions globally applying behavioral science</a>. These institutions help individuals and organizations achieve their desired goals and outcomes, including enabling people to make better financial health decisions. Many organizations have developed frameworks on how to apply behavioral science principles. One widely used framework from the <a href="https://www.bi.team/" target="_blank" rel="noopener">Behavioral Insights Team (BIT)</a>, encourages organizations to make things: easy, attractive, simple, and timely (EAST).</p>
<p>Behavioral science seeks to understand how humans actually behave, rather than exclusively listening to how they want to behave or how they would behave in a perfect context. For example, behavioral science suggests that people are more likely to save when they set aside small <a href="http://journal.sjdm.org/12/12327/jdm12327.html" target="_blank" rel="noopener">amounts over time for specific goals.</a> By developing products that account for and design for these behavioral principles, providers can positively influence financial behaviors while building customers’ financial health. For example, when <a href="https://www.ideas42.org/" target="_blank" rel="noopener">Ideas42</a> and <a href="https://www.womensworldbanking.org/" target="_blank" rel="noopener">Women’s World Banking</a> used behaviorally framed SMS messages to recruit women, <a href="http://www.ideas42.org/wp-content/uploads/2018/04/ideas42_ImpactReport2018_digital.pdf" target="_blank" rel="noopener">female customer sign-ups increased by 64 percent</a>.</p>


<p>One famous example of applied behavioral science in the financial industry is the use of defaults for U.S. employer-sponsored <a href="https://www.jstor.org/stable/10.1086/380085?seq=1" target="_blank" rel="noopener">retirement plan (401(k))</a> contributions. By setting an automatic annual increase of income contribution to an individual’s 401(k), employees were able to increase their savings rate over 40 months compared to employees who had not set up auto-contributions. This default design helped earn <a href="https://www.nobelprize.org/prizes/economic-sciences/2017/thaler/facts/" target="_blank" rel="noopener">Richard Thaler</a> the Nobel Prize in Economics. Behavioral scientists have embraced this as the concept of “set it and forget it.”</p>
<p>Similarly, Accion is applying these principles to help <a href="https://www.accion.org/young-people-in-mexico-need-finance-that-fits-their-lives" target="_blank" rel="noopener">Caja Alianza Cerano</a> — a small financial cooperative in Guanajuato, Mexico – develop a goal-based application that allows youth to save or take out a small credit-building loan for a specific goal. The app is designed to harness the power of automation through an AutoPay feature that makes credit payments and automatic savings easy and frictionless for customers. Even though it seems like a simple switch, this allows more seamless movements of money into the system and provides less friction for users.</p>
<h4>Table 2. The business case for behavioral science</h4>
<p><img class="alignnone wp-image-22274" src="https://content.accion.org/wp-content/uploads/2020/09/FHtable2-e1599082793549.png" alt="" width="900" height="585" /></p>
<h2>Design thinking</h2>
<p>As explained by <a href="https://www.ideou.com/pages/design-thinking" target="_blank" rel="noopener">Tim Brown</a>, the CEO of IDEO,<strong> Design Thinking “</strong>is a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” Delving deep into understanding the needs and realities of individuals allows providers to design better products, services or experiences that build trust and the financial health of customers. In some cases, it demands that providers embrace a longer-term horizon centered on customer-lifetime value.</p>
<p>Successful instances of human-centered design bring a balance of desirability, viability, and feasibility to the product; which allows an institution to not only design with its end user in mind — to develop an intuitive, engaging, and painless user experience to meet the customer’s goals—but also, to ensure that the design is grounded in technical and business reality. The testing of prototypes, whether they are simple drawings on sticky notes, or more sophisticated prototypes that look like an application, ensures that bad ideas fail rapidly and inexpensively, and good ideas are consistently improved upon. By doing this, institutions can save huge upfront investments in technology developments until they have developed a product or experience that fully resonates with end users.</p>
<p>Design thinking requires that financial service providers invest in understanding who their customers are and what they need. Staff need to meet the customers who have traditionally been left out of the financial sector and spend time in their communities, homes, and businesses. By getting to know their customers’ lives and realities, providers can understand, empathize with, and design for their pain points, habits, priorities, and aspirations, even as these shift over the course of their financial health journey.</p>
<p><a href="https://www.accion.org/fintech-helps-small-businesses-thrive-in-india" target="_blank" rel="noopener">Accion worked with Aye Finance</a> to help their clients build a digital transaction history, which would give them more convenient and frictionless access to Aye’s financial services. Rather than entering the project with a predefined idea of how they were going to deliver value to the target market, the organization conducted one-on-one interviews with customers to understand the pain points that they face in running and growing their businesses. They found that business owners needed a more convenient means of recording and consolidating income and expenses and a simplified way to manage inventory. Given this finding, Accion and Aye Finance set out to design a mobile app that encourages Indian entrepreneurs to digitize their bookkeeping to give them more control and oversight over their businesses. Aye Finance developed a dedicated team for this project to ensure that the product was not only centered on the user’s reality, but technological and operational realities as well, and built upon a solid business case, based on projections. In just three-months after launch, the app was downloaded more than 1000 times, despite the pilot operating across only 4 branches. Aye Finance has integrated learnings from the development of the app into subsequent tools and products.</p>


<p>The business value of design has been well documented. McKinsey &amp; Company found that retail banking firms that scored better on the <a href="https://solutions.mckinsey.com/design-index/" target="_blank" rel="noopener">McKinsey Design Index </a>(an online diagnostic tool that benchmarks companies’ design maturity) earned <a href="https://www.mckinsey.com/business-functions/mckinsey-design/our-insights/the-business-value-of-design" target="_blank" rel="noopener">27 percentage points higher revenue growth and 18 percentage points greater total returns for shareholders over five years</a> when compared to their peers.</p>
<p><img class="alignnone wp-image-22270" src="https://content.accion.org/wp-content/uploads/2020/08/FH-brief-chart-e1599060172565.png" alt="" width="800" height="415" srcset="https://content.accion.org/wp-content/uploads/2020/08/FH-brief-chart-e1599060172565.png 1332w, https://content.accion.org/wp-content/uploads/2020/08/FH-brief-chart-e1599060172565-300x156.png 300w, https://content.accion.org/wp-content/uploads/2020/08/FH-brief-chart-e1599060172565-768x398.png 768w, https://content.accion.org/wp-content/uploads/2020/08/FH-brief-chart-e1599060172565-1024x531.png 1024w" sizes="(max-width: 800px) 100vw, 800px" /></p>
<h4>Table 3. The business case for design thinking</h4>
<p><img class="alignnone wp-image-22275" src="https://content.accion.org/wp-content/uploads/2020/09/FHtable3-e1599082949993.png" alt="" width="900" height="506" srcset="https://content.accion.org/wp-content/uploads/2020/09/FHtable3-e1599082949993.png 1439w, https://content.accion.org/wp-content/uploads/2020/09/FHtable3-e1599082949993-300x169.png 300w, https://content.accion.org/wp-content/uploads/2020/09/FHtable3-e1599082949993-768x432.png 768w, https://content.accion.org/wp-content/uploads/2020/09/FHtable3-e1599082949993-1024x576.png 1024w" sizes="(max-width: 900px) 100vw, 900px" /></p>
<h3><strong>How can data + behavior + design help financial service providers? </strong></h3>
<p>Successfully using data, behavioral science, and design thinking approaches, requires a shift in business’ operations and an organization-wide adjustment. The <a href="https://s3.amazonaws.com/cfsi-innovation-files-2018/wp-content/uploads/2019/04/25202818/CFSI_OmidyarNetwork-Report-Final.pdf" target="_blank" rel="noopener">Financial Health Network</a> noted that orienting a business around its customers requires deploying a comprehensive strategy across the organization, one that addresses policies, processes, products, and fosters a culture that supports customers’ financial health. Furthermore, starting with the customer is just the first step. Institutions also need leaders who will stand by those insights and team members with the systematic and operational creativity to design for customer needs.</p>
<p>To pursue these approaches successfully, providers need to engage human-centered designers, interaction designers, behavioral scientists, and data scientists, as well as invest in field research, and conduct experiments to assess the efficacy of interventions and changes. Providers can invest internally or outsource some of these functions and expertise. Business benefits include increased customer lifetime value, enhanced reputational and brand value, larger deposit balances, decreased acquisition costs, increased loyalty and retention, and improved credit access for customers.</p>
<p>Businesses prosper when their customers are successful. People don’t want a bank account just to have a bank account. Instead, they use financial services that work for their purposes: to pay for their children’s education, own a home, launch a business, or recover from both economic and natural disasters. By placing financial health at the heart of the institution, using data, behavioral science, and design thinking, we can make these goals attainable for a greater number of individuals. Understanding these needs and designing for them drives financial health, advances social progress, and creates better, more successful, and more resilient businesses.</p>
<p><img class="wp-image-22178" src="https://content.accion.org/wp-content/uploads/2020/08/mc4g_logo-300x104.png" alt="" width="196" height="68" srcset="https://content.accion.org/wp-content/uploads/2020/08/mc4g_logo-300x104.png 300w, https://content.accion.org/wp-content/uploads/2020/08/mc4g_logo-768x267.png 768w, https://content.accion.org/wp-content/uploads/2020/08/mc4g_logo.png 1000w" sizes="(max-width: 196px) 100vw, 196px" /></p>
<p><em>This brief is supported by the Mastercard Center for Inclusive Growth.</em></p>
<p><em>Contributions from: Malika Anand, John Won, Arisha Salman, Sarah Kovar, Megan Skaggs</em></p>


Financial health has never been more important for financial service providers 

The pandemic has spurred a global economic downturn and widespread uncertainty about the future. The <a href="https://www.accion.org/four-ways-we-can-empower-financially-underserved-people-and-businesses">3</a> <a href="https://www.accion.org/four-ways-we-can-empower-financially-underserved-people-and-businesses">billion</a><a href="https://www.accion.org/four-ways-we-can-empower-financially-underserved-people-and-businesses" target="_blank" rel="noopener noreferrer"> peopl</a><a href="https://www.accion.org/four-ways-we-can-empower-financially-underserved-people-and-businesses">e</a> who are still left out or poorly served by the global financial system are uniquely vulnerable to the effects of COVID-19. They typically rely on daily, in-person interactions to get paid or buy food for their families and the unexpected loss of income for many families has made financial services and a focus on financial health more important than ever.

Financial health assesses whether people are spending, saving, borrowing, and planning in a way that will enable them to be resilient and pursue opportunities over time, as stated by <a href="https://finhealthnetwork.org/research/eight-ways-to-measure-financial-health/" target="_blank" rel="noopener noreferrer">The Financial Health Network</a><u>.</u>

A person’s financial health is determined by their:
<ol>
 	<li>ability to manage day-to-day expenses,</li>
 	<li>resilience against shocks and risks, and</li>
 	<li>effective planning for the future and upward mobility.</li>
</ol>
As economies fluctuate, individuals are turning to financial institutions for added support and security in their lives. Having financial services can enable people to better manage their finances as they navigate the current crisis, save money for a brighter future, protect their families from future shocks, and rebuild their businesses—promoting resilience in the face of crisis.

However, according to a <a href="https://news.gallup.com/reports/233399/gallup-global-financial-health-study-2018.aspx" target="_blank" rel="noopener noreferrer">Gallup Global Financial Health</a> study, access to traditional financial products does not automatically result in improved financial stability, resilience, and access to opportunity. Many traditional financial products were not developed with these pragmatic goals in mind. As a result, they are often poorly suited to helping people, especially low-income individuals, achieve their financial goals. To serve customers as they seek to recover from the economic fallout caused by COVID-19, financial service providers have an opportunity to better utilize customer data, behavioral science, and design thinking to create products and services that support households through shocks, that build resilience and enable them to better manage their financial lives. Well-designed products relevant to customers’ lives can lead to feelings of stability, peace of mind, and hope.

To do this, financial service providers should expand their financial inclusion strategy to focus on financial health. This goes beyond traditional access to services, in order to support people’s lived experiences and aspirations. These lived experiences are influenced by several aspects, including but not limited to age, sex, gender, occupation, marital status, dependents, household responsibilities, financial standing, physical and mental health, and emotional characteristics. Financial health is a perpetual journey — not just a snapshot in time. By developing personalized financial products, services, and experiences that better meet users’ needs and preferences, providers can ultimately create more meaningful change in people’s lives.

Financial products and services that truly work for users and fit their lives will ultimately drive more (and better) business for financial service providers. A business strategy oriented around consumer financial health offers <a href="https://finhealthnetwork.org/research/building-your-business-case-for-financial-health-providing-guidance-and-support-to-increase-customer-well-being/" target="_blank" rel="noopener noreferrer">providers an avenue for growth, organizational resilience, and profitability</a>. In addition, it will offer financial service providers better opportunities to differentiate from the competition, especially today, when users are more and more sophisticated and demanding better interfaces that enable faster ways to interact with their financial reality.

The World Economic Forum <a href="http://www3.weforum.org/docs/WEF_White_Paper_Advancing_Financial_Inclusion_Metrics.pdf" target="_blank" rel="noopener noreferrer">noted</a> that “[b]y aligning the success of their business with the success of their customers, financial providers have seen that the future of financial services is one in which the industry will thrive when their customers prosper.”
<h3>Designing services for the people who need them</h3>
To ensure that financial services deliver greater benefits to customers and that our aspirations for achieving financial health are attainable, Accion’s Global Advisory Solutions is advocating for a new approach to product design that combines <strong>data science, behavioral science, and design thinking</strong>. Together these three disciplines put the customer, rather than the product or the service provider, at the center of product or service design. These methods give providers better visibility into household cash flow fluctuations and customer pain points to design products, services, or experiences that are more useful, convenient, and beneficial. These methods can also help providers reach new market segments, retain customers, and improve customer lifetime value across their business.

Despite increasing access to financial services, <a href="https://www.findevgateway.org/blog/2018/may/new-global-findex-what-you-need-know" target="_blank" rel="noopener noreferrer">use of formal financial products continues to lag</a>, particularly in emerging markets. There are many reasons for this lack of uptake. Accion investigated this lag through hundreds of customer interviews globally in the last few years. The interviews revealed that customers do not find the few formal services available to them valuable or trustworthy, and that they are difficult to understand and cumbersome to use. What people really want is to pay tuition, expand or repair their homes, and to be prepared in case of weather or health emergencies. For this, many rely on informal services, like rotating credit groups and store credit, which are embedded in their communities, and are convenient, flexible, and available when and where people need them.

Data, behavioral science, and design thinking can serve as a starting point for financial service providers as they build greater trust with their customers and incorporate a financial health approach, while articulating the business reasons for doing so.

Placing financial health at the heart of financial institutions to create business and customer value

We can improve financial health for more people by incorporating data, behavioral insights, and human-centered design into financial products

Access to financial products alone does not automatically equip people to improve their finances, build resilience, and seize opportunities. A <a href="https://news.gallup.com/reports/233399/gallup-global-financial-health-study-2018.aspx" target="_blank" rel="noopener noreferrer">Gallup Global Financial Health study</a> found that having a bank account does not guarantee a sense of financial control or security in emerging markets. In the U.S., where financial access is widespread, <a href="https://www.federalreserve.gov/2015-report-economic-well-being-us-households-201605.pdf" target="_blank" rel="noopener noreferrer">nearly half of Americans do</a><a href="https://www.federalreserve.gov/2015-report-economic-well-being-us-households-201605.pdf"> not</a><a href="https://www.federalreserve.gov/2015-report-economic-well-being-us-households-201605.pdf"> have $400 in savings</a> and <a href="https://s3.amazonaws.com/cfsi-innovation-files/wp-content/uploads/2017/01/24183123/Understanding-and-Improving-Consumer-Financial-Health-in-America.pdf" target="_blank" rel="noopener noreferrer">almost half have trouble paying bills every month</a>.

That’s why organizations are focusing on the concept of financial health as a means to develop financial ecosystems that go beyond just access and usage of products and ultimately create meaningful change in people’s lives. Financial health assesses whether people are spending, saving, borrowing, and planning in a way that will enable them to be resilient and pursue opportunities over time, as stated by <a href="https://finhealthnetwork.org/research/eight-ways-to-measure-financial-health/" target="_blank" rel="noopener noreferrer">The Financial Health Network</a>.

During the COVID-19 pandemic, it is more critical than ever to find innovative ways to support those disproportionately affected by an economic downfall outside of their control. A more holistic understanding of financial health will help financial service providers to support and maintain their client base, even in times of uncertainty.
<blockquote>People want to pay tuition, maintain their homes, and be able to weather health emergencies.</blockquote>
As consumer protection bureaus and financial authorities focus on systemic change, they’ve dedicated less attention to developing products that improve financial health, especially in emerging markets. People want to pay tuition, maintain their homes, and be able to weather health emergencies. They need financial products that help them achieve these goals and empower them to make good decisions through both economic upturns and hardships.

Unfortunately, many traditional financial products were not developed with these pragmatic goals in mind. As a result, they are often poorly suited to helping people, especially low-income individuals, achieve their financial goals. It is not always obvious how providers can design more appropriate products, but we recommend that they analyze available data, draw on behavioral insights, and employ design thinking to uncover ways forward.
<h2>Expanding the concept of financial health</h2>
Despite the number of financial institutions that view financial health as core to their mission, many financial health strategies have not thoroughly considered customers’ needs, aspirations, or behaviors in their product innovation. In fact, financial health efforts have primarily focused on what can be tracked and measured, like maximizing profitability or savings balances rather than strategies that allow customers to meet their personal financial goals.

The financial lives of low-income people do not follow the linear pathway of “earn, save, invest, grow, and repay” implied by traditional financial products. Instead, their lives are more turbulent, and the categories may be far more blurred. For example, a typical microfinance customer may accept payment in the form of construction materials like bricks or cement. These materials function as both savings and investment. They are illiquid so cannot easily be spent like savings can, but they may be liquidated at reduced prices at times of emergencies. These materials can also be considered the first step towards future physical improvements, however, they are also likely to deteriorate with exposure to weather and are subject to value fluctuations, so they’re not as secure as traditional savings. Today’s financial products do not reflect the unique ways in which low-income individuals manage their assets and liquidity.

Moreover, current products do not accurately reflect the diversity of low-income individuals’ needs. A young student who depends on cash injections from his family to make ends meet will use a microfinance loan very differently than an established entrepreneur who is trying to expand her business. Most providers currently offer both customers a fundamentally identical credit product without considering their different needs.
<h2>Approaches to adapting financial products</h2>
Financial health strategies must encourage innovation to create financial products that improve customers’ lives — in health, education, and overall well-being. They should also consider emotional dimensions — such as feelings of stability, peace of mind, and hope — as these are closely intertwined with our perception of our own financial health. The sector needs to reimagine traditional financial products, rethink our approach, and start designing more appropriate products. Fortunately, the growth of digital finance and advances in human-centered design have given us data, methods, and theories that can power analysis of users’ needs to improve the products we offer. New innovative approaches will also allow financial institutions to introduce new business models and serve customers in a way that adds value not only to the individual but to the institution itself.

To ensure that financial services deliver greater benefits and that our aspirations for achieving financial health come into reach, Accion’s Global Advisory Solutions team is advocating for a <a href="/placing-financial-health-at-the-heart-of-financial-institutions-to-create-business-and-customer-value">new approach to product development that combines design thinking, behavioral science, and data science</a>. Together these three disciplines put the customer at the center of product design. These approaches apply insights from psychology, economics, statistics, and data science to design products that are better connected to customers’ behaviors, ambitions, and aspirations — empowering them to achieve their goals. The key to this approach is to grounding good design within the business and operational reality of the financial service provider so that the product is sustainable over the long-term.

To learn more about these strategies for product development, read our latest brief developed in partnership with Mastercard Center for Inclusive Growth: “<a href="/placing-financial-health-at-the-heart-of-financial-institutions-to-create-business-and-customer-value">Placing financial health at the heart of financial institutions to create business and customer value.</a>”

Products that truly work for users will ultimately drive more and better business for financial service providers. A business strategy oriented around consumer financial health offers providers an avenue for <a href="https://finhealthnetwork.org/research/building-your-business-case-for-financial-health-providing-guidance-and-support-to-increase-customer-well-being/" target="_blank" rel="noopener noreferrer">growth, organizational resilience, and profitability</a>.

The ultimate goal of financial inclusion should be ensuring everyone has access to financial tools that improve their lives. By making financial health the central principle of product design, we can make this goal attainable and better serve a greater number of individuals.

The crucial but overlooked factor for financial health? Humans.

An interview with Creditas COO Ann Williams about focusing on long-term customer relationships and digital engagement to help people improve their financial lives.

Podcast

[embed]https://soundcloud.com/accioninternational/the-pandemic-is-a-moment-to-get-in-touch-creditas-ann-williams[/embed]

&nbsp;

"The pandemic has been a great learning experience for us and an opportunity to be even closer to our customers in a moment of crisis," says Ann Williams, COO of Creditas, a digital platform that offers financial products and consumer solutions in Brazil and Mexico. The company began by offering asset-backed loans to provide "lower interest rates, longer terms, and lower payments that can fit into the pocket of our customers". In the tenth and final episode of VentureKast: Rebuild, Ann explains how the fully digital company has reached out to their customers — especially small business owners who have been deeply affected by the COVID-19 crisis — to restructure loans and create new products that address their challenges.

"Brazil has one of the highest interest rates in the world for consumer loans and the banks are some of the most profitable in the world," says Ann, who elaborates that their high-cost structures and focus on shorter-term, "toxic" debt have created a need for better, cheaper loans. "There’s been a push among fintechs like Creditas, along with central bank and policymakers, looking to create opportunities for consumers to access more fair financial products," she says. By leveraging a digital platform, Creditas can give customers more information and more opportunities, even during this challenging time. Ann reminds us that "it’s always the moment to work to build something better for the underserved," and she asserts that Creditas’ resolve to enrich the relationships with their customers is as strong as ever.

For more conversations about how the pandemic is shaping our industry, listen to the rest of our <a href="https://www.accion.org/series/venturekast-rebuild"><strong>VentureKast: Rebuild season here</strong></a>. Host and co-managing director of  <a href="https://www.accion.org/how-we-work/invest/accion-venture-lab" target="_blank" rel="noopener noreferrer"><strong>Venture Lab</strong></a><strong>,</strong> <a href="https://www.accion.org/bio/vikas-raj" target="_blank" rel="noopener noreferrer"><strong>Vikas Raj</strong></a> interviewed industry leaders every Thursday for the last 10 weeks about how COVID-19 has impacted their work.

"The pandemic is a moment to get in touch" — Creditas’ Ann Williams

An interview with Center for Financial Inclusion managing director Mayada El-Zoghbi on working across financial services ecosystems to support vulnerable populations with more digital delivery and consumer-centric policies

<strong>“We want to facilitate information to the stakeholders that need it: policymakers, investors, providers,”</strong> explains Mayada El-Zoghbi, managing director of the Center for Financial Inclusion (CFI), an action-oriented think tank that develops insights and collaborates with stakeholders to achieve a comprehensive vision for financial inclusion. In this moment, CFI is providing real-time data to help governments and financial service providers understand the impacts of COVID-19 on their constituents and determine how to best support them. In episode nine of <a href="https://www.accion.org/series/venturekast-rebuild" target="_blank" rel="noopener noreferrer">VentureKast: Rebuild</a>, Mayada explains that “the impact COVID-19 has not been equal across all segments or across all countries,” and that there has been a disproportional impact on women, migrants, and micro and small businesses. She adds that effects have also depended on “how digitally connected people are," pointing out that some MSMEs who sell through e-commerce have actually grown.

“Everyone right now is looking at how can we shift delivery to more digital means,” says Mayada, “because that’s the way we will reduce infection [and] spur recovery.” Mayada discusses how microfinance institutions are “making efforts to divert to digital disbursement and collection.” Digital ID systems, e-commerce platforms, and innovative lenders who leverage data to deliver credit are scaling to provide crucial services to previously excluded customers. Mayada’s message is an inspiring one as she emphasizes the importance of collaboration across the ecosystem, adding that there has been a “massive increase in the number of countries who have realized that this is not a problem that can be solved purely through commercial means.” Mayada  shared some of her key takeaways from the ..

Please join our host and co-managing director of <a href="https://www.accion.org/how-we-work/invest/accion-venture-lab" target="_blank" rel="noopener noreferrer"><strong>Venture Lab</strong></a><strong><u>,</u></strong> <a href="https://www.accion.org/bio/vikas-raj" target="_blank" rel="noopener noreferrer"><strong>Vikas Raj</strong></a><strong><u>,</u></strong> as he interviews industry leaders every Thursday about how COVID-19 is impacting their work.

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"We need collaboration and a multi-stakeholder approach" — CFI’s Mayada El-Zoghbi

Robert Abare

Accion partner Lulalend is supporting women entrepreneurs as they build more resilient communities in South Africa

Yashmita Bhana, a business owner based in South Africa, is no stranger to confronting a challenge with confidence. She studied civil engineering at Wits University, where she was the only woman in her class. Her first business collapsed after she stepped away to care for her second child. And when she was three months pregnant with her third child, she scaled Mount Kilimanjaro, raising R500,000 for charity.

Today, Yashmita is adapting her business to help people in her community affected by COVID-19. Her company Nihka Technology Group is providing temporary free access to tech platforms for business owners, including an online finance and proposal writing tool that is integrated to WhatsApp.

In addition, Yashmita has helped 50 early childhood development centers to complete online training and communicate with other social projects during South Africa’ three-month lockdown, which ended in early June.

“Every time someone stands up for a cause, or does something to improve the lives of others, you are creating a tiny ripple of hope. And that ripple will build and become a massive wave,” said Yashmita.

Yashmita and her company are clients of Accion partner <a href="https://www.lulalend.co.za/" target="_blank" rel="noopener noreferrer">Lulalend</a>, which uses a digitally-enabled business model to provide short-term funding for small and medium enterprises that have been traditionally underserved by other financial service providers.

Lulalend has <a href="https://www.accion.org/how-three-financial-service-leaders-are-adapting-to-covid-19">quickly adapted</a> to support their small business clients coping with the effects of the pandemic. They are addressing client concerns on a case-by-case basis, restructuring loans and extending payment terms as needed. Lulalend also set up a Facebook page for their clients to connect with other struggling business owners and share their experiences.

Yashmita says a major source of strength is her community of fellow women entrepreneurs. “Throughout my journey, there is one really important lesson I’ve learned,” she said. “I didn’t do it alone. I was supported by some incredible women. Women are so powerful when we stand together. We are invincible together.”
<h2>Supporting women in business creates a “multiplier effect”</h2>
Lulalend is proud to support women entrepreneurs like Yashmita. “Studies have shown that when you empower women, you create a multiplier effect,” said Lulalend CEO Trevor Gosling. “You give them what they need to succeed, and they grow and they take entire communities along with them.”

<img class=" wp-image-22155 alignleft" src="https://content.accion.org/wp-content/uploads/2020/08/lulalend81720-2-225x300.jpg" alt="" width="290" height="387" />Jennifer Classen, another client of Lulalend, is living proof of this multiplier effect. She started Ngaphaya Y2K10 (or “Beyond 2010”) with the goal of delivering high-quality industrial equipment and products during the 2010 Soccer World Cup. Since then, Classen has made a difference in her community by creating more jobs and better opportunities for local women.

As an essential business, Classen kept operating through South Africa's COVID-19 lockdown, providing job security to her employees. Beyond that, she’s used her infrastructure to help other businesses, many owned by women, deliver essential products like hand sanitizer. She is now on the forefront of the effort to deliver approved COVID-19 antibody test strips.

“For us, success means so much more than just financial reward,” said Jennifer. “As a woman-owned and managed company, our business is built on the principles of creating opportunities for other women through skills-transfer, sustainable employment, and genuine empowerment.”

Jennifer and Yashmita’s stories demonstrate how, with targeted support, underserved and women-owned businesses can be valuable partners for communities confronting the many challenges raised by COVID-19. In turn, they can also lay a foundation for more women to succeed in business and build financially resilient communities.

How South Africa’s women entrepreneurs are leading responses to COVID-19

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