COVID-19 is pushing more than 100 million people back into poverty.

Only half of people worldwide have any savings.

Climate change affects the poorest households most.

Low-income farmers are vulnerable to extreme weather conditions.

The world’s entrepreneurs face a $5 trillion financing gap.

We focus on global challenges

How we work

Liza Guzman

espanol

Cuando pensamos en cómo se crean los productos financiero digitales, pensamos en programadores y computadoras. Si bien es cierto que los programadores desempeñan un papel fundamental, lo cierto es que los buenos productos financieros comienzan en campo, moldeados por las opiniones y necesidades de sus usuarios. Desafortunadamente, la mayoría de los productos financieros digitales disponibles actualmente para las personas en América Latina son demasiado costosos, difíciles de usar, o están diseñados de manera inapropiada para las personas de bajos ingresos y las pequeñas empresas que más los necesitan.
Desarrollar servicios financieros pertinentes para hogares de bajos ingresos y pequeñas empresas, y que puedan tener un impacto significativo en la salud financiera de las personas, no es sencillo. Estos clientes a menudo carecen de registros financieros y tienen una experiencia limitada con los servicios financieros formales, lo que dificulta que los proveedores identifiquen sus necesidades. Además, muchos de estos clientes desconfían de los servicios financieros formales y tienen opiniones negativas sobre las cuentas bancarias y el crédito.
Accion Global Advisory Solutions, con el apoyo de <a href="https://www.metlife.com/about/corporate-responsibility/metlife-foundation/index.html" target="_blank" rel="noopener">MetLife Foundation</a>, se asoció con empresas fintech, cooperativas y proveedores de servicios financieros tradicionales (PSF) en Chile y México para desarrollar servicios financieros que mejoren la salud financiera de las personas de bajos ingresos. Accion trabajó con estos socios para diseñar y lanzar productos y servicios digitales que llegaran a las personas desatendidas, mejoraran su salud financiera, y así ayudarlas a ser resilientes frente a las adversidades y a aprovechar las oportunidades que el acceso a servicios financieros digitales les representa.
Primero, tuvimos que comprender profundamente los comportamientos financieros, los puntos débiles, las ambiciones, las actitudes y las capacidades financieras, digitales y de gestión del negocio de sus clientes. El trabajo con cada uno de los PSF, comenzó con un intensivo proceso de investigación hablando con los usuarios sobre sus necesidades y objetivos. También aprovechamos la oportunidad para comprender los puntos de entrada y las barreras que experimentaban los usuarios, y para tomar nota del vocabulario que usaban en su vida diaria. Estos hallazgos dieron forma al diseño y las características del producto como tal y su estrategia de comunicación y de enganche que fueron esenciales para su éxito.
En Querétaro, México, nos asociamos con <a href="https://www.ahorrosbienestar.com/" target="_blank" rel="noopener">Caja Bienestar</a>, una cooperativa que busca aumentar los créditos a microempresarios. Sin embargo, al igual que otros prestamistas, se encontraron con que los propietarios se sentían más cómodos con los préstamos de sus proveedores de insumo y materias primas y con sus distribuidores; incluso si les resultaban más costosos que los de la cooperativa. Por ejemplo, Jorge Luis Prado, propietario de una tienda de suministros para la construcción, estaba acostumbrado a comprar inventario a crédito de su proveedor para obtener precios razonables, y señaló: “mi propia competitividad depende de lograr buenos precios de los proveedores”. En nuestra investigación, encontramos que a los empresarios no les agrada el crédito con tasas de interés. Como indica Jose Eduardo Ruiz Suárez, director comercial de Caja Bienestar, “muchos tuvieron malas experiencias con créditos y no les resultaba fácil controlar el tema de los intereses”. En cambio, los clientes informaron que preferían tarifas fijas, incluso si estas resultaban más caras, pues les parecían más seguras y menos riesgosas. El hallazgo ayudó a Caja Bienestar a diseñar un producto con una estructura de precios que sus clientes podían entender.
<a href="https://www.accion.org/young-people-in-mexico-need-finance-that-fits-their-lives" target="_blank" rel="noopener">Caja Popular Cerano</a>, una cooperativa de México, tenia como uno de us objetivos estratégicos atraer usuarios más jóvenes. Accion llevó a cabo grupos focales con jóvenes para entender sus hábitos y expectativas en cuanto a proveedores de servicios financieros. Como era de esperarse, la investigación confirmó que casi la mitad de ellos pasaba al menos cuatro horas al día en línea, por lo que era indespensable encontrarlos en las redes sociales pues son el punto de entrada natural para los servicios financieros digitales. En respuesta, integraron varios aspectos de las experiencias de las redes sociales en su aplicación de banca móvil. Por ejemplo, el nuevo producto permite a los usuarios escoger un avatar que recibe mensajes de aliento y felicitación a lo largo de la aplicación. Si bien los avatares no necesariamente impactan el producto financiero subyacente, hacen que el producto sea atractivo para el segmento objetivo.
En Chile, <a href="https://redcapital.cl/" target="_blank" rel="noopener">RedCapital</a>, una plataforma de crowdfunding que <a href="https://www.accion.org/as-agribusinesses-grow-so-does-food-security" target="_blank" rel="noopener">otorga créditos a microempresarios</a>, tenia como prioridad ajustr su producto ar que pudiera servir también a los microempresarios con crédito. Las investigaciones con propietarios de pequeñas empresas revelaron que se sentían incómodos al proporcionar información financiera confidencial a través de una aplicación o un portal en línea. En cambio, querían hablar con una persona y sentir que sus datos estaban seguros. En respuesta, el equipo diseñó un chatbot para imitar una conversación con un ser humano. El producto resultante es digital, pero ofrece una experiencia más personal, por lo que los usuarios se sienten cómodos con ella.
En cada uno de estos ejemplos, una cuidadosa investigación de campo cualitativa permitió al equipo descubrir ideas simples pero efectivas para el diseño. Estas investigaciones no son fáciles de llevar a cabo ya que los resultados no son evidentes al principio. Sin embargo, la experiencia del equipo de Accion y los PSF que hicieron parte de este proyecto sugiere que vale la pena.
Lea más sobre las ideas que aprendimos de este proyecto en nuestro nuevo documento, <a href="https://www.accion.org/how-providers-can-build-products-that-improve-financial-health-examples-from-mexico-and-chile/" target="_blank" rel="noopener">Cómo pueden los proveedores crear productos que mejoren la salud financiera: ejemplos de México y Chile</a>. Allí compartimos cinco estudios de caso sobre nuestro trabajo con socios chilenos y mexicanos durante los últimos tres años y medio. Esperamos que este documento ayude a los proveedores de servicios financieros a desarrollar y optimizar productos centrados en la salud financiera, que conduzcan a cambios significativos en la vida financiera de los clientes desatendidos.

What we learned from working with financial service providers in Latin America to research and design new products that meet users’ needs while improving their financial health

Article

When you think about how fintech products are created, you might picture a coder sitting behind a desk at a computer. While coders certainly play a critical role, good financial products get their start in the field, shaped by the voices and needs of their users. Unfortunately, most of the digital financial products currently available to people in Latin America are too expensive, difficult to use, or inappropriately designed for the low-income people and small businesses who need them most.

Developing relevant financial services for low-income households and small businesses — services that can have a meaningful impact on people’s financial health — is not straightforward. These customers often lack financial records and have limited experience with formal financial services, making it difficult for providers to pinpoint their needs. Moreover, many of these customers distrust formal financial services and hold negative beliefs around account ownership and credit.

To develop financial services that improve financial health for low-income people, Accion Global Advisory Solutions, with support from <a href="https://www.metlife.com/about/corporate-responsibility/metlife-foundation/index.html" target="_blank" rel="noopener noreferrer">MetLife Foundation</a>, partnered with fintechs, cooperatives, and traditional financial service providers (FSPs) in Chile and Mexico. Accion worked with these partners to design and launch digital products and services to reach underserved people, improve their financial health, help them maintain resilience against adversity, and enable them to seize opportunities.

First, we had to gain a deep understanding of their customer’s financial behaviors, pain points, ambitions, attitudes, and capabilities. In each partnership, the team began with an intensive research process to understand the financial, business, and digital capabilities that customers were missing. This allowed us to comprehend how financial products might improve their lives, understand how their beliefs and past experiences influence their financial decisions, and learn what capability building interventions products were needed to close such gaps and drive product adoption. These findings shaped product design and features, both fundamental and cosmetic user experience, which were all critical to the products’ success.

In Querétaro, Mexico, we partnered with <a href="https://www.ahorrosbienestar.com/" target="_blank" rel="noopener noreferrer">Caja Bienestar</a>, a cooperative seeking to increase lending among microentrepreneurs. However, like many lenders, they found that owners were more comfortable taking out loans from their suppliers and distributors, even if that credit was more expensive than that offered by the cooperative. For example, Jorge Luis Prado, owner of a construction supplies store, was accustomed to buying inventory on credit from his supplier to secure reasonable prices, noting that “my own competitiveness depends on securing good prices from suppliers.” In our research, we found that entrepreneurs dislike credit with interest rates. As Jose Eduardo Ruiz Suarez, Commercial Director of Caja Bienestar, notes, “Many had bad experiences with credit and felt that interest rates could easily get out of hand.” Instead, customers reported they preferred fixed fees which felt safer and less risky. The finding helped Caja Bienestar design a product with a pricing structure that their clients preferred.

<a href="https://www.accion.org/young-people-in-mexico-need-finance-that-fits-their-lives" target="_blank" rel="noopener noreferrer">Caja Popular Cerano</a>, a cooperative in Mexico, struggled to attract youth. Accion held focus groups with young people to understand their habits and expectations from a financial service provider. When the team learned that almost half of them were spending at least four hours a day online, they realized that social media was an entry point for digital banking services. In response, they integrated several aspects from social media experiences into their mobile banking app. For example, the new product allows users to choose an avatar who receives encouraging and congratulatory messages throughout the banking experience. While the avatars do not necessarily impact the underlying financial product, they make the product appealing to the target segment.

In Chile, <a href="https://redcapital.cl/" target="_blank" rel="noopener noreferrer">RedCapital</a> — a crowdfunding platform that <a href="https://www.accion.org/as-agribusinesses-grow-so-does-food-security" target="_blank" rel="noopener noreferrer">provides credit to microentrepreneurs</a> — aimed to improve lending among microbusinesses. Research with small business owners revealed that they were uncomfortable providing sensitive financial information over an app or an online portal. Instead, they wanted to speak to a person and feel confident that their data was secure. In response, the team designed a chatbot to mimic a conversation with a human. The resulting product is digital but still provides a more human experience, so users feel comfortable with the experience.

In each of these examples, careful, qualitative, and behavioral field research allowed the team to uncover simple but effective insights to design digital financial products and services that aim to improve customers’ financial health. This approach to research, design, and implementation process is not easy to undertake as the results are not clear from the outset and it is not simple to integrate them all into a product value proposition. However, the experience of the Accion team and its partners suggests that it is well worth it.

Read more about the insights we learned from this project in our new paper, <a href="https://www.accion.org/how-providers-can-build-products-that-improve-financial-health-examples-from-mexico-and-chile/" target="_blank" rel="noopener noreferrer">How providers can build products that improve financial health: Examples from Mexico and Chile</a>. We share five case studies about our work with Chilean and Mexican partners over the past three and a half years. We hope that this paper will help financial service providers develop and optimize financial health-centric products that will lead to meaningful changes in the financial lives of underserved customers.

How to build digital tools that boost financial health

Michael Schlein

The pandemic created devastating challenges, but we have a chance to build back a more resilient, inclusive world. 

The past year and a half has brought incredible difficulties to the world’s low-income and financially underserved people. Families and small businesses have dealt with — and continue to deal with — shuttered storefronts and restaurants, disrupted supply chains, reduced incomes, and unprecedented social and economic crises that cause fear about the future.

As vulnerable populations continue to struggle, it’s helpful to stop and reflect on the progress we’ve made to support them, despite massive challenges. By giving thanks for our victories, we can focus on what’s working to build a truly inclusive and resilient recovery.

I’ve never been more grateful for the dedication of Accion and our partners to supporting vulnerable people with the financial tools they need to recover, adapt, and build resilience for the future. I’m also incredibly grateful for the global progress we’ve made, together, to leverage the power of technology to respond swiftly to new challenges.
<h2>A once-in-a-lifetime chance</h2>
Thanks to this progress, we have a once-in-a-lifetime chance to create a more equitable economy and a more inclusive world. More people than ever are:
<ul>
 	<li>Receiving cash digitally: Around the world, 166 countries initiated <a href="https://qz.com/africa/2058395/covid-spurred-digital-cash-transfer-adoption-in-poor-countries/" target="_blank" rel="noopener noreferrer">more than 400 cash transfer programs</a>, reaching 1.1 billion people. Most governments relied on digital channels to send these funds, and now millions of people have access to digital financial tools for the first time.</li>
 	<li>Using mobile money and digital banking: Active mobile money accounts <a href="https://www.gsma.com/sotir/" target="_blank" rel="noopener noreferrer">increased 13 percent</a> in 2020, surpassing 1.2 billion, and the monthly value of international remittances sent via mobile money exceeded $1 billion for the first time. Some researchers predict that <a href="https://www.techrepublic.com/article/report-more-than-half-the-worlds-population-will-use-digital-banking-by-2026/" target="_blank" rel="noopener noreferrer">more than half the world’s population</a> — 4.2 billion people — will have access to digital banking by 2026, which is double the current number.</li>
 	<li>Participating in the digital economy: Small businesses are accessing the security and opportunities of the digital economy at an encouraging rate. According to an international survey, <a href="https://news.yahoo.com/survey-small-biz-goes-digital-web-seen-integral-to-surviving-covid-19-124646151.html" target="_blank" rel="noopener noreferrer">71 percent of small and medium size businesses</a> said they survived the pandemic by going digital.</li>
</ul>
This progress would be impossible without the commitment and hard work of inclusive financial service providers, investors, funders, policymakers, and beyond to support the world’s most vulnerable people in a time of immense need. At Accion, we created or accelerated exciting partnerships, products, and other initiatives that are helping people get back on their feet:
<ul>
 	<li>Accion responded to a White House call-to-action <a href="https://www.accion.org/accion-joins-white-house-call-to-action-to-support-economic-opportunity-in-the-northern-triangle" target="_blank" rel="noopener noreferrer">to help create the Partnership for Central America</a>, which seeks to create economic security, stability, and opportunity in Guatemala, Honduras, and El Salvador. We committed to bring 400,000 new financial services to the region and, with support from Mastercard, we’ve started <a href="https://www.accion.org/pathway-to-a-resilient-future-for-guatemalan-farmers-and-entrepreneurs" target="_blank" rel="noopener noreferrer">new work with our partner Fundación Génesis Empresarial</a> in Guatemala to reach that goal.</li>
 	<li>We invested in and supported innovative fintech companies that are advancing the latest trends <a href="https://www.accion.org/embedded-finance-more-than-a-trend" target="_blank" rel="noopener noreferrer">like embedded and contextualized finance</a>, allowing businesses of every kind to integrate financial services into their offerings — and making it easier than ever for small businesses to access the tools they need to grow.</li>
 	<li>We <a href="https://www.accion.org/the-digital-transformation-guide-six-strategies-to-scale-financial-inclusion" target="_blank" rel="noopener noreferrer">accelerated the digital transformation</a> of frontline financial service providers who are creating <a href="https://www.accion.org/gamification-motivates-microentrepreneurs-to-save-in-bolivia" target="_blank" rel="noopener noreferrer">innovative new products</a> and services that struggling small businesses desperately needed to recover from major disruptions caused by the pandemic and build better futures.</li>
 	<li>With support from MetLife Foundation, we shared insights from years of work with providers in Mexico and Chile on how to develop financial products that empower clients to improve their financial health and resilience.</li>
 	<li>We enabled our partners to leverage data and technology to <a href="https://www.accion.org/leveraging-data-to-close-the-digital-gender-divide" target="_blank" rel="noopener noreferrer">close the gender divide</a>, and empower women to grow businesses, manage their finances, and take control of their financial futures.</li>
</ul>
<h2>Great challenges remain</h2>
While we’ve made promising strides in equipping vulnerable people with the financial tools of resilience, there’s so much more work to do on our path toward a more equitable and inclusive economy.

As advanced economies focus on administering COVID-19 booster shots, vaccination rates in emerging markets remain horribly low, hovering around four percent or lower. That’s partly why <a href="https://www.imf.org/en/Publications/WEO/Issues/2021/10/12/world-economic-outlook-october-2021" target="_blank" rel="noopener noreferrer">the IMF</a> has dubbed the global recovery from the pandemic “the Great Divergence.” Other research shows world economy could lose $2.3 trillion because of global disparities in vaccination rates, with emerging markets accounting for two-thirds of these losses.

The pandemic has <a href="https://www.accion.org/5-ways-to-help-women-entrepreneurs-adapt-during-covid-19" target="_blank" rel="noopener noreferrer">also had especially damaging effects on women</a>, who have experienced higher rates of job loss and are less likely to have the cash reserves needed to withstand an economic shock. The ever-rising <a href="https://www.accion.org/with-support-from-fintech-farmers-can-grow-an-inclusive-global-recovery" target="_blank" rel="noopener noreferrer">threats of climate change</a> also pose challenges for smallholder farmers, agricultural retailers, and many other businesses vulnerable to droughts, floods, and storms.

Together, we can find innovative solutions to these challenges and create a more resilient and inclusive world for future generations. We should be thankful for all the progress we’ve made, but we can’t lose sight of the crisis that continues to face the world’s most vulnerable people, who desperately need support to recover, adapt, and grow.

Toward a more resilient, inclusive world

Leonardo Tibaquira

Las pequeñas empresas pueden apoyar a sus familias y comunidades cuando disponen de las herramientas financieras para mantener sus negocios operativos.
María Olga Calixto y su familia tienen una ferretería a las afueras de Querétaro, México. A pesar de que su esposo e hijos también la ayudan en la tienda, María Olga administra las finanzas y, la mayoría de las veces, atiende a los clientes en el mostrador.
“Vendemos un poco de todo: pinturas en aerosol, herramientas, piezas de bicicletas, incluso cemento y yeso”, dice. Uno de los muchos desafíos de María Olga es abastecer su tienda con suficiente inventario para satisfacer las necesidades de los clientes que se presentan y, a la vez, mantener suficientes reservas de efectivo para comprar materiales cuando recibe pedidos especiales más grandes.
Antes de la pandemia, María Olga contaba con el crédito a corto plazo de sus proveedores para realizar compras inesperadas y satisfacer los pedidos de sus clientes. Con una simple llamada a un proveedor de confianza recibía los productos en su tienda en cuestión de horas, en el entendido de que pagaría por el inventario una vez que su cliente le pagara. La liquidez provista por su distribuidorgarantizaba el funcionamiento de su tienda y a la vez generaba negocios para sus proveedores.
Pero este esquema leresultaba complicado a sus distribuidores, como a Materiales San Francisco. Para otorgar crédito a sus clientes de pequeñas empresas, Materiales San Francisco necesitaba realizar un seguimiento de los créditos pendientes de pago, asumir el riesgo de incumplimiento y manejar el costo del financiamiento. A medida que los confinamientos por el COVID-19 se fueron extendiendo en México, Materiales San Francisco descubrió que sus costos financieros se dispararon y ya no podía seguir otorgando crédito a sus clientes.
Este cambio tuvo implicaciones para María Olga y sus clientes, muchos de los cuales son contratistas individuales, y comenta: “en esa época no estaba solvente; siempre debía algo. Los clientes venían y yo no tenía cómo adquirir materiales, incluso cuando estaban decididos a comprar &#8220;. Además, no podía ofrecer a sus clientes facilidades de pago, aunque a la mayoría de ellos solo les pagan una vez que terminan sus propios trabajos. “Antes era complicado; me quedaba sin dinero para el inventario. Estaba perdiendo clientes por falta de materiales y porque no podía ofrecerles crédito &#8220;.
Luego, hace un año, una nueva asociación entre Materiales San Francisco y <a href="https://www.ahorrosbienestar.com/">Caja Bienestar</a>, la institución financiera con enfoque social más grande de México, ofreció una solución. En colaboración con Accion, y <a href="C:\Users\lguzman\AppData\Local\Microsoft\Windows\INetCache\Content.Outlook\02FENXCE\with%20support%20from%20MetLife%20Foundation">con apoyo de MetLife Foundation</a>, Caja Bienestar creó una línea de crédito renovable para microempresarios diseñada con la intención de ayudar a los clientes con su resiliencia en tiempos difíciles y mejorar su salud financieras. En asocio con distribuidores locales de confianza como Materiales San Francisco,  <a href="https://www.accion.org/this-tool-puts-financial-health-first-for-microentrepreneurs-in-mexico">otorgan crédito a los pequeños comerciantes clientes de los distribuidores para que puedan obtener el inventario que necesitan para sus tiendas</a> y pagar una vez vendidos los productos. María Olga supo de Caja Bienestar exactamente en el momento adecuado, y la línea de crédito que ofrecen la ha ayudado a salir de sus problemas. “Ahora puedo llamar a Bienestar cuando necesito fondos para realizar compras, y así puedo ayudar a otros en la comunidad que necesitan crédito &#8220;.
Ella comenta que Bienestar se esfuerza por ayudarla. Su tienda está ubicada lejos de Oxxo, una popular cadena de tiendas de conveniencia donde otros clientes depositan sus pagos. En lugar de obligarla a hacer ese costoso viaje, Mauricio, su agente de Bienestar, viene a su tienda y recoge sus pagos para que no tenga que cerrarla y perder ventas. “No siento mucha presión con Bienestar. Puedo programar mis fechas de pago para cuando tengo dinero disponible. Ellos entienden lo que significa manejar una pequeña empresa &#8220;.
María Olga se siente aliviada de haber encontrado un socio de confianza para su negocio y dice: “Actualmente, no hay nadie en quien confiar o que confíe en uno. Gracias a Dios que vino Bienestar y confiaron en mí”.
<a href="https://vimeo.com/648737573">Vea la historia de María aquí</a>.

Small businesses owners can support their families and communities when they have the financial tools to keep their businesses afloat and improve their financial health

María Olga Calixto and her family run a hardware shop outside of Queretaro, Mexico. Though her husband and children also help out at the store, Maria Olga manages the finances and, more often than not, is the face of the business as she works behind the counter.

“We sell a little of everything: spray paint, tools, bicycle parts — even cement and plaster,” she says. Among María Olga’s many challenges is stocking her shop with enough inventory to meet the needs of her walk-in customers while still maintaining sufficient cash reserves to buy materials when she receives larger special orders.

[caption id="attachment_25183" align="aligncenter" width="1200"]<img class="size-full wp-image-25183" src="https://content.accion.org/wp-content/uploads/2021/11/maria-olga-bienestar-2.jpg" alt="Maria Olga outside her construction store in Mexico" width="1200" height="800" /> “We all participate in this business. My children, my husband, and myself,” says María Olga about her family-owned hardware store called Ferremateriales El Vegil.[/caption]

Before the pandemic, María Olga could depend on short-term credit from her suppliers to cover the costs of unexpected purchases requested by her customers. A quick call to a trusted supplier would mean she could receive products at her door within hours, with the understanding that she would pay for the inventory once she received the payment from her customer. The liquidity within the value chain kept her store afloat while also generating business for her suppliers.

But these arrangements presented complexity for her suppliers, like Materiales San Francisco. In order to extend credit to its small business customers, Materiales San Francisco needs to keep track of outstanding credit, shoulder the risk of default, and manage the complex cost of capital. As the COVID-19 lockdowns extended in Mexico, Materiales San Francisco found that cost of capital skyrocketed, and they could no longer extend credit to their customers.

<img class="alignright wp-image-25181" src="https://content.accion.org/wp-content/uploads/2021/11/maria-olga-bienestar-3.jpg" alt="Maria Olga in her store in Mexico" width="450" height="676" />This change had implications for María Olga and for her customers, many of whom are individual contractors. She says, “I wasn’t solvent then; something was always due. Customers would come, and I didn’t have the cash to buy the materials, even when they were ready to buy.” Furthermore, she wasn’t able to offer her customers delayed payment terms, although many of them only receive payments once their own jobs are complete. “It was complicated before; I would run out of money for inventory. I was losing clients because of lack of materials and because I couldn’t offer [them] credit.”

Then, a year ago, a new partnership between Materiales San Francisco and <a href="https://www.ahorrosbienestar.com/" target="_blank" rel="noopener noreferrer">Caja Bienestar</a> — the largest socially focused financial institution in Mexico — offered a solution. Working with Accion, <a href="/accion-and-metlife-foundation-announce-expanded-partnership-to-advance-financial-inclusion" target="_blank" rel="noopener noreferrer">with support from MetLife Foundation</a>, Caja Bienestar created a revolving credit line for microentrepreneurs, purposefully designed to help their clients stay resilient in times of hardship and improve their financial well-being. Caja Bienestar partners with trusted local distributors like Materiales San Francisco and <a href="/this-tool-puts-financial-health-first-for-microentrepreneurs-in-mexico" target="_blank" rel="noopener noreferrer">extend credit to the distributors’ small merchant customers so that they can get the inventory they need</a> for their stores and repay once they sell the products. María Olga learned about Caja Bienestar at exactly the right time, and the rotating credit line they provide has helped her out of a hole. “Now, I can tell Bienestar when I need capital to make purchases. I can help others in the community that need credit.”

She notes that the Bienestar team goes above and beyond to help her. Her shop is located far from an Oxxo, a popular convenience store chain where other customers deposit their credit repayments. Instead of forcing her to make the onerous trip, her Bienestar agent Mauricio comes to her shop to pick up her payments, so she doesn’t have to close her shop and lose sales. “I don’t feel a lot of pressure with Bienestar. I can schedule my repayment date when I have the money. They understand the ins and outs of running a small business.”

María Olga is relieved to have found a trusted partner that can help her maintain her financial health and that of her business, saying, “These days, there isn’t anyone to trust or who trusts you. I thank God that Bienestar came along and that they had confidence in me.”

Watch Maria’s story here:

[embed]https://vimeo.com/648737573[/embed]

A family hardware store stays in business with the right financial tools

Amee Parbhoo

Amid severe challenges, fintech is helping more people than ever access the tools they need to thrive and build resilience

As the pandemic continues to make life harder for low-income people, it’s also accelerating the adoption of digital tools that can create a more inclusive economy and more resilient communities.

More people than ever are using digital financial services. In 2020 alone, the number of active mobile money accounts grew to a record-breaking 1.2 billion. Some researchers predict that <a href="https://www.techrepublic.com/article/report-more-than-half-the-worlds-population-will-use-digital-banking-by-2026/" target="_blank" rel="noopener noreferrer">more than half the world’s population</a> — 4.2 billion people — will have access to digital banking by 2026, which is double the current number.

By opening doors to the digital economy and promoting healthy financial habits, the proliferation of these new tools has immense potential to help families and small businesses build healthier, safer, and more prosperous lives. And while many still lack access to technology and the skills required to apply it, fintech can be flexible, applying <a href="https://www.accion.org/the-tech-touch-balance" target="_blank" rel="noopener noreferrer">a tech-touch balance</a> that meets people where they are.

Fintech innovation is playing a central role in expanding access to and the quality of financial services — as the industry’s rapid growth indicates. <a href="https://www.economist.com/finance-and-economics/2021/07/15/investment-in-fintech-booms-as-upstarts-go-mainstream" target="_blank" rel="noopener noreferrer">One in every five dollars</a> invested by venture capitalists this year has gone into fintech companies. As of Q3 2021, the sector has raised <a href="https://www.cbinsights.com/research/report/fintech-trends-q3-2021/" target="_blank" rel="noopener noreferrer">more than $97 billion</a>, representing a massive year-over-year growth of 147 percent. Fintechs focused on digital asset exchanges, payments, savings, and wealth management reported growth in transaction numbers and volumes of 13 percent and 11 percent in 2020, according to <a href="https://www.worldbank.org/en/news/press-release/2020/12/03/fintech-market-reports-rapid-growth-during-covid-19-pandemic" target="_blank" rel="noopener noreferrer">the World Bank.</a>
<h2>Three ways fintech is changing the game</h2>
My team at Accion Venture Lab finds, funds, and supports early-stage fintech startups around the world that are scaling new ways to meet the financial needs of vulnerable people. Through our work with 59 companies to date, we’ve seen three key opportunities for fintech to make a difference for those who’ve been left out of the formal economy and are now dealing with the most severe effects of the pandemic.
<h3>1. Embedding financial tools</h3>
<a href="https://www.accion.org/embedded-finance-more-than-a-trend" target="_blank" rel="noopener noreferrer">Embedded finance</a> allows fintechs to integrate financial services into any type of business — from utilities to retailers. This innovative practice has greatly expanded the reach of financial services and created value for customers who are early in their journey of using financial tools.

Accion Venture Lab has invested <a href="https://www.accion.org/embedded-finance-more-than-a-trend" target="_blank" rel="noopener noreferrer">in two types of embedded finance models</a>: platforms that create new marketplaces through which consumers and small businesses can access new financial and non-financial offerings, and enablers that allow platforms to seamlessly provide financial services.

Our portfolio company <a href="https://agrim.app/" target="_blank" rel="noopener noreferrer">AGRIM</a> in India is an excellent example of a platform that is bridging gaps in the agricultural supply chain. India has over 1 million agri-retailers that provide informal credit to 130 million farmers, but these retailers often struggle with limited availability of goods, opaque pricing, product quality assurance, and the high cost of working capital. AGRIM’s digital marketplace solves these issues by first connecting retailers directly to manufacturers, allowing access to a wider range of products that can be delivered to their doorsteps at transparent prices.

One of our enabler portfolio companies, <a href="https://www.dinie.com/" target="_blank" rel="noopener noreferrer">Dinie</a>, partners with platforms of all kinds to <a href="https://www.accion.org/embedded-finance-meets-small-business-lending-in-latin-america" target="_blank" rel="noopener noreferrer">seamlessly provide lending products</a> that help Brazilian small businesses meet their short-term capital needs in the same digital environments where they already do business. And our partner <a href="https://www.lami.world/" target="_blank" rel="noopener noreferrer">Lami</a> in Kenya enables consumer-facing businesses like banks and e-commerce companies to <a href="https://www.accion.org/tech-opens-the-door-for-low-income-africans-to-get-the-insurance-they-need" target="_blank" rel="noopener noreferrer">develop and sell insurance products</a> to their customers in need. This innovative model builds financial resilience in Africa, where only three percent of those outside South Africa have insurance.
<h3>2. Empowering women</h3>
The economy’s rapid shift to digital threatens to expand the digital divide and risks leaving behind those with limited digital capabilities, especially women. Fintechs can play a major role in opening economic opportunities for women and equipping them with the digital tools they need to thrive in the modern economy.

<a href="https://fairbanc.app/" target="_blank" rel="noopener noreferrer">Fairbanc</a>, another recent investee of Accion Venture Lab, is an embedded tech platform in Indonesia that <a href="https://www.accion.org/an-embedded-finance-platform-helps-mom-and-pop-shops-grow-in-indonesia" target="_blank" rel="noopener noreferrer">enables inventory financing</a> for small retail shops, 70 percent of which are owned and managed by women. Fairbanc has made a concerted effort to understand the hurdles these women face, including a major lack of financing options partly linked to their reliance on cash. Fairbanc’s “buy now, pay later” product is integrated into the inventory ordering apps of large retail partners, vastly expanding access to financing that these shops need to grow and build financial resilience.

In Latin America, our portfolio company <a href="https://soyhenry.com/" target="_blank" rel="noopener noreferrer">Henry</a> is <a href="https://www.accion.org/a-fintech-cultivates-tech-talent-in-latin-america" target="_blank" rel="noopener noreferrer">expanding access to software development education</a> — and has focused on enabling more women to get the training they need for tech jobs. Henry has grown their percentage of female students from 20 to 25 percent — well above regional rates for women graduating with tech degrees. The company is also leading by example, as thirty percent of Henry’s staff are women, and most of their instructors are women.
<h3>3. Making progress on broader development goals</h3>
Access to financial services is critical to achieving economic growth and prosperity. Therefore, inclusive fintech startups have emerged as critical partners in advancing broader global development goals, including widening access to education, improving healthcare, and building resilience to climate change.

For example, our portfolio company <a href="https://field.inc/" target="_blank" rel="noopener noreferrer">Field Intelligence</a> applies data analytics and a subscription-based service to <a href="https://www.accion.org/how-tech-is-helping-to-meet-health-care-needs-during-the-pandemic" target="_blank" rel="noopener noreferrer">digitally transform community pharmacies</a> in Kenya and Nigeria, helping them better manage their inventories and focus on serving their customers. And in India, <a href="https://toffeeinsurance.com/" target="_blank" rel="noopener noreferrer">Toffee Insurance</a> is <a href="https://www.accion.org/affordable-accessible-insurance-gives-people-in-india-a-safety-net" target="_blank" rel="noopener noreferrer">revolutionizing access to insurance</a> by providing affordable, “bite-sized” policies that address specific challenges faced by customers, like policies that protect against dengue fever.

Our portfolio company <a href="https://www.pula-advisors.com/" target="_blank" rel="noopener noreferrer">Pula</a> has provided more than 4.5 million traditionally excluded farmers in Africa and Asia — many of them women — with agricultural insurance and data-driven insights to help them increase crop yields and build resilience to increasingly frequent droughts and floods. <a href="https://www.apolloagriculture.com/" target="_blank" rel="noopener noreferrer">Apollo Agriculture</a>, based in Kenya, also takes <a href="https://www.accion.org/tech-gives-farmers-in-east-africa-a-boost" target="_blank" rel="noopener noreferrer">a tech-based approach</a> to help farmers build climate and financial resilience through mobile money accounts, financing, optimized advice, farming products, and insurance.

Fintech is also making it easier for people to get a high-quality education. In Indonesia, where 90 percent of colleges and universities are private and public education options are few, our portfolio company <a href="https://pintek.id/" target="_blank" rel="noopener noreferrer">Pintek</a> provides education lending products to low-income families and the schools that serve them. And as schools quickly shifted to virtual learning during the pandemic, Pintek <a href="https://www.accion.org/schools-go-virtual-with-fintech-support-in-indonesia" target="_blank" rel="noopener noreferrer">provided financial support</a> to help cover unforeseen and unbudgeted costs of digital transitions and bridge the gap when low enrollment fees left them unable to fund these new initiatives.

At Accion Venture Lab, we are letting the fintech leaders in the field guide our efforts to identify, grow, and scale the most powerful innovations that are revolutionizing our economy for those who’ve been left out. By empowering these companies to succeed, we can provide a lifeline to those facing the most severe effects of the pandemic today and who deserve a more inclusive economy tomorrow.

With fintech, we can seize the moment to create a new, inclusive economy

Priya Punatar

Executive summary

People around the world are continually working to improve their financial lives. They do so with whatever knowledge they have gathered and with the tools available to them, some informal and some formal. Much of this effort happens outside of financial services; people work hard to grow their businesses, send their children to school, and troubleshoot during tough moments. Ultimately, all people aspire for greater financial health and for better lives for themselves and their families.
<blockquote class="pullquote--right">Ultimately, all people aspire for greater financial health and for better lives for themselves and their families.</blockquote>
In 2018, Accion and MetLife Foundation launched a partnership to explore how financial service providers (FSPs) can craft financial products to support these efforts. More specifically, they sought to design products that benefit users’ financial health using customer-centric, behaviorally informed design. The project aimed to build better digital financial products and delivery methods grounded in customer needs to benefit underserved customers.
This paper features five in-depth case studies that detail Accion’s experience working with five financial service provider (FSP) partners in Chile and Mexico over the past three years. 
The teams worked together to design and launch innovative financial products, 
and to monitor their impact via financial health measurements. The case studies dive into the contextual problems we worked to solve, the product features that we designed, and share preliminary measures of product uptake and impact on users seen to date. At the end of each case study, we share key takeaways for FSPs and industry players that are seeking to build the financial health of low-income and underserved populations.
For each of these products, <a href="https://www.accion.org/how-we-work/advise/accion-global-advisory-solutions" target="_blank" rel="noopener noreferrer">Accion Global Advisory Solutions</a> helped FSPs develop the skills to truly listen to what their customers need, design best-in-class digital products utilizing behavioral science principles to nudge healthy financial behaviors and implement a financial health measurement methodology. We also worked closely with our partner institutions to ensure that product concepts were <a href="https://www.accion.org/to-succeed-innovative-financial-products-must-be-desirable-feasible-and-viable" target="_blank" rel="noopener noreferrer">desirable, feasible, and viable</a>; to manage organizational change; and to market the products effectively. In Mexico, we launched a supply chain finance product with <a href="https://www.ahorrosbienestar.com/" target="_blank" rel="noopener">Caja Bienestar</a> and a savings product for youth with <a href="https://www.accion.org/young-people-in-mexico-need-finance-that-fits-their-lives" target="_blank" rel="noopener">Caja Popular Cerano</a>. In Chile, we revamped a financial health portal with <a href="https://www.accion.org/fintech-founders-have-a-formula-for-building-financial-health" target="_blank" rel="noopener">Destácame</a>, tailored a business management application for (micro, small, and medium enterprises) MSMEs with <a href="https://www.accion.org/this-new-app-is-helping-small-business-owners-build-financial-health-and-resilience" target="_blank" rel="noopener">Organizame and Banigualdad</a>, and deployed a crowd-funding platform for microentrepreneurs with <a href="https://redcapital.cl/" target="_blank" rel="noopener">RedCapital</a>. 
To assess and document the impact of these products on users’ <a href="https://www.uncdf.org/admin/editors/ArticleItem/Index/7008?articleTitle=delivering-financial-health-globally-a-collection-of-insights-approaches-and-recommendations" target="_blank" rel="noopener">financial health</a> — the state in which an individual can meet current needs, absorb financial shocks (like global pandemics), and pursue financial goals — we tracked outcomes in five areas that map to our conceptual framework for financial health for individuals and MSMEs: overall feelings of financial well-being, budget management, debt management, savings and long-term planning, and business management.
While these products are still early days in terms of customer uptake and traction, preliminary results reveal significant and positive improvements across these dimensions of financial health. We found that:  
<ul>
<li style="font-weight: 400;" aria-level="1">Nearly all products resulted in less financial stress and greater satisfaction with their current financial situation. Among users that own their own business, many demonstrated an ability to bounce back to levels prior to the COVID-19 pandemic level of sales (or higher!) when compared with control groups that did not use the financial products developed through this project. </li>
<li style="font-weight: 400;" aria-level="1">Easy-to-use budget management tools led to more users tracking their income and expenses on a more regular basis, therefore making users feel more in control of their finances. </li>
<li style="font-weight: 400;" aria-level="1">Across all products, individuals and businesses felt that they had a manageable level of debt, were better able to pay their credit on time, and were more comfortable taking out credit with a formal financial provider.</li>
<li style="font-weight: 400;" aria-level="1">Individuals using each of the products were able to save more and contribute to emergency funds. </li>
<li style="font-weight: 400;" aria-level="1">Business owners that took out working capital credit or used the business management tools noted that the additional liquidity enabled their business to take advantage of more opportunities. </li>
</ul>
Through our work with our partners and their clients across this project, we uncovered five cross-cutting takeaways for building relevant, impactful, and financial health-centric products:

Introduction

Financial inclusion is more than just connecting people to a bank account. People need financial tools that they trust, use, and benefit from, so that entrepreneurs can hire more employees, parents can save for the future, families can weather economic shocks, and communities everywhere can accelerate social and economic progress. The COVID-19 pandemic has highlighted the importance of well-designed financial tools, especially digital ones, to help low-income populations build resilience to weather prolonged income shocks.
<blockquote>While access to financial services has advanced during the last decade in Latin America, many consumers who have gained access have not taken full advantage of their newly acquired services. As of 2017, <a href="https://www.cgap.org/blog/financial-inclusion-glass-half-empty-or-half-full-pt-2" target="_blank" rel="noopener">17 percent of accounts</a> in Latin America and the Caribbean sat dormant.</blockquote>
This is because widely available financial products are not designed to fit most users’ needs, wants, and behaviors. Moreover, we have found that consumers need better support in navigating how different products can help them to grow their businesses, make choices that fit their lives, and reach their ambitions.
To address dormant accounts and low engagement, financial service providers should focus on products that build <a href="https://www.uncdf.org/admin/editors/ArticleItem/Index/7008?articleTitle=delivering-financial-health-globally-a-collection-of-insights-approaches-and-recommendations" target="_blank" rel="noopener">financial health</a> among users — the ability to meet their current financial needs, absorb financial shocks, and pursue financial goals. Such products are not just good for users, they are good for business. The 2019 <a href="https://finhealthnetwork.org/research/u-s-financial-health-pulse-2019-trends-report/" target="_blank" rel="noopener">US Financial Health Pulse</a> reports that, in the United States, people whose primary institution helped them to improve their financial health were 1.5 times more likely to be satisfied customers and 1.3 times more likely to purchase more products and services in the future. Additional research from Albania has shown that financially-healthy customers <a href="https://www.tandfonline.com/doi/full/10.1080/1331677X.2020.1820362" target="_blank" rel="noopener">exhibit better financial behaviors;</a> they use a more diverse range of financial products and services and use them more actively. And finally, Gallup found that when customers feel that their bank is <a href="https://news.gallup.com/opinion/gallup/176534/looking-customers-financial-table-stakes-banks.aspx" target="_blank" rel="noopener">looking out for their financial well-being</a>, they are much more likely to be fully engaged with that bank. 
By helping consumers build their financial health, FSPs can help customers become more informed and engaged; in other words, they become better customers. Moreover, as competition among FSPs continues to grow, providers that can serve those with unmet needs will win loyalty and growth.
<h2>Our approach</h2>
For decades, Accion has helped FSPs around the world deliver products that unserved and underserved client needs from the formal financial sector. The <a href="https://www.accion.org/how-we-work/advise/accion-global-advisory-solutions" target="_blank" rel="noopener">Accion Global Advisory Solutions team</a> is committed to delivering high-quality, affordable solutions for the billions of individuals who are still unserved or underserved by the financial sector. We combine human-centered design with insights into emerging technologies and effective business models to create financial services that accelerate social and economic progress.
<img class="alignright wp-image-25226" src="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-report-graphics-EN-Social-FINAL-08-1024x819.png" alt="Accion-MetLife-report-graphics-client map" width="493" height="394" srcset="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-report-graphics-EN-Social-FINAL-08-1024x819.png 1024w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-report-graphics-EN-Social-FINAL-08-300x240.png 300w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-report-graphics-EN-Social-FINAL-08-768x614.png 768w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-report-graphics-EN-Social-FINAL-08.png 1350w" sizes="(max-width: 493px) 100vw, 493px" />
In our view, to build financial health, FSPs need to put customers at the center of the design process and ask, “How can we better understand the challenges that our customers face, and how can we help them tackle these issues through our services?” Accion helps FSPs on this journey to understand the customers’ key pain points and develop tools, exercises, and advice that will build customer’s financial knowledge, skills, and attitudes. 
In 2018, Accion launched a partnership with <a href="https://www.accion.org/accion-and-metlife-foundation-announce-expanded-partnership-to-advance-financial-inclusion" target="_blank" rel="noopener">MetLife Foundation</a> to support five institutions in Chile and Mexico to develop products and services clients can trust, use, and benefit from. Over the last three and a half years, we worked closely with our FSP partners to create innovative solutions and services that help underserved families and businesses improve their financial health outcomes, become more resilient to shocks, and take advantage of opportunities that come their way. 
In Mexico, we partnered with two cooperatives: <a href="https://www.ahorrosbienestar.com/" target="_blank" rel="noopener">Caja Bienestar</a> to launch a supply chain finance product and <a href="https://cpcerano.com.mx/" target="_blank" rel="noopener">Caja Popular Cerano</a> to develop a savings product for youth. In Chile, we worked with three fintech organizations: we supported the revamp of a financial health portal with <a href="https://www.destacame.cl/" target="_blank" rel="noopener">Destácame</a>, a business management application with <a href="https://banigualdad.cl/" target="_blank" rel="noopener">Organizame for Fundacion Banigualdad</a>’s clients, and a crowd-funding platform for microentrepreneurs with <a href="https://redcapital.cl/" target="_blank" rel="noopener">RedCapital</a>.
Across all projects, we tracked impact in five specific areas of financial health that together suggest levels of resiliency and ability to take advantage of opportunities:
<img class="wp-image-25151 alignleft" src="https://content.accion.org/wp-content/uploads/2021/11/1-e1637339986812.png" alt="" width="40" height="38" />
Overall feeling of financial well-being: Assess feelings of satisfaction with regard to users’  financial lives, and the extent to which thinking about finances causes stress. 
<img class=" wp-image-25155 alignleft" src="https://content.accion.org/wp-content/uploads/2021/11/5.png" alt="" width="40" height="40" />Business management: Consider whether business owners feel confident about the financial sustainability of their businesses in the long run.
<img class=" wp-image-25153 alignleft" src="https://content.accion.org/wp-content/uploads/2021/11/3.png" alt="" width="40" height="39" />Debt management: Evaluate how well people are managing their existing debt and the extent of access to external resources, if needed.
<img class="wp-image-25154 alignleft" src="https://content.accion.org/wp-content/uploads/2021/11/4.png" alt="" width="40" height="39" />Savings and long-term planning: Observe whether users are building and maintaining short- and long-term savings based on their financial goals. 
<img class=" wp-image-25152 alignleft" src="https://content.accion.org/wp-content/uploads/2021/11/2.png" alt="" width="40" height="36" />
Budget management: Understand what tools are being used to manage personal, family, and business budgets to prioritize expenses and assess profitability.
These aspects of financial health were assessed via short, digital surveys among potential customers before product launch, and again several months after product launch. Due to small sample sizes, we were not always able to achieve statistical validity with our results, but we believe the directionality is still promising. Moreover, these products are still relatively new to the market and early days in terms of customer uptake and traction, so impact is likely underestimated. 
<img class="wp-image-25235 aligncenter" src="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-report-graphics-EN-Social-FINAL_Framework-300x150.png" alt="Accion-MetLife-report-graphics-Social-Framework" width="690" height="345" srcset="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-report-graphics-EN-Social-FINAL_Framework-300x150.png 300w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-report-graphics-EN-Social-FINAL_Framework-768x384.png 768w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-report-graphics-EN-Social-FINAL_Framework-1024x512.png 1024w" sizes="(max-width: 690px) 100vw, 690px" />
<h2>A note on timing</h2>
We experienced many challenges throughout the product development process: political insecurity, strikes, violence that made travel impossible, and, of course, the pandemic. Building an innovation mindset to financial institutions is never easy since FSPs are generally conservative, risk-averse institutions, and political, social, and natural uncertainty has made change even more challenging. Though our teams were able to conduct in-depth research through direct engagement with users at the onset of the project, our interactions with end-customers were entirely virtual from March 2020 onwards. These shocks delayed several product launches as our partner institutions shifted their attention to more immediate and pressing priorities. 
Furthermore, many of our end-clients also experienced health challenges and losses during this period. Most experienced disruptions in their business or were forced to shutter their doors and reinvent their livelihoods amid uncertainty. 
Nine months into the pandemic, we surveyed our partners’ clients to validate whether the product concepts we conceived before the pandemic would continue to be relevant, useful, and helpful as they sought to navigate and recover from the pandemic. We overwhelmingly heard from users that products that could give them the working capital they needed to keep the lights on, tools to manage their budget and their debt, and digital records for their business were exactly what they needed to keep their financial lives on track. 
In all, we hope that the lessons shared here will help other institutions develop and launch innovative products that empower their customers to make choices that fit their lives and build habits that improve their financial health, so they can improve their resilience to shocks and reach their ambitions.

Case Study: Caja Bienestar

In Mexico, <a href="http://www.inegi.org.mx/" target="_blank" rel="noopener">99 percent of all businesses are micro, small, and medium enterprises (MSMEs)</a>. They contribute 52 percent of GDP and generate 72 percent of jobs in the country. Although MSMEs play a crucial role in Mexico, <a href="https://read.oecd-ilibrary.org/industry-and-services/financing-smes-and-entrepreneurs-2016_fin_sme_ent-2016-en#page334" target="_blank" rel="noopener">fewer than 10 percent of them have received a bank loan</a>.  
Located in the heart of central Mexico, Caja Bienestar is meeting the needs of MSMEs. It is the largest socially focused financial institution in the country. Now entering its 25th year, the institution has more than 80,000 active microentrepreneur clients. Since its inception, Caja Bienestar has offered a variety of low-cost, high-quality financial services to its clients — both for personal and business purposes — and continues to be one of the most affordable credit options for small businesses and families in Central Mexico.
However, there remained two distinct segments that Bienestar had not able to reach with their current offering.  The first included microentrepreneurs, who, due to their business size, lack of documentation, and low or non-existent credit scores continued to lack access to credit, even from socially focused lenders like Caja Bienestar.  The second segment included microentrepreneurs that have the necessary documentation and credit histories to obtain credit but may lack the financial capabilities that would enable them to take out a loan confidently. For example, these entrepreneurs may not know what type of credit to apply for, may find it difficult to understand interest rates, or may be afraid of finding themselves deep in debt.
As a result of these challenges, these segments of MSMEs in Mexico often obtain the financing they need to purchase inventory from their suppliers, who they know and trust. MSMEs often find it more convenient to access informal credit from suppliers, where there is no need for collateral or paperwork. This short-term credit, with clear fees and schedules, is easier to understand than formal credit. However, such credit is not reliably available and can be expensive. Moreover, not all distributors offer such credit, as it requires them to carry the risk of late repayments, and the risk of theft upon collections. This reluctance means that many MSMEs are left without sufficient access to credit to fuel their business operations.   
<h2>The solution </h2>
To extend credit to informal MSMEs — that lack credit scores or distrust formal financial services but require liquidity to manage inventory — Caja Bienestar developed a revolving credit line product. The team knew that the credit product would have to be deeply customer-centric and tailored to the specific needs of the MSMEs that Bienestar had not previously been able to serve. The working capital loan, with attractive and competitive fees, was designed to not require a credit score, and instead uses information and recommendations from third-party wholesale distributors to assess risk. These distributors have sold to these businesses for many years, often extending them in-kind credit, and can therefore provide reliable assessments of their creditworthiness. In all, several innovative features that make it particularly well-suited to growing the financial capabilities of microenterprises:
<ul>
<li aria-level="1">Fee-based credit rather than interest rates. While most loans include interest rates, Accion’s research with customers found that such calculations are difficult for many microentrepreneurs to understand. Instead, the researchers found that defined fees are easier to grasp and can help shopkeepers better calculate the profitability of various aspects of their businesses. However, it is worth noting that, since various providers describe their pricing in different terms, it can be difficult for users to compare prices, so Bienestar’s loan officers make themselves available to help potential clients understand what option is best for them.  </li>
<li style="font-weight: 400;" aria-level="1">Pre-approved credit based on information from distributors. Using information and recommendations from distributors, Bienestar pre-approves groups of microentrepreneurs to access credit to replenish their product inventory. The sales and payment information from distributors has served as a valuable substitute for credit history, allowing Caja Bienestar to sufficiently assess creditworthiness for those without formal credit histories. </li>
</ul>
Distributors also benefit from this arrangement, as they can optimize their sales and transfer the risk of giving credit to Caja Bienestar. For Caja Bienestar itself, the information received from suppliers helps them get to know their customers better and make more informed decisions regarding the MSME borrowers’ debt, reserves, business inventory, and operations.
<div id="attachment_25230" style="width: 391px" class="wp-caption alignright"><img aria-describedby="caption-attachment-25230" class="wp-image-25230" src="https://content.accion.org/wp-content/uploads/2021/11/Bienestar-credit-simulator-tablet-300x222.png" alt="Bienestar-credit-simulator-tablet" width="381" height="282" srcset="https://content.accion.org/wp-content/uploads/2021/11/Bienestar-credit-simulator-tablet-300x222.png 300w, https://content.accion.org/wp-content/uploads/2021/11/Bienestar-credit-simulator-tablet-768x567.png 768w, https://content.accion.org/wp-content/uploads/2021/11/Bienestar-credit-simulator-tablet-1024x756.png 1024w, https://content.accion.org/wp-content/uploads/2021/11/Bienestar-credit-simulator-tablet.png 1056w" sizes="(max-width: 381px) 100vw, 381px" />Caption: Bienestar’s digital simulator helps MSMEs determine the loan terms they need to finance their inventory.</div>
<ul>
<li aria-level="1">A digital simulator to help MSMEs make informed decisions and prevent over-indebtedness. As MSMEs often lack an understanding of their own margins or costs of capital, the team built a digital simulator that MSMEs can use to determine what loan terms they need to finance their inventory. The tool calculates whether the expected profits from the sale of their inventory will be enough to cover the cost of credit. It then guides them to consider different terms or amounts based on their profitability levels. </li>
</ul>
<ul>
<li aria-level="1">A go-to-market strategy closely tied to key customer pain points. Marketing materials for the product provided customers with tips and advice about how to better understand the cost of credit and how to manage their debt.  Loan offers were also trained to help clients calculate what their monthly sales would need to be to pay back credit, and ultimately determine whether they should take out a loan.  </li>
</ul>
By offering entrepreneurs access to credit as well as free use of the digital simulator and complementing the approach with a communications strategy oriented around building financial health, Bienestar provides underserved entrepreneurs a low-risk way to grow their businesses while building their confidence to adopt and use credit to grow their businesses and manage their debt. The product, Bienestar para tu Negocio, was launched in January 2020 in partnership with six trusted, local textile and construction distributors that provide goods to MSMEs. With Bienestar para tu Negocio, entrepreneurs finally have access to the credit they need and the opportunity to grow their businesses. Over time, this financing will help MSMEs smooth their income and remain resilient in difficult periods. 
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<h2>Customer Spotlight: Maria Olga</h2>
<img class="size-large wp-image-25286" src="https://content.accion.org/wp-content/uploads/2021/11/DSF5482-1024x683.jpg" alt="MARIA OLGA" width="1024" height="683" srcset="https://content.accion.org/wp-content/uploads/2021/11/DSF5482-1024x683.jpg 1024w, https://content.accion.org/wp-content/uploads/2021/11/DSF5482-300x200.jpg 300w, https://content.accion.org/wp-content/uploads/2021/11/DSF5482-768x512.jpg 768w" sizes="(max-width: 1024px) 100vw, 1024px" />
Maria Olga is a microentrepreneur, she lives with her husband and children in Querétaro, Mexico. She opened her own business four years ago, where she sells a little of everything: spray paint, tools, bicycle parts and even cement and plaster. Lately, she was facing difficulties; customers came to her business to buy certain products, but she did not have capital available to purchase it because her resources were already invested in inventory. She did not dare to acquire a loan, because she thought that it would not be given to her, and she was afraid that the interest rates were very high. One day a supplier told her about the Caja Bienestar product loan, and she applied. Now, Maria Olga can stock her business with everything she needs and learned that she can pay off a loan in the time it takes her clients to pay her. She no longer loses customers due to lack of inventory. She feels very grateful because someone trusted in her.
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<h2>Results</h2>
During the pilot, the credit product had 14 active users, each of whom has received an average of 18 rounds of credit since January 2020, demonstrating significant recurring use. Ten of these individuals are first-time credit users.  Of those that have used the credit product, nearly 70 percent are between the ages of 26 and 45, 65 percent have had their business for over five years, and the majority describe their business as being in the commerce or transportation sectors. To date, 327 people have used the simulator to determine whether they should take out credit. 
To understand the impact of the credit, the team asked both those who received credit as well as some who did not, a series of questions about financial health at the beginning and end of the pilot in November 2020 and June 2021, respectively.
Overall, we found that use of the Bienestar para tu Negocio credit product is correlated with improved feelings of financial well-being, greater resilience to the shock of the pandemic, but we also saw an increase in stress among users when thinking about taking out credit—likely due to increased business uncertainty as the pandemic continues. 
<img class="wp-image-25236 aligncenter" src="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-report-graphics-EN-FINAL_Framework-Bienestar-300x150.png" alt="Accion-MetLife-report-graphics-Framework-Bienestar" width="696" height="348" srcset="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-report-graphics-EN-FINAL_Framework-Bienestar-300x150.png 300w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-report-graphics-EN-FINAL_Framework-Bienestar-768x384.png 768w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-report-graphics-EN-FINAL_Framework-Bienestar-1024x512.png 1024w" sizes="(max-width: 696px) 100vw, 696px" />
<h3>Overall financial well-being</h3>
Feelings of overall financial well-being among Caja Bienestar’s clients who took out a line of credit improved significantly when compared to those in the control group (those who did not take out any credit). In the group that received credit, the percentage of respondents that said their financial situation caused them stress decreased by nearly 10 percentage points in the time since the product launched. For those that did not receive credit, feelings of financial stress increased by nearly 5 percent over the same time period. 
<h3>Business management </h3>
The group of clients that received credit also reported being more able to manage their businesses than those in the control group. They reported a faster recovery after the pandemic and higher profits than this time last year. They also reported fewer instances of lost opportunities due to lack of liquidity or inventory. 
<div id="attachment_25231" style="width: 679px" class="wp-caption aligncenter"><img aria-describedby="caption-attachment-25231" class="wp-image-25231" src="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_Bienestar-300x162.png" alt="Bienestar_Business earnings" width="669" height="361" srcset="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_Bienestar-300x162.png 300w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_Bienestar-768x414.png 768w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_Bienestar-1024x552.png 1024w" sizes="(max-width: 669px) 100vw, 669px" />Caption: Product users reported a marked improvement in their ability to manage their businesses compared to those in the control group. </div>
<h3>Debt Management </h3>
Understanding what interest rate is best when seeking credit is an important skill when choosing a credit product. To test their understanding of debt, respondents were asked what interest rate they preferred when seeking credit. In both the group that received credit and those that did not, a large percentage could not identify the best interest rate. In addition, users of the Bienestar para tu Negocio product reported an increase in stress when seeking credit from a cooperative of a bank (an increase of 10 percent). These key findings demonstrate a need to further strengthen knowledge around how to choose between credit products and build greater confidence in managing debt. 
However, those that used the simulator tool expressed greater willingness to take out credit from a bank or credit union to take advantage of bulk purchase discounts from distributors in the future, demonstrating an improved understanding of when it is appropriate to seek credit.

Case Study: Caja Popular Cerano

Only <a href="https://databank.worldbank.org/reports.aspx?source=1228" target="_blank" rel="noopener">33 percent of the youth population</a> (ages 15-24) in Mexico are clients of a banking institution, compared to nearly 40 percent across Latin America and the Caribbean. These low rates of engagement in Mexico reflect the fact that <a href="https://www.oecd.org/finance/advancing-the-digital-financial-inclusion-of-youth.pdf" target="_blank" rel="noopener">young people do not connect with traditional brick-and-mortar financial institutions,</a> which have limited hours and require in-person transactions. Young people are looking for financial institutions that allow them to conduct transactions around the clock, and that use the channels that they use – social media and smartphone apps.  
<a href="https://cpcerano.com.mx/" target="_blank" rel="noopener">Caja Popular Cerano</a> is one of the many financial institutions that has struggled to connect with young people. It was founded in 1965 as a savings and credit cooperative and is headquartered in Cerano in the state of Guanajuato in Mexico. Today, it has 22 branches and serves more than 100,000 people. Its mission is to extend access to financial services to low-income segments of the population and to improve their users’ quality of life. To do so, Caja Popular Cerano provides specialized savings and loans to the middle-, low- and very-low-income segments, as well as micro, small and medium enterprises. Caja Popular Cerano is part of Federacion Alianza, a federation of 19 cooperatives in Mexico that serves as an umbrella organization to offer its members services such as a core banking system, as well as marketing and product development support. 
Although youth people make up a small percentage of current users, Caja Popular Cerano saw an enormous opportunity to serve the urban youth market in Mexico. However, market research showed that many of their current customers’ children were uninterested in opening accounts with Caja Cerano, a break from the past when families banked with Caja Cerano for generation after generation. The institution was finding their customer base was aging and that they were acquiring very few younger ones. To attract and serve young customers, Caja Popular Cerano needed to better understand the needs and preferences of youth, as they think about their own financial lives, and create a new offering relevant to their lives.  
The Accion and Caja Popular Cerano teams partnered to conduct in-depth interviews and co-creation sessions with several young students, part-time workers, and self-employed individuals to compile a detailed picture of youth in the state of Guanajuato. These research efforts revealed several key findings that became the basis for the product design. We found that many young people had already or aspired to start their own business—and had ambitious plans to grow. We also found that young people are busy managing many responsibilities at once, including school, work, caring for their families, and starting new businesses, in some cases. Despite having ambitious plans to grow their businesses and careers, young people told us that they usually think about their financial lives in short time horizons, planning how to get through the week, rather than thinking about planning for the future. But in the same vein, young people said they were excited to save for specific projects. Even if they do not make much money, they value saving informally. They like to use mobile apps to keep in touch with friends and for online shopping, however, most lack a credit card or mobile money account. Most people told us that they do not currently use formal financial services, are fearful of taking out loans as the risk of not being able to repay and being blacklisted could be detrimental to their lives.
The research also uncovered the extent to which young people use their phones to access the internet. Nearly 40 percent noted that they spend more than four hours a day on the internet, and 23 percent reported spending 2-3 hours on the internet a day. Nearly 90 percent of these respondents noted that they typically connect to the internet through their mobile phone.
<h2>The Solution</h2>
In light of the research findings, Accion worked with Caja Popular Cerano to develop a platform that would motivate young people to develop a saving discipline that would enable them to reach their future ambitions and help them develop positive credit scores over time. The team helped Caja Popular Cerano build their internal capacity to develop their <a href="https://www.accion.org/young-people-in-mexico-need-finance-that-fits-their-lives" target="_blank" rel="noopener">first digital product: AlianzApp</a>, an application that allows youth to put money aside weekly for a particular goal, either by putting money into savings or by taking out a very small loan. AlianzApp encourages young clients to save regularly and for specific purposes, borrow when they need, learn the value of a positive credit score, and build trust in formal financial institutions. By cultivating these capabilities in younger clients, Caja Popular Cerano will help customers thrive throughout their financial lives, starting with the app, which will likely be the individual’s first interaction with a financial institution. 
<div id="attachment_25289" style="width: 1034px" class="wp-caption aligncenter"><img aria-describedby="caption-attachment-25289" class="wp-image-25289 size-large" src="https://content.accion.org/wp-content/uploads/2021/11/Cerano-screenshot1-e1638316214976-1024x351.png" alt="Caja Popular Cerano’s AlianzApp helps its clients build healthy financial habits, including setting and saving for financial goals." width="1024" height="351" srcset="https://content.accion.org/wp-content/uploads/2021/11/Cerano-screenshot1-e1638316214976-1024x351.png 1024w, https://content.accion.org/wp-content/uploads/2021/11/Cerano-screenshot1-e1638316214976-300x103.png 300w, https://content.accion.org/wp-content/uploads/2021/11/Cerano-screenshot1-e1638316214976-768x263.png 768w, https://content.accion.org/wp-content/uploads/2021/11/Cerano-screenshot1-e1638316214976.png 1523w" sizes="(max-width: 1024px) 100vw, 1024px" />Caption: Caja Popular Cerano’s AlianzApp helps its clients build healthy financial habits, including setting and saving for financial goals.</div>
To craft a financial services app offer that meets the preferences and expectations of young people, key features of the AlianzApp include:
<ul>
<li style="font-weight: 400;" aria-level="1">Use of avatars to personalize and send timely advice. The app allows youth to choose an avatar, Mauricio or Pamela, who becomes a source of financial information throughout the youth’s journey. As the user saves or takes out credit, Mauricio or Pamela gives them advice, sends messages or nudges as needed.  For example, if a user has not made a loan repayment for more than two weeks, they receive a reminder that not repaying can impact their credit score.</li>
</ul>
<div id="attachment_25290" style="width: 777px" class="wp-caption aligncenter"><img aria-describedby="caption-attachment-25290" class="wp-image-25290 size-full" src="https://content.accion.org/wp-content/uploads/2021/11/Report-graphics-cerano-e1638316141546.png" alt="AlianzApp features Mauricio and Pamela, who guide clients along their financial journey." width="767" height="352" srcset="https://content.accion.org/wp-content/uploads/2021/11/Report-graphics-cerano-e1638316141546.png 767w, https://content.accion.org/wp-content/uploads/2021/11/Report-graphics-cerano-e1638316141546-300x138.png 300w" sizes="(max-width: 767px) 100vw, 767px" />Caption: AlianzApp features Mauricio and Pamela, who guide clients along their financial journey.</div>
<ul>
<li aria-level="1">Built-in calculators to simulate time horizons for reaching their savings and loan goals. In our research, we found that it was very hard for youth to calculate the duration of a loan, or how long they would need to save to purchase something. By including a simulation tool in the app, users can see how long they need to save or to pay off a loan. In the app, users are presented with a dashboard that indicates how much they would need to save a week, and over what time horizon, to meet their goals. The dashboards are designed with flexibility in mind; the user can easily see how their savings requirements change as they change one variable.</li>
</ul>
<div id="attachment_25291" style="width: 762px" class="wp-caption aligncenter"><img aria-describedby="caption-attachment-25291" class="wp-image-25291 size-full" src="https://content.accion.org/wp-content/uploads/2021/11/Report-graphics-cerano2-e1638316171537.png" alt="AlianzApp’s in-app messaging provides positive reinforcement to clients as they reach milestones towards achieving their goal." width="752" height="360" srcset="https://content.accion.org/wp-content/uploads/2021/11/Report-graphics-cerano2-e1638316171537.png 752w, https://content.accion.org/wp-content/uploads/2021/11/Report-graphics-cerano2-e1638316171537-300x144.png 300w" sizes="(max-width: 752px) 100vw, 752px" />Caption: AlianzApp’s in-app messaging provides positive reinforcement to clients as they reach milestones towards achieving their goal.</div>
<ul>
<li style="font-weight: 400;" aria-level="1">Motivating in-app messaging. The user also receives helpful tips about saving and paying back loans via notifications when they use the app. Additionally, the app has built-in motivational markers that show users whether they’re on a ‘streak’ (saving or paying consistently), how close they are to finishing a goal, and reminder messages if they have skipped a payment—and users receive badges when they have accomplished a goal. One of the overwhelming lessons we learned during interviews and prototyping is that youth value validation and celebration. The app includes six badges to incentivize use and continued savings and loan payments.  </li>
</ul>
<div id="attachment_25292" style="width: 206px" class="wp-caption alignright"><img aria-describedby="caption-attachment-25292" class="wp-image-25292 " src="https://content.accion.org/wp-content/uploads/2021/11/Report-graphics-cerano3-e1638315995906.png" alt="AlianzApp allows clients to set automated savings or payment from their account." width="196" height="280" srcset="https://content.accion.org/wp-content/uploads/2021/11/Report-graphics-cerano3-e1638315995906.png 252w, https://content.accion.org/wp-content/uploads/2021/11/Report-graphics-cerano3-e1638315995906-210x300.png 210w" sizes="(max-width: 196px) 100vw, 196px" />Caption: AlianzApp allows clients to set automated savings or payment from their account.</div>
<ul>
<li style="font-weight: 400;" aria-level="1">Automated save and pay options. The application allows users to save or pay their credit automatically, with self-save and self-pay, features that were new to the institution. They allow for payments to be “out of sight, out of mind” for those who opt in.  </li>
</ul>
Outside of the app, the team understood that the application could only be helpful if youth can easily find a place to deposit money. For this reason, the bank built a banking partnership so their young customers can make deposits at any BBVA branch, ATM, or banking agent (which includes OXXO, the largest network of kiosk and convenience stores in the country). This partnership provides a huge network of cash-in points for youth.
<h2></h2>
<h2>Results</h2>
Due to regulatory delays, AlianzApp has not yet launched, but the team expects its launch by the end of 2021. Given how promising the product is, the Federacion Alianza has expressed interest in expanding AlianzaApp to the other 18 cooperatives in the network. To support this growth, Accion has amplified the development of the product to ensure that once it is ready to launch, any cooperative in the network can offer it to their clients. The team is working with a local digital marketing firm to develop an ad and social media campaign to engage with youth and ensure that they learn about the application. The marketing tagline for the product is, #Financialloveexists or #ElAmorFinancieroExiste.
&nbsp;
<hr />
<h2>Customer Spotlight: Alejandra Rico</h2>
Alejandra Rico is 22 years old and currently is studying business management engineering at Guanajuato University. Saving is important to her because it can help her with unexpected expenses. She thinks that going to bank branches for transactions or to check your account movements is a waste of time, especially for young people who are looking to optimize their time. After testing the Cerano app, Alejandra noted that it can be helpful in helping her to control her expenses, and to create a saving habit since the app allows her to define a goal and track progress toward reaching it. Alejandra says the app will create a positive impact in her life via the advice and guidance it provides in setting up goals step-by-step, which is really easy and clear for young people.
<hr />
In our business case projections, we assumed that at least 10,000 users would adopt the product in the first three years. Today, there are less than 10 cooperatives <a href="https://bfaglobal.com/finnsalud/insights/from-analog-to-digitized-future-proofing-financial-cooperatives-in-mexico/" target="_blank" rel="noopener">out of 150</a> in all of Mexico that have digital financial services offerings for their users, and this will be the first digital offering specifically tailored to youth. As such, we expect that many cooperatives will be motivated to adopt this offer, in which case, its reach will scale dramatically.
Overtime, we expect that the use of this app will result in improved measures of overall financial well-being of its users, improved ability to manage debt, and finally, greater capacity to save and plan for the long-term.
Expected financial health outcomes from the use of the AlianzApp:
<img class="wp-image-25238 aligncenter" src="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-report-graphics-EN-FINAL_Framework-Cerano-300x150.png" alt="Accion-MetLife-report-graphics-framework-Cerano" width="692" height="346" srcset="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-report-graphics-EN-FINAL_Framework-Cerano-300x150.png 300w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-report-graphics-EN-FINAL_Framework-Cerano-768x384.png 768w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-report-graphics-EN-FINAL_Framework-Cerano-1024x512.png 1024w" sizes="(max-width: 692px) 100vw, 692px" />

Case Study: Destácame

In Chile, <a href="https://www.oecd.org/chile/Better-Life-Initiative-country-note-Chile.pdf" target="_blank" rel="noopener">53 percent of the population</a> is financially insecure, or at-risk of falling into poverty if they had to forgo three months of income. <a href="https://www.accion.org/five-reasons-small-merchants-arent-using-financial-services-in-chile" target="_blank" rel="noopener">Accion’s research in Chile</a> shows that many Chileans feel significant stress over their financial well-being, lack confidence in interacting with the formal financial sector, and have difficulty identifying how products and services can help them achieve their financial goals. The pandemic has only exacerbated feelings of financial insecurity in Chile.
<a href="https://www.destacame.cl/" target="_blank" rel="noopener">Destácame</a> is a personal financial management platform that seeks to empower individuals by raising their awareness of their own financial situation and facilitating access to financial products and services. On the Destácame website, users can review their credit report free of charge, access discounted options to pay off debt, review product offers from different entities, and learn tips to improve their financial situation. Destácame operates in Mexico and Chile, has over three million registered users, and partners with over 30 financial service providers.
Destácame’s site began as a marketplace to provide users with immediate access to many products and services as soon as they logged onto the site. While the offering was extensive (including credit reports, credit offers, credit cards, and debt reduction), it was not personalized. The original structure worked well to quickly grow the user base, but it did not promote Destácame as a long-term partner or financial health resource; only 11 percent of users were returning to the site month-over-month.
Accion partnered with Destácame to conduct market research, where we found that users feel stressed and alone in the face of managing their finances and financial challenges. We found that this emotional burden adds to daily challenges and manifests in different ways – some actively avoid dealing with their financial obligations, while others think about nothing else. Some people choose to believe that ‘nothing bad will happen,’ while others focus on just getting through the day rather than longer-term financial planning. We learned that people tend to prioritize current consumption without considering the healthy balance between income and expenses. Most users told us that they have no system in place to budget their expenses and were often unable to pay their expenses at the end of each month.
<h2>The Solution</h2>
Destácame knew that their users needed more than just access to financial products – they need an advisor to help them navigate their financial lives, manage a budget and debt, save for the future, and become more resilient to shocks. The fintech, in partnership with Accion, set out to revamp and expand its platform to create a fully customized user experience, <a href="https://www.accion.org/finding-a-path-to-financial-health-in-chile-one-step-at-a-time" target="_blank" rel="noopener">Experiencia Destácame</a>, to allow customers to set, visualize, and work toward their financial goals through simple diagnostics, personalized user journeys, and digestible tips, tools, and product recommendations. Rather than adding products or features to its platform, the Experiencia Destácame project involved changing the core of Destácame’s business and re-envisioning its value proposition around financial health. This revamping of the platform provides a more comprehensive experience for its users, improve retention and engagement so as to improve customer lifetime value. 
The Accion and Destácame teams developed several personalized tools for Experiencia Destácame to better support the financial health of the platform’s users:
<ul>
<li aria-level="1">Diagnostics that assess the user’s financial health and personalize their experience. When a user arrives at the Destácame site, they can take a diagnostic that assesses their financial health in three main categories: budget management, shock resilience, and long-term planning. Based on their responses to the diagnostic, they are qualified as good, neutral, or bad in each category, and provided with suggestions and tips for how to improve their standing. They also receive recommendations for relevant products based on their financial needs.   </li>
<li aria-level="1">A budgeting tool to ensure users can save for the future and become more resilient to shocks. Based on users’ responses to the diagnostic, they may be directed to Destácame’s budgeting tool. This tool provides users a step-by-step, user-friendly approach to building a budget. Users are walked through a series of screens to add income and expenses and calculate their savings. It also provides users with guidance on how much money they can set aside each month to pay off any existing debt, so that they can improve their creditworthiness over time. Design elements were incorporated throughout to provide guidance and encouragement, including easily accessible definitions, quick tips, and an informal, user friendly, positive prose.  </li>
<li aria-level="1">An expense reduction tool that helps users better manage their monthly cash flow. Users may also be guided to an expense reduction tool, which helps them manage their monthly cashflow by setting goals to reduce expenses in key categories and entering spending once a week to assess progress. The tool is designed to be flexible enough to meet user needs (for example, selecting the day to receive reminders) but structured enough to encourage action using positive language and support. </li>
</ul>
These tools are easily accessible on mobile devices, require little time to complete, and quickly demonstrate and reward progress towards better financial habits. All the tools are also closely linked to each other. For example, after a user completes the budget, she may see that she is spending more than she’s bringing in each month and be prompted to work on reducing expenses via the expense reduction tool. After reducing expenses, she may be encouraged to start saving, and provided with recommendations for relevant savings products. 
<h2>Results</h2>
Since launching in early 2020, over 1.25 million users in Chile and Mexico have visited the redesigned site. Almost 65,000 have completed the diagnostic, 128,000 have accessed the budgeting tool, and 30,000 have accessed the expense reduction tool, as of July 2021. These conversion rates are consistent with broader usage of Destácame products – and are impressive for self-driven tools. Survey data and usage metrics were collected before using the platform and again 12 and 18 months later in order to assess the impact of the Destácame platform on financial well-being.  
<img class="size-large wp-image-25316 aligncenter" src="https://content.accion.org/wp-content/uploads/2021/12/Accion-MetLife-report-graphics-EN-FINAL_Framework-Destacame-1024x512.png" alt="Destacame Framework" width="1024" height="512" srcset="https://content.accion.org/wp-content/uploads/2021/12/Accion-MetLife-report-graphics-EN-FINAL_Framework-Destacame-1024x512.png 1024w, https://content.accion.org/wp-content/uploads/2021/12/Accion-MetLife-report-graphics-EN-FINAL_Framework-Destacame-300x150.png 300w, https://content.accion.org/wp-content/uploads/2021/12/Accion-MetLife-report-graphics-EN-FINAL_Framework-Destacame-768x384.png 768w" sizes="(max-width: 1024px) 100vw, 1024px" />
<h3>Overall feeling of financial well-being</h3>
Experiencia Destácame users were asked about their level of satisfaction with their financial situation. Survey results show a large increase between baseline and final measurement (a 23 percentage point increase of those stating that they agree or strongly agree that they are satisfied with their financial situation). Since this study did not include a control group, it is hard to know how much of the changes to attribute to the platform although our statistical analysis did include controls for various contextual variables.
<img class="wp-image-25241 aligncenter" src="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_Destacame-1-300x162.png" alt="Destacame-Financial Situation Satisfaction" width="689" height="372" srcset="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_Destacame-1-300x162.png 300w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_Destacame-1-768x414.png 768w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_Destacame-1-1024x552.png 1024w" sizes="(max-width: 689px) 100vw, 689px" />
<h3>Savings and planning</h3>
Over the evaluation period, the number of Destácame platform users that place importance on savings increased.  There was also a notable increase in the number of users who have emergency funds, keep their emergency funds in a formal institution, have long-term savings, have a sense of financial security as they age, have plans to achieve financial goals, and have fulfilled a financial goal in the last twelve months. 
<img class="wp-image-25245 aligncenter" src="https://content.accion.org/wp-content/uploads/2021/11/Savings-and-long-term-planning-indicators-table-300x86.png" alt="Savings and long-term planning indicators- Destacame table" width="684" height="196" srcset="https://content.accion.org/wp-content/uploads/2021/11/Savings-and-long-term-planning-indicators-table-300x86.png 300w, https://content.accion.org/wp-content/uploads/2021/11/Savings-and-long-term-planning-indicators-table-768x221.png 768w, https://content.accion.org/wp-content/uploads/2021/11/Savings-and-long-term-planning-indicators-table-1024x295.png 1024w" sizes="(max-width: 684px) 100vw, 684px" />
Users of the Experiencia Destácame platform articulated greater resilience than they did before they began using the platform. The proportion of users that stated that they would be able to survive for more than a month if they were to lose income, increased by 32 percentage points compared to the baseline.
<img class="wp-image-25246 aligncenter" src="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_Destacame-2-300x162.png" alt="Lost incomes Graphs_Destacame" width="683" height="369" srcset="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_Destacame-2-300x162.png 300w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_Destacame-2-768x414.png 768w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_Destacame-2-1024x552.png 1024w" sizes="(max-width: 683px) 100vw, 683px" />
<h3>Budget management</h3>
Usage data of the Destácame budget tool shows that 34 percent of users accessing the budget tool were creating a budget for the first time, 30 percent achieved a positive end-of-month cash flow, and 8 percent said they were able to decrease expenses through usage of the tool.
Since only some of the platform users used the budgeting tool, we were able to compare their responses to those who used the platform but not the budgeting tool. Among those who completed the budgeting tool, the percentage of users that reported spending more than they earn each month increased from 20 percent in the baseline to 27 percent in the endline. Among those that did not complete the budgeting tool, the percentage that reported spending more than they receive monthly decreased from 30 percent to 20 percent.
In addition, those who completed the expense reduction tool reported a higher willingness to recommend the Experiencia Destácame platform to family and friends. The Net Promoter Score (NPS) among those using the tool was equal to 55.56, higher than the NPS of 51.12 for the overall use of the platform.
<h3>Debt management</h3>
The number of Destácame users with delinquent debt decreased significantly over the course of the project (52 percent in the baseline to 24 percent in the final measurement). Results also showed an increase in the number of users that feel that their level of debt is manageable. 
In addition, users that were able to pay off debts using the discount provided by Destácame reported a higher willingness to recommend the Destácame platform to family and friends than did clients who have not used the Experiencia Destácame platform to pay off debt. The average willingness to recommend the platform measured on a scale of 0-10, was 9.44 for among those who leveraged the platform to pay debt, versus 8.45 for those who did not.

Case Study: Fundación Banigualdad and Organizame

<a href="https://datareportal.com/reports/digital-2021-chile">Eighty-two percent of Chilean nationals</a> report being internet users, a figure significantly above the region’s 72 percent average. According to the same report, 99 percent of Chileans that use social media, access social media via a cell phone. Despite the prevalence of digital tools and usage in Chile, many microentrepreneurs continue to use notebooks to track their income and expenses, rather than digital tools that can help them to manage their business , maintain business records, calculate profitability, and plan for the future.   These manual behaviors persist and are difficult to change.  
In this context, <a href="https://www.banigualdad.cl/">Fundación Banigualdad</a> is a nonprofit organization that helps low-income microentrepreneurs access traditional financial services, giving them greater economic opportunity and equipping them to endure instability. In addition to issuing microloans, Banigualdad provides users with basic training in finance, marketing, sustainability, and business strategy. Today, the Fundación has just over 35,000 clients.
One of Fundación Banigualdad’s clients is Ms. Cecilia, who owns a small shop where she sells everyday items like food, cleaning supplies, and small gifts. While Cecilia knows when her shop is making money, she does not know what her actual profits are on a monthly or annual basis. This is because Cecilia and her husband track sales in several notebooks. When making a sale, they simply reach for the closest notebook and record the item and price sold. However, this process makes it very difficult to balance their accounts. 
This process is typical of many informal microentrepreneurs around the world. While this casual approach to tracking income gets small business owners through the day-to-day, it can hold them back from building longer-term financial health. Without knowledge of their profits, it is hard to make effective, strategic long-term decisions and better prepare for unstable times. Moreover, without an accurate picture of profitability it is difficult for informal microentrepreneurs to begin the process of formalizing their business—which provides greater opportunities for access to credit and government subsidies. 
<div id="attachment_25250" style="width: 310px" class="wp-caption alignright"><img aria-describedby="caption-attachment-25250" class="wp-image-25250 size-medium" src="https://content.accion.org/wp-content/uploads/2021/11/Felipe-Armijo-from-Organizame-shows-Cecilia-how-to-use-the-app--300x192.png" alt="Felipe Armijo from Organizame shows Cecilia how to use the app to digitize the record of her income and expenses." width="300" height="192" srcset="https://content.accion.org/wp-content/uploads/2021/11/Felipe-Armijo-from-Organizame-shows-Cecilia-how-to-use-the-app--300x192.png 300w, https://content.accion.org/wp-content/uploads/2021/11/Felipe-Armijo-from-Organizame-shows-Cecilia-how-to-use-the-app-.png 541w" sizes="(max-width: 300px) 100vw, 300px" />Caption: Felipe Armijo from Organizame shows Cecilia how to use the app to digitize the record of her income and expenses.</div>
<a href="https://www.organizame.cl/">Organizame</a> is a Chilean fintech company that was founded to help formalized small businesses track their sales and expenses digitally and issue electronic invoices. The Organizame website helps digitize business functions like cash flow management, bill payment, and credit applications to help entrepreneurs consolidate business transactions and send electronic documents. In tracking sales and expenses, the application captures significant data on merchant revenue streams that entrepreneurs can use to formalize their businesses and financial service providers can also use to assess credit capacity and offer credit at better prices. 
While the Organizame solution is helping many small businesses, informal MSMEs like Cecilia’s were not among their typical users. The team found that informal merchants don’t actively search for a digital solution and even when presented with one, are reluctant to adopt them given lack of access to computers, high costs, barriers in trust, digital literacy, and knowhow. In sum, the team realized that the original Organizame solution was not suited to the needs of shopkeepers who are accustomed to using a notebook.
Organizame’s interest to meet the needs of informal microentrepreneurs and Banigualdad’s commitment to helping their clients run their businesses more effectively, brought these two organizations together for this partnership. 
During the customer research phase, the organizations found the target segment not only needed a tool to help them reconcile their finances at the end of the month, but also needed support in analyzing and developing new business opportunities, setting and sticking to goals, and keeping their family and business expenses separate. 
<h2>The Solution</h2>
The Banigualdad and Organizame teams saw an opportunity to influence the record-keeping behavior of informal microentrepreneurs by helping them to separate family and business expenses, understand the importance of tracking income and expenses, calculate their business results, and monitor their accounts receivable.
Accion worked with Organizame to tailor their <a href="https://www.accion.org/this-new-app-is-helping-small-business-owners-build-financial-health-and-resilience" target="_blank" rel="noopener">online business management tool</a> to better serve Banigualdad’s informal, low-income clients. The app influences the user’s financial capabilities through several means:
<div id="attachment_25252" style="width: 220px" class="wp-caption alignright"><img aria-describedby="caption-attachment-25252" class=" wp-image-25252" src="https://content.accion.org/wp-content/uploads/2021/11/Organizame-mobile-e1638375886753.png" alt="Organizame-mobile" width="210" height="380" srcset="https://content.accion.org/wp-content/uploads/2021/11/Organizame-mobile-e1638375886753.png 344w, https://content.accion.org/wp-content/uploads/2021/11/Organizame-mobile-e1638375886753-166x300.png 166w" sizes="(max-width: 210px) 100vw, 210px" />Caption: Organizame’s app gives microentrepreneurs a view of their overall month-end finances.</div>
<ul>
<li>An app-based tool that enables MSMEs to digitize their business operations. While most microentrepreneurs in Chile do not have a computer, they have smartphones that they actively use for personal purposes, and to reach their customers and suppliers. Organizame, Banigualdad, and Accion decided to leverage that existing usage to develop a mobile application that would enable MSMEs to track their sales and expenses, and even issue electronic invoices — a first step to business formalization. The app consolidates their business transactions and automatically calculates monthly profits.</li>
<li>In-app notifications that provide reminders and advice to ensure the tool is being used effectively. The app sends notifications and reminders to users at least once a week to remind them to keep track of their business transaction data in the app. In addition, the app monitors any inputted accounts receivable, and sends the user notifications when they come due. The app also sends reminders with key pieces of advice, such as keeping your family and business accounts separate.</li>
</ul>
<div id="attachment_25251" style="width: 266px" class="wp-caption alignleft"><img aria-describedby="caption-attachment-25251" class=" wp-image-25251" src="https://content.accion.org/wp-content/uploads/2021/11/Organizme-gamified-tablet-e1638375917225.png" alt="Organizme-gamified-tablet" width="256" height="319" srcset="https://content.accion.org/wp-content/uploads/2021/11/Organizme-gamified-tablet-e1638375917225.png 473w, https://content.accion.org/wp-content/uploads/2021/11/Organizme-gamified-tablet-e1638375917225-241x300.png 241w" sizes="(max-width: 256px) 100vw, 256px" />Caption: The app’s gamified tutorials encourage and incentivize microentrepreneurs to record their daily transactions.</div>
<ul>
<li>Gamified tutorials that make learning how to record transactions digitally engaging and fun. Research has shown that simply educating entrepreneurs about the benefits of digital tracking is not effective in changing their behavior, but gamification of experiences can be more effective. The project team developed a gamified tutorial for microentrepreneurs to play within the application to encourage and incentivize them to register their daily sales and expenses in the platform. Immediately after downloading the application, users are introduced to a game that simulates a small fictional business. The user earns points as they complete tasks that help them learn how to use the app, like tracking the fictional business’ income and expenses. As users gain points, they can improve the virtual business. The game walks users through how to log sales by customer and how to keep track of what they owe their suppliers or what is owed to them.</li>
</ul>
<h2>Results</h2>
The Organizame app was launched in April 2021 and five months after launch, it has been downloaded 1,660 times and 543 users have completed the gamified tutorials. To measure the impact of the tool on overall well-being of the users, we surveyed a sub-segment of clients prior to the launch of the tool, and again three months later to assess their overall feelings of well-being, ability to manage their business, and ability to manage debt.
Among the 554 merchants that responded to the survey, 44 percent downloaded the application and among those who have the application, 33 percent have begun registering their sales into the platform. The following findings compare the financial well-being of those that have downloaded and are using the application with those who have not downloaded the application. The second group does not serve as a perfect control group because the team targeted more mature businesses to pilot app, suggesting that impact may be overestimated.
<hr />
<h2>Customer Spotlight: Rosita Corrotea</h2>
<img class="wp-image-25334 alignright" src="https://content.accion.org/wp-content/uploads/2021/12/Rosita-Corrotea-Screenshot.png" alt="The Interview with Rosita Corrotea - Screenshot" width="223" height="332" srcset="https://content.accion.org/wp-content/uploads/2021/12/Rosita-Corrotea-Screenshot.png 601w, https://content.accion.org/wp-content/uploads/2021/12/Rosita-Corrotea-Screenshot-201x300.png 201w" sizes="(max-width: 223px) 100vw, 223px" />
Rosita Corrotea is an entrepreneur from Coquimbo city in northern Chile who sells homemade cakes for birthdays and events. Her business is informal and she has been a Banigualdad client for almost four years. She knows how her business is going by the number of orders she receives but, before using the Organizame app, she didn’t really know how much money she earned per month. With the app, she can keep track of what she sells and what she spends on her business, and can calculate profits at the end of the month. Rosita has always been a person who likes to learn new things and found that using Organizame was very easy. She followed the tutorials and says that, “the application itself teaches her how to use it, it is easy to follow the instructions.”
<hr />
<h3>Overall well-being</h3>
Results of the survey show that overall feelings of well-being improved for both those that used the Organizame app, as well as those who did not, which may reflect that microentrepreneurs across Chile are slowly beginning to recover from the ravages of the pandemic. However, users of the platform reported a 17 percentage point increase in their satisfaction with their financial situation, while those that did not use the platform only reported a 5 percentage point increase.
<img class="size-large wp-image-25317 aligncenter" src="https://content.accion.org/wp-content/uploads/2021/12/Accion-MetLife-report-graphics-EN-FINAL_Framework-Fundacio╠ün-Banigualdad-and-Organizame-1024x512.png" alt="Organizame-framework" width="1024" height="512" srcset="https://content.accion.org/wp-content/uploads/2021/12/Accion-MetLife-report-graphics-EN-FINAL_Framework-Fundacio╠ün-Banigualdad-and-Organizame-1024x512.png 1024w, https://content.accion.org/wp-content/uploads/2021/12/Accion-MetLife-report-graphics-EN-FINAL_Framework-Fundacio╠ün-Banigualdad-and-Organizame-300x150.png 300w, https://content.accion.org/wp-content/uploads/2021/12/Accion-MetLife-report-graphics-EN-FINAL_Framework-Fundacio╠ün-Banigualdad-and-Organizame-768x384.png 768w" sizes="(max-width: 1024px) 100vw, 1024px" />
<h3>Business management</h3>
Across all measures, users of the app noted an improved ability to manage their business when compared with those that did not use the application. Prior to use of the app, approximately 50 percent of merchants reported feeling their businesses were progressing well. Among those who used the app, that group grew by 16 percent whereas it stayed around 50 percent among those who didn’t access the app, suggested that those who used the app were more likely to report positive feelings about their businesses.
All businesses reported being better able to pay themselves a salary at the end of every month, but the change was greatest among those who registered for the app as compared with those who never registered for the app. Similarly, the number of merchants who reported that their businesses grew in the last year increased in all groups. But while that proportion only grew by 5 percent in the non-app group, it grew by 13 percent among merchants who used the Organizame app.
Finally, users of the app were also less likely to confuse their personal and business funds. While the group without the app reported a 3 percent decline in ‘mixing their business and personal expenses’ (perhaps an effect of the assessment process), the group using the application reported a 12 percent decline, suggesting the effectiveness of the application in helping people track their business and personal funds separately but also a slight overall trend in better organization of funds across both the control and user group.
<img class="wp-image-25255 aligncenter" src="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_Organizame-1-300x162.png" alt="Business Confidence table" width="693" height="374" srcset="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_Organizame-1-300x162.png 300w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_Organizame-1-768x414.png 768w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_Organizame-1-1024x552.png 1024w" sizes="(max-width: 693px) 100vw, 693px" />
<h3>Budget management</h3>
The primary objective of the Organizame application was to change microentrepreneur’s business record-keeping behaviors to help them better manage and grow their businesses. Results from the survey found that even for those using the application actively, a notebook continues to be the primary tool for monitoring and tracking daily income and expenses. However, both groups did report an increase in their use of digital tools when managing their businesses — likely a result of changing digital behaviors during the pandemic. Not surprisingly, those that started using the app to monitor their finances reported a 24 percentage-point increase in their use of applications and computers when monitoring their expenses. The group without the app saw a 15 percent increase in the use of applications and computers. It will be critical for the Organizame team to continue 
to find ways to motivate and incentivize users to continue recording their transactions digitally, as lasting behavior change takes time.
<img class="wp-image-25256 aligncenter" src="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_Organizame-2-300x162.png" alt="Tools used to track and monitor finance table" width="689" height="372" srcset="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_Organizame-2-300x162.png 300w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_Organizame-2-768x414.png 768w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_Organizame-2-1024x552.png 1024w" sizes="(max-width: 689px) 100vw, 689px" />
<h3>Savings and long-term planning</h3>
Usage of the Organizame application is also correlated with greater resilience. The proportion of users of the app who reported that they could survive less than three weeks with their current savings decreased by 17 percent over the treatment period. In contrast, that proportion stayed more stable among those who didn’t use the app.
Overall, Organizame’s app seems to help microentrepreneurs gain greater control over their expenses and even helps them to prepare for months of low sales — a critically important task for them to stay resilient in uncertain times. The Organizame solution provides low-income entrepreneurs with better insights into their finances, organizes their operations, and helps them make more informed decisions to grow their businesses and re-invest in their households.
While the app has had some preliminary benefits, there is still room for improvement. Usage data shows that only 28 percent of users are inputting their sales into the app regularly (seven times a month or more). Others are consolidating their daily sales and inputting their expenses into the app at various points within the month. The notebook continues to be the most prevalent method of record keeping. Through user research, we found that it is onerous for microentrepreneurs to record every single transaction separately in a digital app, as they may sell a high volume of low-price items each day, which are easier to note down in a notebook and transfer to the digital app in batches a few times each month.

Case Study: RedCapital

Chilean banks and authorities have made critical advances to increase financial inclusion. Between agent networks, payment platforms, and the <a href="https://www.bis.org/ifc/publ/ifcb47i.pdf" target="_blank" rel="noopener">CuentaRUT account</a> — a simplified deposit account with a debit card that state-owned Banco Estado has made available to anyone with an identity card — Chile has nearly reached universal access to financial services.
Despite the advances, many small merchants in Chile cannot find financial tools to meet their needs. Micro, small, and medium enterprises (MSMEs) make up <a href="http://www.smefinanceforum.org/data-sites/msme-country-indicators" target="_blank" rel="noopener">98.5 percent of enterprises</a> in the country but <a href="https://www.smefinanceforum.org/data-sites/msme-finance-gap" target="_blank" rel="noopener">almost a quarter</a> face difficulty accessing financing in times of need. This has been especially true since COVID-19 infections <a href="https://www.npr.org/sections/goatsandsoda/2020/07/02/885207834/covid-19-exploits-cracks-in-chilean-society" target="_blank" rel="noopener">soared</a> last year, especially since nearly <a href="https://oecdecoscope.blog/2020/06/29/reaching-out-to-informal-workers-in-latin-america-lessons-from-covid-19/" target="_blank" rel="noopener">30 percent of the </a> 
population that works in the informal sector has no access to social protection.
RedCapital, a fintech and crowdfunding platform in Chile, was founded in 2014 to help formal small and medium enterprises (SMEs) get the funding they need. On RedCapital’s platform, individual investors lend money or provide factoring for SMEs, giving Chile’s small businesses the financing they need to expand, and investors are provided with attractive returns.
While the platform has served SMEs well, microentrepreneurs, especially informal ones, have been more difficult for RedCapital to serve for several reasons. They tend to prefer informal credit with simpler processes, lack the documentation required by the RedCapital’s original credit scoring system, and are often less comfortable using a digital platform to meet their financial needs. To continue growing the platform and address the credit gap faced by MSMEs in the country, the team needed to find a way to expand down market. By RedCapital’s estimations, there is a projected USD $10 billion market opportunity to be accessed by serving MSMEs that lack access to finance.

RedCapital and Accion partnered to conduct market research with Chilean microentrepreneurs and found that MSMEs are eager to grow their businesses but need support to understand how to use short-term credit to control their levels of inventory, manage their debt, and to deploy simple strategies for setting and meeting growth goals. Many informal entrepreneurs said they were uncomfortable taking out loans from a digital platform, and preferred to speak with a person when sharing personal information or addressing key questions. These findings made it clear to the team that, in addition to simply redesigning their platform for MSMEs, they would also need to adapt the customer experience to provide microentrepreneurs with a way to grow their businesses and help them to understand and improve their financial health in the process.
<h2>The Solution</h2>
To create such a product, Accion helped RedCapital completely redesign their platform and digital customer experience to better serve microenterprises. The team adapted the platform’s processes, credit-scoring methodology, pricing, and the customer experience to provide greater transparency and support to microentrepreneurs. And they created a low-cost, easy to access credit product, coupled with business management lessons, to build the financial health of microentrepreneur users of the RedCapital platform.
The lending product was adjusted to better serve microentrepreneurs and support their financial well-being through the following features:
<ul>
<li>A credit scoring model more appropriate for the MSME segment. As a fintech, RedCapital’s business model leveraged technology and a proprietary credit scoring system utilizing publicly-available tax and utility data. However, the model excluded MSMEs, which did not meet the credit-underwriting criteria. With this project, the team developed a new scoring model, <a href="https://www.accion.org/risk-management-tool-guide-credit-scoring" target="_blank" rel="noopener">using Accion’s credit risk methodology</a>, to provide credit to MSMEs that exhibit an entrepreneurial spirit and growth mindset, profit potential, and some level of tech usage.</li>
<li>A chatbot to mimic human interactions. The research found that users were not comfortable inputting their personal information into a website. The team created a chatbot to mimic an interaction that users trusted and felt more comfortable with. Customers can get ongoing support through the intelligent chatbot at every step of the journey — and there is also the option to connect to customer service if additional hand holding is required, balancing tech and touch in the digital journey.</li>
<li>Financial-health focused exercises that help MSMEs grow their businesses. To address the key pain points that MSMEs face in growing their businesses, the team created video and blog content to help their customers spend, save, borrow, and plan better by: (1) organizing their finances, (2) controlling costs, (3) planning for their future, and (4) managing debt. The content was designed to help entrepreneurs gain skills as their businesses became more established.</li>
</ul>
Each blog and video ends with key calls to action that encourage customers to take steps that, over time, can build their financial health. For example, in one activity, users are asked to develop a concrete plan for managing their current debt, which <a href="https://s3.amazonaws.com/cfsi-innovation-files-2018/wp-content/uploads/2016/05/09212818/Consumer-FinHealth-Metrics-FINAL_May.pdf" target="_blank" rel="noopener">evidence shows can lead to better outcomes</a>. To encourage the completion of these calls to action, the platform rewards users with dynamic rewards. As users complete more activities, they unlock benefits, such as higher loan amounts. These rewards are intended to keep users motivated and engaged over time.
<div id="attachment_25261" style="width: 549px" class="wp-caption aligncenter"><img aria-describedby="caption-attachment-25261" class="wp-image-25261 " src="https://content.accion.org/wp-content/uploads/2021/11/redcapital3-768x237.png" alt="RedCapital customers are rewarded as they complete calls to action, like these in the “Manage your Debt” blog: Calculate the percentage of Debt, Credit Financing, Credit Rules (from left to right)." width="539" height="186" srcset="https://content.accion.org/wp-content/uploads/2021/11/redcapital3-768x237.png 472w, https://content.accion.org/wp-content/uploads/2021/11/redcapital3-768x237-300x104.png 300w" sizes="(max-width: 539px) 100vw, 539px" />Caption: RedCapital customers are rewarded as they complete calls to action, like these in the “Manage your Debt” blog: Calculate the percentage of Debt, Credit Financing, Credit Rules (from left to right).</div>
<ul>
<li>Digital support tools to address customer needs. A simple simulator, built into the product flow, gives customers a better idea of the breakdown of their loan. It also allows customers who are hesitant to apply to better understand the process and terms they might potentially qualify for, which helps demystify the process and build trust and confidence.</li>
</ul>
<div id="attachment_25262" style="width: 606px" class="wp-caption aligncenter"><img aria-describedby="caption-attachment-25262" class=" wp-image-25262" src="https://content.accion.org/wp-content/uploads/2021/11/RedCapital-credit-simulator-tablet-e1638323383269.png" alt="RedCapital’s credit simulator helps customers better understand their loan terms and demystifies the loan application process for those who are hesitant to apply." width="596" height="451" srcset="https://content.accion.org/wp-content/uploads/2021/11/RedCapital-credit-simulator-tablet-e1638323383269.png 724w, https://content.accion.org/wp-content/uploads/2021/11/RedCapital-credit-simulator-tablet-e1638323383269-300x227.png 300w" sizes="(max-width: 596px) 100vw, 596px" />Caption: RedCapital’s credit simulator helps customers better understand their loan terms and demystifies the loan application process for those who are hesitant to apply.</div>
With this additional support, RedCapital helps Chile’s micro-entrepreneurs achieve their personal and professional goals — whether it is to expand their business or to buy a home for their family.
<h2>Results</h2>
To date, 305 MSMEs have received financing through RedCapital, and over 2,600 are registered on the RedCapital platform. Of those registered, 650 users have visited the financial health blogs and 394 users have viewed the financial capability videos on YouTube, averaging nearly 100 views per topic. The most popular topics included, “<a href="https://www.youtube.com/watch?v=nyCGrvyN8NY" target="_blank" rel="noopener">Controlling your expenses</a>” and “<a href="https://www.youtube.com/watch?v=u697gWHaj7A" target="_blank" rel="noopener">Plan for your future</a>,” while “<a href="https://www.youtube.com/watch?v=w1QPcJdzSRc" target="_blank" rel="noopener">Manage your debt</a>” generated the least interest. Interestingly, those whose initial credit applications were not approved reported greater use and consultation of the blog content on the RedCapital website than those who did take out credit.
To better understand the impact of credit and corresponding financial health content, the team asked both those who received credit as well as some who did not, a series of questions about their financial health. Given small sample sizes, the team also conducted several interviews with product users to better understand their experience using the product.
<hr />
<h2>Customer Spotlight: Karolayn Opazo</h2>
<img class="alignnone size-large wp-image-25310" src="https://content.accion.org/wp-content/uploads/2021/11/DSF3773-e1638326290457-1024x738.jpg" alt="KAROLAYN OPAZO" width="1024" height="738" />
Karolayn’s business, Don Beño, sources avocados from small producers, sorts and packages them, and then delivers them to consumers across Chile. The business is now stable and established, but it started slow and faced challenges along the way. For example, when she needed investment for a bigger office and warehouse space two years ago, she was not sure where to turn. At that time, Karolayn was introduced to RedCapital. She remembers she didn’t have records or sales receipts, but the loan officers recognized her drive and smarts. She says, “They believed in our business but, more than that, they believed in us as people.” RedCapital issued Karolayn her first credit and now she is in her third loan.
<hr />
<h3> Overall financial well-being</h3>
Customers who received credit from RedCapital were more likely to be satisfied with their current financial situation. Among platform users, the proportion who reported satisfaction with their financial life increased by15 percentage points, whereas among those that did not take out credit, the group reporting satisfaction decreased by 14 percent over the evaluation period. However, since the baseline was taken pre-pandemic, those experiencing financial stress increased in both groups over the course of the evaluation (nine percent in the group that did not receive credit, and six percent in the group that did).
<img class="wp-image-25264 aligncenter" src="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_RedCapital-300x162.png" alt="Accion-MetLife-Graphs-RedCapital-financial situation satisfaction" width="691" height="373" srcset="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_RedCapital-300x162.png 300w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_RedCapital-768x414.png 768w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-Graphs_EN_FINAL_RedCapital-1024x552.png 1024w" sizes="(max-width: 691px) 100vw, 691px" />
In a series of interviews held with customers that had taken out credit, the respondents emphasized that despite how difficult it has been to sustain their businesses during the pandemic, the loan helped them to maintain their business and reactivate economically, even though strict quarantines negatively affected their businesses. One customer told us, “We are currently financially satisfied, we have achieved a lot with the business, although we still aspire to many more things and to continue growing. Our goals are getting bigger and bigger!”
Of course, other microentrepreneurs continue to feel financially stressed and dissatisfied with their current financial situation. Many businesses have not been able to fully recover from the pandemic, and uncertainty about the volume of sales they may have on any given day remains for many.
<h3>Business management</h3>
The group that received credit saw an increase in those reporting business growth over the last year (4 percent increase), whereas the control group reported no change in business growth. Customers told the team that the credit has allowed them to “capitalize and grow their business”, hire more staff, and expand their product and service offering.
In a survey, 100 percent of the respondents that did not take out any credit told us that they lost opportunities over the last 12 months due to a lack of business liquidity. For those that did receive credit, only 89 percent reported losing opportunities due to lack of liquidity — still a high number due to the pandemic, but not quite as stark as the group that received no credit. Finally, those that did receive credit reported less confusion between their personal finances and those of their business.
<h3>Debt management</h3>
Overall, users of the RedCapital credit product reported improved attitudes towards taking out credit with formal financial institutions over time. As expected, when asked how they relate to the statement, “I have access to timely and affordable credit to meet the needs of my business,” non-credit holders perceived fewer opportunities to access credit to meet the needs of their business (20 percent agreed with the statement) as compared to credit-holders (55 percent agreed). Finally, those who received credit demonstrated better debt practices; they felt they were better able to pay debt on time, and that their level of debt was appropriate. While 65 percent of RedCapital credit customers were able to pay their debt on time over the last six months, only 55 percent of non-credit clients were able to do the same. Finally, survey results showed that those that took out a loan with RedCapital are 30 percent more likely to recommend RedCapital to family and friends.
<img class="wp-image-25265 aligncenter" src="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-report-graphics-EN-FINAL_Framework-RedCapital-300x150.png" alt="" width="692" height="346" srcset="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-report-graphics-EN-FINAL_Framework-RedCapital-300x150.png 300w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-report-graphics-EN-FINAL_Framework-RedCapital-768x384.png 768w, https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-report-graphics-EN-FINAL_Framework-RedCapital-1024x512.png 1024w" sizes="(max-width: 692px) 100vw, 692px" />

Conclusion

With the right financial products, we believe that entrepreneurs will be better able to hire more employees, parents can more easily save for the future, and communities everywhere will be able to accelerate social and economic progress. However, for these benefits to take shape, we must develop financial health-centric products that are rooted in the behaviors, knowledge, skills, and attitudes of the target segment, to ensure that people can trust, use, and benefit from them.
Financial service providers are at the frontlines of engaging and serving customers on a daily basis and have an important role to play in supporting positive financial health outcomes of their users. However, such providers don’t always have the resources or skills to conduct in-depth user research and human-centered design experiments to develop innovative new products. In partnership with MetLife Foundation, Accion worked closely with five financial service providers to design and launch behaviorally informed and financial health focused products. The resulting products span the range from a gamified savings app to a loan origination process to an expense-tracking solution for small businesses. While the products are diverse, the approach to design is what unites them. In each case, the Accion team helped the providers connect with users to understand their needs, preference, and habits. Insights from these conversations guided critical aspects of product design, from product naming to onboarding requirements to chatbot interfaces. Though these aspects may seem like details relative to product features or even pricing, they are critical to promoting uptake and usage.
The value of this attention to detail and to users is evident in the initial response to the products. While these products are still early days in terms of customer uptake and traction, preliminary results reveal significant and positive improvements across all the dimensions of financial health we aimed to influence, including overall feeling of financial well-being, budget management, debt management, savings and long-term planning, and budget management. In all, users report higher levels of financial confidence and comfort, less stress about debt, and greater optimism about their futures.
Measures like these help the financial service to go beyond just inclusion figures and income and revenue measures, to consider a more holistic picture of financial health.
Moreover, a financial health approach demonstrated meaningful impact in attracting customers to FSPs, in improving loyalty and customer lifetime value, and greater willingness to refer the provider to family and friends. Over time, we expect to see increases in product adoption and opportunities to better serve these users with a wider breadth of financial products, as their financial lives become more fruitful.
Key takeaways for financial service providers looking to develop a financial health approach, include:
<ul>
<li>Financial health interventions need to be as easy and effortless as possible for users.</li>
<li>Behavior change requires frequent interaction with the user, and integration into their daily lives.</li>
<li>Human touchpoints are critical to influencing financial health, especially for low-income and underserved customers.</li>
<li>A focus on financial health is attractive to customers and potential business partners.</li>
<li>Centering on financial health can improve customer lifetime value by creating more resilient, more loyal customers and opening other opportunities.</li>
</ul>
Through this project, we confirmed that a sure way to develop impactful financial services is to start with user-centric design and research — by gaining a deep understanding of customer behaviors and capabilities. After all, true financial inclusion is about behavior change, which must start with a profound understanding of users’ preferences, needs, and routines. Such understandings, when fed into creating feasible and viable solutions, strong change management, and rigorous monitoring processes, can position financial service providers to deliver the financial well-being they articulate in their mission and vision statements. As demonstrated through these case studies, this approach can reliably deliver benefits to overall feelings of well-being and resiliency, as well as business and debt management.
Delivering such benefits is especially important for small businesses — which are the backbone of emerging economies around the world but are extremely vulnerable to financial shocks and macro volatility. These businesses serve as the primary source of income for many low-income households so reinforcing them can have benefits throughout the economy. By giving microentrepreneurs the tools they need to manage their businesses day-to-day, and individuals the tools to plan for financial shocks and to take advantage of opportunities, we can help ensure they are better prepared during unexpected challenges and can access a path to a better future.

Acknowledgements

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<img class="alignnone size-medium wp-image-25269" src="https://content.accion.org/wp-content/uploads/2021/11/Metlife_Logo_2016-300x64.png" alt="Metlife logo" width="300" height="64" srcset="https://content.accion.org/wp-content/uploads/2021/11/Metlife_Logo_2016-300x64.png 300w, https://content.accion.org/wp-content/uploads/2021/11/Metlife_Logo_2016-768x165.png 768w, https://content.accion.org/wp-content/uploads/2021/11/Metlife_Logo_2016-1024x220.png 1024w" sizes="(max-width: 300px) 100vw, 300px" />
<h2>MetLife Foundation</h2>
In 2018, Accion announced a new partnership with MetLife Foundation in Latin America to work alongside financial service providers (FSPs) to develop customer-centric and behaviorally informed products and services that reach underserved clients and improve their financial health. This partnership — <a href="https://www.accion.org/accion-and-metlife-foundation-announce-expanded-partnership-to-advance-financial-inclusion" target="_blank" rel="noopener">Building Financial Capabilities and Strengthening Institutions through Customer-Centered Innovations</a> — aims to equip regional FSPs with the skills to listen to what their customers need, design best-in-class digital products that are easy to use, and help customers build healthy financial habits. Accion would like to thank the following organizations for sharing their expertise and learnings for this paper: Caja Bienestar (Mexico), Caja Popular Cerano (Mexico), Destácame (Chile), Fundacíon Banigualdad (Chile), Organizame (Chile), and RedCapital (Chile).
Accion could not have tracked and monitored the financial outcomes outlined in this paper without the help of the user experience research firm, <a href="https://www.sensata.io/" target="_blank" rel="noopener">Sensata SAS</a>. The author is also grateful to the many contributors to this publication, including all team members involved in this project: Sandra Calderon, Maria Belen Garrett, Liza Guzmán, Yanina Seltzer, Amy Stewart, Leonardo Tibaquira, Kathleen Yaworsky, Tannaz Daruwalla, and Malika Anand.
The opinions expressed in this report are those of the author(s) and do not necessarily represent the views of MetLife Foundation.

Report

<h1>Foreword</h1>
<a href="https://www.accion.org/finding-a-path-to-financial-health-in-chile-one-step-at-a-time" target="_blank" rel="noopener noreferrer">Karen</a> is a single mom who lives in Santiago, Chile, with her young daughter. She went to school to study business administration but had to drop out to care for her daughter. Today, she works at a retail shop where she makes just enough to get by. Karen worries all the time — about paying the bills each month, about providing for her daughter, and about her growing credit card debt. She knows she needs to make a change, but she doesn’t know where to start. She has tried to put together a plan to pay off her debt, but it is difficult to figure out the total amount she owes or identify the right person to call. Thinking about money makes her feel stressed, overwhelmed, and alone.

To achieve their goals and build financial health, people like Karen need products and services that can help them to better track their finances, manage shocks (like global pandemics) and pursue financial goals. 

Unfortunately, most low-income individuals and small businesses currently lack access to formal financial services; <a href="https://databank.worldbank.org/reports.aspx?source=global-financial-inclusion" target="_blank" rel="noopener noreferrer">nearly half of adults</a> in Latin America do not have a formal bank account, and those with accounts use them <a href="https://publications.iadb.org/en/converting-dormant-bank-accounts-dynamic-force-latin-america" target="_blank" rel="noopener noreferrer">infrequently</a>. This suggests that most of the financial products available to users in Latin America may be expensive, inconvenient, inappropriate, or all three. 

This is because developing relevant financial services for low-income households and small businesses — that can have a meaningful impact on their financial health — is not straightforward. Low-income customers often lack formal financial records, operate informally, and have little experience with formal financial services, making it difficult for providers to pinpoint their needs. Moreover, many of these customers distrust formal financial services and hold negative beliefs around account ownership and credit. To craft relevant financial products, providers must acquire a deep understanding of their customer’s financial behaviors, pain points, ambitions, attitudes, and capabilities. 

To help them develop financial services that can deliver financial health, Accion Global Advisory Solutions along with <a href="https://www.metlife.com/about/corporate-responsibility/metlife-foundation/index.html" target="_blank" rel="noopener noreferrer">MetLife Foundation</a> partnered with fintechs, cooperatives, and traditional financial service providers (FSPs) in Chile and Mexico to develop products to better serve their low-income customers. Accion worked with these FSP partners to design and launch viable digital products and services to reach underserved clients and improve their financial health, to help them maintain resilience against adversity and take advantage of opportunities. 

This paper shares five case studies about Accion’s work with Chilean and Mexican partners over the past three and a half years. In Chile, we used human-centered design and behavioral economics to launch a business management application for microbusinesses with <a href="https://www.accion.org/this-new-app-is-helping-small-business-owners-build-financial-health-and-resilience" target="_blank" rel="noopener noreferrer">Organizame and Banigualdad</a>, revamped a financial health portal with <a href="https://www.accion.org/fintech-founders-have-a-formula-for-building-financial-health" target="_blank" rel="noopener noreferrer">Destácame</a>, and deployed a crowd-funding platform for microentrepreneurs with <a href="https://redcapital.cl/" target="_blank" rel="noopener noreferrer">RedCapital</a>. In Mexico, we developed a savings product for youth with <a href="https://www.accion.org/young-people-in-mexico-need-finance-that-fits-their-lives" target="_blank" rel="noopener noreferrer">Caja Popular Cerano</a> and launched a supply chain finance product with <a href="https://www.ahorrosbienestar.com/" target="_blank" rel="noopener noreferrer">Caja Bienestar</a>. In this paper, we share our key challenges, learnings, and overall results from this project — uncovering best practices on how to design for and influence financial health along the way. 

To date, most financial health efforts have focused on measurement and monitoring, but little guidance has been provided to financial service providers that are at the frontlines of engaging and serving customers on a daily basis. This paper is a first effort in that direction, giving providers actionable lessons for how to support positive financial health outcomes among their users. Moreover, the case studies within demonstrate the positive impact that a financial health-focused approach has on loyalty, customer lifetime value, and in creating new customer acquisition opportunities.

In the midst of enormous financial uncertainty sparked by COVID-19, our efforts to help underserved families and businesses improve their financial capabilities and develop healthy financial behaviors are critical. Our hope is that this paper will help financial service providers develop and optimize financial health-centric products that will lead to meaningful changes in the financial lives of their customers. This will require a more holistic approach to designing products for underserved individuals that includes consideration of their financial capabilities and historic behaviors. We believe that such an approach will result in better products with greater uptake and engagement. 

&nbsp;

Liza Guzman

Vice President and Program Manager, Customer Strategy

How providers can build products that improve financial health: Examples from Mexico and Chile

Laura Glenny

How financial providers can build a culture of experimentation that leads to better services for low-income people

This article is the third of a six-part series on scaling financial inclusion to accompany our <a href="https://www.accion.org/the-digital-transformation-guide-six-strategies-to-scale-financial-inclusion" target="_blank" rel="noopener noreferrer">digital transformation guide</a>. 

In emerging markets, many banks and financial providers rely on a network of field agents that interact with customers in person. Through in-person visits, these field agents build strong personal connections with customers while helping them to manage their money and determine which financial products best meet their needs. Many financial service providers (FSPs) who work with low-income segments struggle to build up their digital capabilities internally because their field employees fear that digital tools may diminish their deep relationships with customers and negatively impact the customer experience. Changing this mindset is key to a successful digital transformation.  When FSPs can create a culture of experimentation, they can drive digital innovation and reimagine how to address challenges and opportunities that arise for their organization and their customers.

To build this culture of experimentation, financial providers should:
<h3>Focus on alignment before getting started</h3>
Many FSPs feel they need to get new products out the door quickly to demonstrate progress on digital transformation initiatives. However, providers shouldn’t shortchange the time and effort required to build alignment across the organization before taking on a new digital strategy. Successful digital transformations should start with a shared understanding of the roles and responsibilities expected of each team member — from the board of directors all the way down each level of the organization.

Sasidhar Thumuluri, CEO of <a href="https://www.accion.org/clients/sub-k" target="_blank" rel="noopener noreferrer">Sub-K IMPACT Solutions</a> — a partner of Accion that reaches underserved populations in India, approached the challenge of launching a new digital strategy by first aligning with all teams on organizational goals and priorities. By holding several strategy-setting workshops to identify gaps within the organizational design and process flows before developing new products, Sub-K saw an opportunity to streamline their operations. Sasidhar also appointed subcommittees to determine which activities best supported the organization’s priorities, making Sub-K much more open to running experiments that ultimately lead them to build solutions that help low-income customers in rural India.
<h3>Take a test-and-learn approach — and create a safe space to fail</h3>
When working with our partner <a href="https://www.accion.org/clients/accion-microfinance-bank" target="_blank" rel="noopener noreferrer">Accion Microfinance Bank</a> (Accion MfB) in Nigeria, we knew the organization was just starting their digital transformation journey. While the leadership team was excited and motivated to digitize, we quickly learned that other departments essential to the digital team’s effectiveness, like HR, IT, marketing, and risk, weren’t fully sold on the idea. Their KPIs remained aligned with business as usual, so they weren’t incentivized to take risks and work toward the bank’s new digital ambitions. This trickle-down approach was insufficient to cultivate a culture where all teams embrace large-scale digital changes, and operational departments support the digital team’s needs using a test-and-learn approach. To address these challenges, Accion MfB embedded organization-wide changes, including:

<img class="alignnone wp-image-24077" src="https://content.accion.org/wp-content/uploads/2021/04/Accion-MAP-report-graphics-WEB_10-Culture-of-experimentation-300x150.png" alt="Culture of experimentation in digital transformation" width="738" height="369" />
<ul>
 	<li>Encouraging management to take risks. Since management worried about the impact of failed projects on the bank’s profitability, the board approved an innovation budget, noting that they would not count any losses against profitability metrics or performance-related pay. This change made management increasingly comfortable with learning by doing.</li>
 	<li>Prioritizing a Chief Digital Officer with the necessary people skills to drive digital adoption. The bank’s new Chief Digital Officer set a vision and evangelized digital transformation, encouraging his team to take risks and learn from failure.</li>
 	<li>Developing and embedding digital KPIs into the organization’s DNA. Helping all teams understand their role in supporting digital initiatives is key. For example, HR took on KPIs like the speed of recruiting talent with digital skills, while the commercial team and branch managers contributed 15 to 20 percent of their time to digital support.</li>
</ul>
<blockquote class="blockquote pullquote--right">“In order to ensure that the digital unit is not just a brand within a brand, we had to create a connection between departments like audit, risk, and HR. We created a digital KPI for everybody across the bank so there is ownership and an embracing of our digital strategy.”

— Taiwo Joda, Managing Director and CEO, Accion Microfinance Bank in Nigeria</blockquote>
<ul>
 	<li>Implementing interdepartmental service level agreements. Accion MfB ensured that audit and compliance departments would conduct timely assessments of digitally enabled products, marketing would respond to new products’ needs, and risk teams would support new product innovation, all of whom created budgets and plans that support experimentation requirements.</li>
 	<li>Creating a safe space to fail and encouraging experimentation in a sandbox-like environment. Taking a flexible approach, Accion MfB ringfenced potential risks by limiting the number of customers and the total amount to lend during the digital loan pilot so they could identify the upfront costs needed for the experiment to achieve its objectives. Providing the digital unit with autonomy and decision-making power allowed them to frame their new digital loan as a low-risk experiment rather than a fully-fledged product launch.</li>
</ul>
<h3>Combine comfort with radical experimentation</h3>
To succeed in a digital world, FSPs need the flexibility to experiment safely and effectively. Leadership teams can cultivate a safe space and offer teams the freedom to fail by mastering six skills: be approachable, show compassion, stay composed, manage conflict, direct others, and listen proactively. When leaders embody these characteristics, their teams are more empowered to develop innovative solutions to serve financially excluded populations.

Accion worked with <a href="https://www.accion.org/clients/civico" target="_blank" rel="noopener noreferrer">CÍVICO</a>, a digital ecosystem that geolocates small merchants and corner stores across Latin America to make it easier for people to find what they need in their neighborhoods. While CÍVICO is not a traditional financial provider, they saw the opportunity to serve their customers better and grow their business by providing financial services. Though they initially sought to form partnerships with external vendors to develop a digital lending platform, their users’ urgent financing needs during the COVID-19 pandemic led CÍVICO to make the bold decision to start lending directly. They launched a low-fidelity product, lending very small amounts while conducting tests, learning quickly, and making adjustments to the process. Using surveys, they were able to better understand entrepreneurs’ behaviors, biggest pain points, and state of financial health, ultimately helping to identify the merchants most in need of just-in-time credit.

Realizing the transformative power of experimentation is a commitment. Over time, these experiments can yield thousands of small and not-so-small changes that can lead to huge benefits for customers. While many experiments may fail, prioritizing innovation leads to a successful digital transformation.

<a href="https://www.linkedin.com/in/malavika-krishnan/" target="_blank" rel="noopener noreferrer">Malavika Krishnan</a> contributed to this article.

Invest in innovation to reach low-income customers

Kathleen Yaworsky

Karolayn comenzó su negocio hace cinco años cuando ella y su esposo visitaban a su abuelo. Se dieron cuenta de que a los productores locales de aguacate enfrentaban dificultades para llevar sus productos al mercado. Comenzó por ayudar a un vecino a cosechar sus campos y a enviar sus aguacates a los compradores, y pronto otros se le acercaron. Recuerda que un vecino le dijo: &#8220;Tengo esta tierra y estos árboles, pero necesito ayuda para cosechar y vender&#8221;. Karolayn utilizó sus ahorros y el apoyo de familiares y amigos para lanzar Don Beño, un negocio de distribución de aguacate al por mayor que lleva el nombre del abuelo de su esposo.
Don Beño obtiene aguacates de pequeños productores en Chile: los clasifica y empaca, y luego los distribuye a diversos consumidores en todo el país. La empresa es responsable de llevar alimentos de los agricultores a los consumidores de manera segura, rápida y eficiente. América Latina es uno de los <a href="http://www.fao.org/americas/noticias/ver/en/c/1200912/" target="_blank" rel="noopener">principales productores y exportadores de alimentos del mundo</a> y las empresas agrícolas como Don Beño desempeñan un papel fundamental en las cadenas de suministro de alimentos de Chile: desde la producción hasta la distribución y las ventas. La pandemia de COVID-19 puso de manifiesto la fragilidad de las cadenas de suministro globales y reforzó su importancia para trasladar alimentos del campo a la mesa. Muchos distribuidores son también micro, pequeñas y medianas empresas (MIPYME): representan más del <a href="https://www.worldbank.org/en/topic/smefinance" target="_blank" rel="noopener">90 por ciento</a> de las empresas en todo el mundo, y son el motor que lleva los productos alimentarios y agrícolas a los consumidores, donde y cuando los requieran. A pesar de la cantidad e importancia de las MIPYME, muchas empresas en Chile enfrentan dificultades para obtener el financiamiento que necesitan para crecer.
Al principio, Karolayn y su esposo trabajaban desde su casa, y su área de trabajo se extendía hasta el pasillo de su patio. Ahora poseen un negocio floreciente con una oficina y un almacén de buen tamaño. Si bien su negocio está actualmente consolidado, los inicios fueron lentos y enfrentaron desafíos en el camino. Por ejemplo, cuando necesitaba invertir en una oficina y un almacén más grandes hace dos años, descubrió que los capitales escaseaban. “Fue una época en la que nadie te apoyaba”, recuerda. “Solo teníamos dos años, pero los bancos pedían ingresos y estados de cuenta para negocios de al menos cuatro años.”
La situación no ha cambiado mucho desde entonces y hasta hace poco Karolayn seguía enfrentando el mismo problema de financiación. Sin embargo, Karolayn supo de <a href="https://redcapital.cl/" target="_blank" rel="noopener">RedCapital</a>, una plataforma de crowdfunding que se ocupa exclusivamente en las MIPYME de Chile, así que procedió a solicitar un crédito. Recuerda que no tenía registros ni recibos de ventas; sin embargo, bajo el nuevo modelo de calificación crediticia adaptado para este segmento empresarial, su solicitud fue aprobada.  RedCapital desembolsó el préstamo de forma electrónica, aprovechando su plataforma digital. Ella comenta: &#8220;Creyeron en nuestro negocio, pero, más que eso, creyeron en nosotros como personas&#8221;. RedCapital otorgó a Karolayn su primer préstamo quien ahora está en su tercer crédito. Afirma con orgullo: &#8220;confiaron en nosotros y les hemos cumplido.&#8221;
Aunque Don Beño es ahora un negocio consolidado, Karolayn no ha terminado de crecer. De hecho, dice que tan solo están a mitad de camino. Quiere adquirir otro almacén e invertir en materiales para empaquetar a temperatura controlada. Dado que Don Beño se compromete a ofrecer a sus clientes aguacates frescos con la madurez exacta requerida, las temporadas pueden representar desafíos. La fruta madura demasiado rápido en verano y no lo suficiente en invierno. El agregar paquetes refrigerados a las cajas durante el verano aliviaría el estrés durante los meses más cálidos y garantizaría que los consumidores locales obtengan los alimentos que necesitan cuando los necesitan. Pero esto requiere financiamiento.
Karolayn también quiere invertir en una máquina para clasificar aguacates. Actualmente, el equipo los separa a mano en cinco categorías diferentes, pesando cada uno individualmente y colocándolos en diferentes zonas del almacén. Una máquina podría automatizar esta clasificación y realizar el trabajo de dos días en tan solo una hora. Ella señala que esta inversión permitiría que su negocio creciera fuertemente, pero solo la puede hacer mediante crédito. No es factible ahorrar para tales compras porque su capital está inmovilizado en inventario e inversiones más pequeñas como cajas, camiones y otros activos. Cualquier excedente de fondos se destina a estas oportunidades de crecimiento, por lo que debe buscar financiamiento para grandes inversiones como esta máquina y materiales para empacar a temperatura controlada.
RedCapital ha ayudado a Karolayn a realizar la inversión que Don Beño necesita, y ella abriga la esperanza de lograr la próxima fase de su negocio. RedCapital apoya a muchas empresas como Don Beño, que son fundamentales para potenciar a los actores de la cadena alimentaria: agricultores, restaurantes, minoristas y consumidores. Todos son esenciales, pero no pueden tener éxito sin el apoyo y los servicios adecuados. Instituciones financieras como RedCapital han hecho posible el éxito de pequeñas empresas y, al hacerlo, apuntalan la cadena de valor de producción y distribución de alimentos, contribuyendo así a la seguridad alimentaria en general.
Accion trabajó con RedCapital, <a href="https://www.accion.org/accion-and-metlife-foundation-announce-expanded-partnership-to-advance-financial-inclusion" target="_blank" rel="noopener">con el apoyo de MetLife Foundation</a>, para desarrollar un producto de crédito digital diseñado específicamente para las MIPYME como Don Beño y distribuido a través de su plataforma de crowdfunding, para ayudarlas a crecer y al mismo tiempo brindarles la capacidad de comprender y mejorar su salud financiera.

By getting agribusinesses the funding needed to grow, we can strengthen food supply chains and enhance food security

Karolayn started her business five years ago when she and her husband visited his grandfather. They noticed that local avocado producers were struggling to get their produce to market. She started by helping one neighbor harvest his fields and sent his avocados to buyers, and soon others approached her. She remembers another neighbor saying, “I have this land and these trees, but I need help harvesting and selling.” Karolayn used her savings and support from her family and friends to launch Don Beño, a wholesale avocado distribution business named after her husband’s grandfather.

Don Beño sources avocados from small producers in Chile, sorts and packages them, and then delivers them to various consumers across the country. The business is responsible for getting food from farmers to consumers safely, quickly, and efficiently. Latin America is one of the <a href="http://www.fao.org/americas/noticias/ver/en/c/1200912/" target="_blank" rel="noopener noreferrer">world’s leading food producers and exporters</a>, and agribusinesses like Don Beño play a critical role in Chile’s food supply chains, from food production to distribution to sales. The COVID-19 pandemic exposed the fragility of global supply chains and reinforced their importance in moving food from producers to tables. Many distributors are also micro, small, and medium enterprises (MSMEs), which make up more than <a href="https://www.worldbank.org/en/topic/smefinance" target="_blank" rel="noopener noreferrer">90 percent</a> of businesses worldwide and are the engine for ensuring that food and agricultural products reach consumers where and when needed. Despite the prevalence and importance of MSMEs, many businesses in Chile face difficulty getting the funding they need to grow.

In the beginning, Karolayn and her husband worked from their home and their workspace spilled out into the hallway of their patio. Now they have a flourishing business on their hands with a sizable office and warehouse. While their business is now stable and established, they started slow and faced challenges along the way. For example, when she needed investment for a bigger office and warehouse space two years ago, she found that capital was scarce. “It was a moment in which no one would support you,” she remembers. “We were only two years old, but the banks were asking for revenues and statements for businesses at least four years old.”

Until recently, Karolayn still faced the same funding problems. Things changed when she learned about <a href="https://redcapital.cl/">RedCapital</a>, a crowdfunding platform with a sole focus on MSMEs in Chile, and filled out their credit application. She remembers she didn’t have records or sales receipts but, under the company’s new credit scoring model adapted for the MSME segment, her application was approved. RedCapital disbursed the loan electronically, leveraging the digital infrastructure of its platform. She says, “They believed in our business, but, more than that, they believed in us as people.” RedCapital issued Karolayn her first loan, and now she is in her third round of credit. She states proudly, “they trusted us, and we have delivered.”

Though Don Beño is an established business now, Karolayn isn’t done growing. In fact, she says they are only halfway there. She wants to acquire another warehouse and invest in materials for temperature-controlled packaging. Since Don Beño is committed to getting its customers fresh avocados at the exact ripeness required, seasons can present a challenge. The fruit ripens too fast in the summer and not fast enough in winter. Adding cool packs to the boxes during the summer would alleviate stress during the warmer months and ensure that local consumers get the food they need when they need it. But such materials require capital.

Karolayn also wants to invest in a machine to sort the avocados. Currently, the team separates the fruit into five different grades by hand, weighing each avocado individually and placing them in separate corners of the warehouse. A machine could automate this sorting and cut two days of work down to just an hour. She notes that this investment would allow her business to grow dramatically, but it can only be acquired via credit. It isn’t feasible to save for such a purchase because her capital is tied up in inventory and smaller investments like boxes, trucks, and other assets. Any spare capital goes to these incremental growth opportunities, so she must look for financing for large investments like this machine and materials for temperature-controlled packaging.

RedCapital has helped Karolayn make the investment Don Beño needs, and she is hopeful the next phase of her business is within reach. RedCapital supports many businesses like Don Beño, which are critical to enabling players across the food chain — farmers, restaurants, retailers, and consumers. These businesses are essential, but they cannot succeed without adequate support and services. Financial institutions like RedCapital assured small business success, and in so doing, shore up the food production and distribution value chain, contributing to overall food security.

Accion worked with RedCapital, <a href="https://www.accion.org/accion-and-metlife-foundation-announce-expanded-partnership-to-advance-financial-inclusion">with support from MetLife Foundation</a>, to develop a digital credit product distributed through their crowdfunding platform. Specifically designed for MSMEs like Don Beño, their product helps entrepreneurs grow their business while giving them the ability to understand and improve their financial health. Watch Karolayn’s story here:

[embed]https://vimeo.com/641199249[/embed]

As agribusinesses grow, so does food security

Fintechs around the world take innovative approaches to put affordable education in reach for more students in developing markets

Written by <a href="https://www.linkedin.com/in/navjot-navi-hansra/" target="_blank" rel="noopener noreferrer">Navjot Hansra</a>

The education gap within India is considerable, <a href="https://www.unicef.org/india/what-we-do/education" target="_blank" rel="noopener noreferrer">with 29 percent of children dropping out of school</a> before completing their full cycle of elementary education. The COVID-19 pandemic has exacerbated this issue, <a href="https://www.accion.org/putting-education-in-reach-for-more-women-and-girls" target="_blank" rel="noopener noreferrer">especially for women and girls</a>; in 2020, <a href="https://www.unicef.org/india/press-releases/covid-19-schools-more-168-million-children-globally-have-been-completely-closed" target="_blank" rel="noopener noreferrer">1.5 million schools in India closed</a>, and many students are unlikely to return to their classrooms as schools reopen. From primary schooling to university, many students can’t obtain a formal education due to the high costs of schooling. The Indian education loans market aims to bridge this affordability gap and help more students stay in school. While this <a href="https://yourstory.com/2021/03/india-education-finance-startups-affordable-learning-students/amp" target="_blank" rel="noopener noreferrer">industry is estimated to be worth over $10 billion</a>, traditional lenders only address five percent of this market – presenting a large opportunity for fintech companies to meet students’ financial needs.

To tackle the affordability challenge in the education industry, startups at the intersection of fintech and education focus on driving cost efficiencies for schools and affordably financing education for students. Schools seek solutions that help them improve their payment collection and tracking processes, apply for and receive loans with sector-specific underwriting to go toward facilities and curriculum, and obtain insurance to mitigate risks associated with school infrastructure. Families with students attending these institutions need a way to finance tuition costs across the spectrum of education levels, including vocational school, as well as start education savings plans for their children.

At Accion Venture Lab, we’re increasingly focused on unique business models that address education affordability for historically underserved groups. Three of our recent seed-stage fintech investments within India, Latin America, and Southeast Asia take innovative approaches to support education:
<h2>Tech powers financial solutions for schools and students in India</h2>
As schools in India continue to contend with low enrollment and other challenges from the pandemic, many institutions struggle to manage their financial and administrative operations. <a href="https://www.getanthem.co/" target="_blank" rel="noopener noreferrer">Anthem</a>, previously called Finwego, is an education sector lender in India that provides a money management platform to schools and educational institutions to digitize and streamline their banking and finance functions so they can focus on providing high-quality education in their communities.

The company launched as a fintech lender in January 2019, providing credit products to institutions and educators. After working closely with educational institutions and realizing the need to digitize their fee collection processes, the company launched Radius, a revenue management tool that allows educational institutions to collect and track tuition payments and send reminders to their students. The Radius tool enables Anthem to gain a deep understanding of fee collection trends and underwrite loans tailored to meet the needs of an institution’s “customers”: students, families, institutions, vendors, and educators.

One such product is the zero percent interest, “buy now, pay later” option offered to families to pay students’ tuition fees through Anthem’s digital platform. Families often struggle to pay schooling fees in large lump sums twice per year, but Anthem’s product allows users to pay fees in equal monthly installments, helping to smooth cash flows of households and reducing their dependence on expensive personal loans. This product also addresses schools’ need for short-term working capital credit by enabling consistent, predictable inflows of tuition payments.
<h2>A coding bootcamp leads to tech jobs in Latin America</h2>
As the tech industry grows in Latin America, so does the demand for software development and coding skills within the workforce. <a href="https://www.soyhenry.com/" target="_blank" rel="noopener noreferrer">Henry</a> is a coding bootcamp in Latin America that <a href="https://www.accion.org/a-fintech-cultivates-tech-talent-in-latin-america" target="_blank" rel="noopener noreferrer">offers financing for technology courses</a> through an Income Sharing Agreement where students take Henry’s coding courses at no cost until they secure a job in their chosen field.

The company launched their full-stack developer course in March 2020. Through this model, young adults can gain a technical education without upfront costs that typically make formal schooling inaccessible. Henry also builds relationships with top tech companies in the U.S. and Latin America to help students find high-paying jobs after graduation, and students only start making payments to Henry once they get jobs after graduating. Although the company is headquartered in Argentina, its 100 percent remote method has allowed them to expand to Colombia, Uruguay, and Chile. Overall, Henry’s zero upfront cost, job security-focused, remote model allows anyone – including those without the financial means – to acquire a thorough technical education that is relevant and sought after in today’s labor market.
<h2>Making education accessible in Indonesia through fintech</h2>
While access to education in Indonesia has improved significantly in recent years, many students and schools still struggle to get what they need to invest in high-quality education. <a href="https://pintek.id/" target="_blank" rel="noopener noreferrer">Pintek</a> is a specialized education lender that provides financing to schools and families in Indonesia.

The company offers financing options to help schools smooth cash flows, fund repairs in their facilities, purchase equipment for their classrooms, and finance other working capital needs. Once a school onboards to their platform, Pintek also provides the enrolled student body with access to student loans that help break large school-related expenses, such as tuition payments, books, and uniforms, into more manageable monthly payments. This allows lower-to-middle income households to access education more affordably — more than half of Pintek’s students and families are first-time formal borrowers. Also, as the company recognized a push for schools to <a href="https://www.accion.org/schools-go-virtual-with-fintech-support-in-indonesia" target="_blank" rel="noopener noreferrer">go digital amid the COVID-19 pandemic</a>, Pintek developed a software platform called TataSkola to help schools digitize their internal functions. Pintek offers TataSkola to schools for free to support their operations, like tracking receivables and requesting and accepting bill payments through online or digital channels. For Pintek, the plan is to utilize TataSkola to reach more customers, increase data insights, and improve their lending decisions.

These three business models are at the forefront of education lending within their geographies, and we expect the market to continue evolving quickly. Looking forward, Accion Venture Lab plans to continue investing in new innovations at the intersection of fintech and education that are driving affordable education and reaching more students in developing markets.

Innovation at the intersection of education and fintech

Ishan Mishra

Why we invested in Cashinvoice, a digital platform that enables access to working capital for large and mid-sized corporates and their MSME partners 

Small businesses in India create a staggering number of jobs, employing over 100 million people across the country. The micro, small and medium enterprise (MSME) sector also forms the backbone of India’s economy, accounting for 29 percent of the country’s gross domestic product (GDP) and 49 percent of its exports. Despite their crucial economic and societal role, these small businesses are held back from reaching their potential by the lack of access to timely and reasonably priced credit products they need to succeed. Without adequate credit, Indian MSMEs aren’t prepared to weather challenging times, supply chain shocks, or get what they need to grow in the future. The ongoing pandemic has disrupted supply chains, increased procurement costs, and has made it even more challenging for MSMEs to access credit.

At Accion Venture Lab, we believe in the potential of supply chain financing to bridge the working capital gap for MSMEs. That’s why we’re excited to <a href="/cashinvoice-sets-a-new-msme-financing-disbursal-target-of-rs-10000-cr-after-raising-funds-from-accion-venture-lab" target="_blank" rel="noopener noreferrer">invest in Cashinvoice</a>, a digital invoicing and payments solution for large and mid-sized companies and their small business vendors and customers. <a href="https://cashinvoice.in/" target="_blank" rel="noopener noreferrer">Cashinvoice</a> leverages technology to bring financial institutions, large corporations, and their MSME suppliers and customers onto a single platform that streamlines payments for their services, unlocks working capital for small businesses when they need it, and offers them embedded lending products to expand their businesses.

We are excited to partner with Cashinvoice as they:
<h2>Close the financing gap for small businesses in India</h2>
Traditional lending institutions only fulfill an estimated five percent of the need for short-term working capital financing in India. That leaves an overwhelmingly large proportion of the country’s 65 million MSMEs without access to appropriately priced, short-term working capital and creates a massive credit gap among MSMEs who cannot provide adequate collateral or documentation needed to secure loans from traditional lenders. Even if these businesses had the collateral or documentation needed, traditional lending institutions and non-banking finance companies (NBFCs) predominantly offer expensive term loan products that aren’t optimal to meet the working capital needs of small businesses.

Cashinvoice aims to close this huge financing gap for small businesses by partnering with large and mid-sized corporations to build customized channel financing programs for the MSMEs within their value chain. Cashinvoice’s tech platform seamlessly brings together validated invoices, historical business transactions with these corporate anchor partners, and other data points to assess the credit risk of anchor partners’ small business vendors and customers. For example, a small business operating as a vendor for a corporation can choose to be paid upfront in lieu of a discount against an invoice that is expected to be settled by the corporation in the next 30 to 60 days, the typical credit period. The discount is calculated dynamically through algorithms that use diverse data sources and the credit profile of the business. Access to proprietary data helps reduce the credit risk and thus lowers the credit cost for the MSMEs.
<h2>Leverage data to make financial services more accessible</h2>
Supply chains across many industries in India have traditionally operated offline, relying on paper invoices and cash to complete transactions. The lack of digital records creates a challenge for MSMEs when they need to validate invoices and access data to prove past trade relationships with their corporate partners. Cashinvoice’s platform brings ecosystem players of offline supply chains onto a digital platform and thus creates a rich data source on trades between them. Cashinvoice leverages this data source to enable invoice financing for MSMEs, which brings down the interest cost for them compared to other credit products.

As the company scales, Cashinvoice’s platform will collect pools of MSME data on business performance, cashflows, and loan repayment history. With this information, the company plans to provide a range of financial services to its small business customers, such as corporate credit cards, insurance, working capital loans, current accounts, and more. With access to rich data on the MSMEs, the financial services products can be customized to their needs and offered in a timely manner.
<h2>Digitize supply chains and create digital footprints for MSMEs</h2>
Traditionally, most payments and collections between retailers and distributors happen in cash. Cashinvoice’s platform creates a digital collection of receivables within the supply chain to replace offline transactions. Digital collections are more efficient and enable small retailers to build a credit history and generate a digital trail of data. With this digital footprint, MSMSEs can gain access to services provided by formal financial institutions at a lower cost.

The Accion Venture Lab team is excited about the journey that lies ahead for Cashinvoice. We look forward to supporting Cashinvoice’s stellar team as they work to digitize offline value chains and open access to supply chain financing solutions for MSME customers. We believe that access to supply chain finance is key to the growth and sustainability of small businesses in India and worldwide.

A digital solution unlocks supply chain finance for small businesses in India

The power of embedded finance to change the game for the financially underserved

You might have heard about the latest trend in fintech – embedded finance. Maybe you’ve used a “buy now, pay later” option when shopping online, or purchased insurance to protect your rental car trip. When we talk about embedded finance, we’re referring to two types of companies: platforms that provide financial products alongside their core offerings and API-based enablers that plug into existing companies and allow those partners to offer financial services to their customers.

At Accion Venture Lab, we see embedded finance as more than just a trend. It’s a means to responsibly and seamlessly provide credit, savings, insurance, and other financial tools to underserved customers around the world. When companies that are not financial institutions offer embedded finance products, they give customers who aren’t able to access traditional financial services a way to grow their businesses, protect their livelihoods, and save for their futures.

As embedded finance gains more traction, there’s been a lot of discussion about what it means to embed financial services and who stands to benefit the most. Here’s what we’ve learned so far from our work with embedded finance providers around the world:
<h3>1. Companies are thinking about embedded financial services from day one.</h3>
In the past, we used to see companies only begin to think about integrating financial services into their platforms after establishing their core offerings or raising later stages of funding. Now, more companies understand the importance of embedded finance – it allows companies to reach never-before-serviced customers and increases value of customers by decreasing acquisition costs and increasing revenue potential – and are offering financial services from the start as one of their core products.

For example, Accion Venture Lab portfolio company <a href="https://field.inc/" target="_blank" rel="noopener noreferrer">Field Intelligence</a> helps pharmacies in Nigeria and Kenya digitize their supply chain operations and manage their inventory. However, Field Intelligence’s “pay as you sell” product, Shelf Life, which <a href="/this-company-is-making-healthcare-more-accessible-in-emerging-markets" target="_blank" rel="noopener noreferrer">allows users to pay for their inventory as they sell it</a>, has been a critical part of Field Intelligence’s business model since its earliest days. With Shelf Life, pharmacies can keep up with fluctuating customer needs without paying expensive upfront costs. Business owners can afford to stock their shelves and free up their working capital to instead invest in their businesses and expand their operations. By ensuring that pharmacies can continue to pay for products while they strengthen their businesses, the subscription aspect of the Shelf Life helps Field Intelligence retain customers long-term.

Another one of our portfolio companies, <a href="https://www.capiter.net/" target="_blank" rel="noopener noreferrer">Capiter</a>, is a platform that provides fast-moving consumer goods (FMCG) retailers in Egypt with access to a suite of products, including inventory procurement, business management, and credit. As an early-stage startup, Capiter not only provides financing to its customers but has also started to expand into offering a digital wallet, all prior to raising their Series A round. Capiter’s financial offerings have been key to its success. After connecting merchants to suppliers, they can then offer both cash and credit-based inventory financing options, addressing several customer needs at once.
<h3>2. Embedded finance isn’t just one product.</h3>
When you think of financial services, you might initially think of just credit. But embedded finance goes beyond credit and cuts across the full spectrum of financial services – lending, insurance, savings, and investments.

In the Accion Venture Lab portfolio, <a href="https://www.lami.world/" target="_blank" rel="noopener noreferrer">Lami</a> partners with companies such as banks and telecommunications providers to offer customizable insurance to their customers in Africa, <a href="https://www.accion.org/tech-opens-the-door-for-low-income-africans-to-get-the-insurance-they-need" target="_blank" rel="noopener noreferrer">where only 3 percent of Africans outside of South Africa have access to insurance</a>. Lami’s solution contextualizes the purchase of insurance by meeting customers where they are and addressing specific needs, resulting in greater long-term adoption of the product and retention of customers.

In India, our portfolio company Anthem provides administrative and financial solutions for schools in 300 cities across the country. Anthem’s digital platform helps educational institutions streamline their administrative activities – with tools to manage cashflows, expenses, and school fees all in one place.
<h3>3. Embedded finance is for everyone.</h3>
Embedded finance is democratizing financial services for underserved populations around the world by meeting people where they are and building on the trust that people have with existing platforms they already use.

Embedded financial services are fundamentally reshaping the distribution model of financial services. They allow companies to reach previously underlooked populations in more contextualized and inclusive ways. As these customers stick around longer for financial services, they drive up retention rates and increase a company’s revenue streams. As a result, the profitability and lifetime value of currently underserved customers increases.

Accion Venture Lab’s global portfolio companies are helping diverse populations access financial services that they otherwise wouldn’t be able to. In Indonesia, where <a href="https://www.ifc.org/wps/wcm/connect/260f2097-e440-4599-91ec-e42d45cf3913/SME+Indonesia+Final_Eng.pdf?MOD=AJPERES&amp;CVID=lj8qhPY" target="_blank" rel="noopener noreferrer">70 percent of small businesses</a> are owned and managed by women, <a href="https://fairbanc.app/" target="_blank" rel="noopener noreferrer">Fairbanc</a>’s “buy now, pay later solution” helps small businesses stock their shelves and keep their shops open. In Latin America, <a href="https://www.soyhenry.com/" target="_blank" rel="noopener noreferrer">Henry</a> helps address <a href="https://data.worldbank.org/indicator/SL.UEM.TOTL.ZS?locations=ZJ" target="_blank" rel="noopener noreferrer">high unemployment rates</a> by offering virtual coding courses that students pay for via an income sharing agreement (ISA), where they only pay for their education once they have secured employment after graduation. In India, <a href="https://agrim.app/" target="_blank" rel="noopener noreferrer">AgriM</a>’s digital marketplace provides inventory procurement to the country’s more than one million agricultural retailers, who serve 130 million farmers.

Embedded finance is a powerful tool to provide the world’s financially underserved populations with seamless access to finance. But this trend will only succeed in enacting meaningful change if the offerings are <a href="/what-does-embedded-inclusive-fintech-look-like" target="_blank" rel="noopener noreferrer">responsible, affordable, and fair</a>. Embedded products must not only offer better terms and pricing than other traditional counterparts, but all prices, terms, and data being used must be visible and understood by customers who may not have used any financial services before. When this happens, we ensure that people have products that meet their needs and are not left further behind.

Embedded finance: More than a trend

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