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

Michael Schlein

The Harvard Business School-Accion program equips leaders in inclusive finance with valuable insights at a pivotal moment 

Article

The past two years have been extremely challenging — and transformational — for the field of inclusive finance. As vulnerable small businesses, microentrepreneurs, and families continue to face extreme difficulties caused by the pandemic, frontline financial service providers have rapidly evolved to meet their shifting needs.

Leaders in the inclusive finance field have:
<ul>
 	<li>Embraced new digital tools and helped <a href="https://www.accion.org/how-the-pandemic-is-spurring-microentrepreneurs-to-go-digital">their clients do the same</a>,</li>
 	<li>Adapted <a href="https://www.accion.org/with-support-from-fintech-farmers-can-grow-an-inclusive-global-recovery">innovative fintech solutions</a> to support struggling small businesses,</li>
 	<li>Navigated <a href="https://www.accion.org/the-financial-engine-for-half-the-worlds-jobs-is-about-to-seize-up">liquidity crunches</a> jeopardizing millions of jobs,</li>
 	<li>Shifted to remote work and supported staff coping with stress, and</li>
 	<li>Worked to build financial resilience amid a global recovery that <a href="https://www.accion.org/growing-disparities-threaten-an-inclusive-recovery">is increasingly unequal</a>.</li>
</ul>
<h2><strong>Gain valuable insights at a critical time</strong></h2>
In this extraordinary environment, and after a two-year hiatus, we are very excited to resume <a href="https://www.accion.org/how-we-work/influence/hbs-accion-program-on-strategic-leadership-in-inclusive-finance">the Harvard Business School (HBS)-Accion Program on Strategic Leadership in Inclusive Finance</a> this April, at the HBS campus in Boston. As of January 19, 2022, <a href="https://forms.office.com/r/x76TQa10xE">applications</a> to join the 2022 cohort are now open.

The program is led by faculty cochairs Kash Rangan and Michael Chu, and involves guest lectures by renowned HBS faculty experts on international business, strategy, and management. Kash Rangan is a co-founder and faculty co-chair of the <a href="https://www.hbs.edu/socialenterprise/Pages/default.aspx">HBS Social Enterprise Initiative</a>, and teaches extensively in HBS’s MBA and executive education programs. Michael Chu is a senior lecturer in the HBS Social Enterprise Initiative and is also a co-founder and partner of <a href="http://www.ignia.mx/">IGNIA Fund</a>. Both lead the HBS MBA course, “Business at the Base of the Pyramid.”

This intensive, six-day experience is an invaluable opportunity for leaders from e-commerce and consumer goods firms, fintechs, banks, regulators and policymakers, microfinance institutions and nonprofit organizations, to engage with respected experts on business management and strategy during a pivotal moment for our sector — and learn from experiences on the front lines of digital transformation during the pandemic.

The HBS-Accion program will take place on Harvard Business School’s campus in Boston, Massachusetts. The program applies the famed HBS case study methodology to immerse participants in real world scenarios that combine strategic thinking with advancements in financial inclusion and impact investing, including the latest developments seen during the pandemic. Participants come away with lifelong connections, friendships, and new perspectives.

As our sector continues to rapidly evolve, now is an excellent time to gain skills and insights that empower providers and their vulnerable clients to build a stronger, more resilient future.

<a href="https://www.accion.org/how-we-work/influence/hbs-accion-program-on-strategic-leadership-in-inclusive-finance/hbs-accion-program-frequently-asked-questions">Learn more about the program and how to apply here.</a>

A unique opportunity to expand your network and knowledge

Paolo Limcaoco

Why we invested in MyRobin, a digital platform in Indonesia that provides blue-collar workers with access to fair employment opportunities, training, and embedded financial services

In Indonesia, blue-collar workers — like couriers, warehouse staff, cleaners, and daily laborers — fill essential roles but are highly marginalized because they have informal positions, short-term contracts, incomplete work profiles, irregular and fully cash-based salary payments, and no opportunities to move up and upskill. All of this has led these workers to be excluded from accessing formal financial services. So, we are truly excited to now partner with <a href="https://myrobin.id/" target="_blank" rel="noopener noreferrer">MyRobin</a>, a digital platform that provides these blue-collar workers with improved opportunities and much-needed financial services, a goal aligned with Accion Venture Lab’s mission. <a href="https://www.accion.org/myrobin-id-workforce-as-a-service-marketplace-announces-close-of-pre-series-a-led-by-accion-venture-lab-sosv" target="_blank" rel="noopener noreferrer">As participants in MyRobin’s</a> pre-Series A round, we are thrilled to have the opportunity to work with founders Siddharth Kumar and Ardy Satria Hasanuddin, the team, and our co-investors to help the company reach and support blue-collar workers in Indonesia.

We invested in MyRobin because they:
<h4><strong>Serve and improve the lives of blue-collar workers in Indonesia</strong></h4>
The company <a href="https://www.bps.go.id/statictable/2009/04/16/970/penduduk-15-tahun-ke-atas-yang-bekerja-menurut-lapangan-pekerjaan-utama-1986---2020.html" target="_blank" rel="noopener noreferrer">estimates that there are at least 50 million blue-collar workers in Indonesia</a>, and this figure is expected to grow as demand for workers to fill roles from fast-growing industries of e-commerce, logistics, and others will continue to increase. However, despite being an integral part of these businesses, these workers normally find themselves outside of proper employment and the formal financial system. Most of them work part-time, lack employment certificates, receive less than $300 per month on average, and struggle to progress into higher-value roles.

MyRobin works to provide these workers with a better alternative. By addressing the various problems that these workers are facing, starting with employment, the company aims to play a role in uplifting the lives of these workers. From couriers to warehouse workers, kitchen staff to field personnel, a significant portion of the population depends on these roles for employment, and it is crucial to continue finding ways to support them.
<h4>Take a holistic approach to build their platform</h4>
MyRobin understood that uplifting the lives of these workers start with helping them secure their livelihood, so they intervene at the start of this process – the job search. Blue-collar workers find roles via informal means like social media and referrals. Given this, MyRobin focused on: (1) building a strong community where workers can support each other and refer jobs, (2) partnering with enterprises and sharing open positions, and (3) creating a seamless and fully digital application process. MyRobin has organized and streamlined the job-hunting process, allowing workers better chances at landing fair employment opportunities (MyRobin also vets the roles on their platform).

The company’s support does not stop here. After landing a role, workers have access to other benefits such as affordable motorbike leases, discounts on daily needs such as motor oil, ability to build a digital profile (their version of LinkedIn, which is useful for keeping track of work history for future applications), and trainings and upskilling programs. MyRobin also provides embedded financial services, starting with advance access to their earned salaries but with plans to expand further to other credit products and microinsurance. These features add tremendous value to the workers in both the present and the future. MyRobin has built a platform truly focused on serving the blue-collar worker needs, and it is only through this holistic approach that the company will be able to impact the lives of these workers and build long-term resilience.
<h4>Solve the pain points of enterprises by providing a fully digital solution</h4>
As open roles are a key value proposition of the platform, MyRobin partners with large enterprises that hire blue-collar workers. And for those partnerships to work, MyRobin knew that it was crucial that the company solved the pain points faced by those corporates. The company worked diligently to understand the issues faced, and the major pain points were clear: (1) hiring and managing workers at scale and (2) reducing worker turnover.

For this, MyRobin built an end-to-end digital solution for enterprises that allows them to hire pre-screened, quality blue-collar workers at scale and in under 24 to 36 hours. In addition, MyRobin provides a dashboard to help monitor and track these workers and handles the salary payments, significantly reducing management costs. Finally, MyRobin also decreased churn of the workers through the value-added services available on the platform. By solving these pain points, MyRobin has turned itself into a key partner of enterprises, which will allow them to continue sustainably providing holistic support to the blue-collar workers on their platform.
<h4>Shown impressive growth and execution despite the challenges of the pandemic</h4>
MyRobin launched their platform in the midst of the COVID-19 pandemic with Siddharth (CEO) stuck in Singapore and Ardy (CTO) in Jakarta. As I had conversations with the company, the founders and team continued to demonstrate success as they built their business despite the challenges. MyRobin was able to develop the initial version of the platform, secure partnerships with key corporates including Shopee, Anteraja, Shipper, and others, and grow their blue-collar community to over two million members — all during the pandemic.

Ultimately, MyRobin has the opportunity to transform the lives of blue-collar workers in Indonesia by providing them providing fair employment opportunities, access to benefits such as a digital profile and upskilling programs, and much-needed financial services. We are excited to work with and support the company as they bring greater financial inclusion and resilience to these workers.

MyRobin is our fifth portfolio company in Southeast Asia and the second made during the pandemic, along with <a href="https://www.accion.org/building-resilience-in-southeast-asia-through-inclusive-fintechs" target="_blank" rel="noopener noreferrer">our investment in Fairbanc</a>. We also recently <a href="https://www.techinasia.com/pintek-series-a-funding" target="_blank" rel="noopener noreferrer">followed on in the Series A</a> of <a href="https://www.accion.org/making-education-accessible-through-fintech" target="_blank" rel="noopener noreferrer">specialized education lender Pintek</a> in Indonesia while continuing to actively support <a href="https://www.accion.org/innovation-msme-finance-philippines" target="_blank" rel="noopener noreferrer">digital B2B SME lender First Circle</a> and <a href="https://advance.ph/" target="_blank" rel="noopener noreferrer">earned-wage-access (EWA) platform Advance</a> in the Philippines. This is only the beginning of our work in the region, and we look forward to working with and supporting more innovative and impactful founders and startups that contribute to greater financial inclusion.

Improving the lives of blue-collar workers in Indonesia through a digital platform

Vishal  Ajmera

The right partners can help achieve a digitally integrated financial ecosystem

<em>This article is the last in a six-part series on scaling financial inclusion to accompany our <a href="/the-digital-transformation-guide-six-strategies-to-scale-financial-inclusion" target="_blank" rel="noopener noreferrer">digital transformation guide</a>. </em>

Partnerships are crucial to a successful digital transformation — enabling new ways to leverage data, evaluate risk, reach new customers, develop innovative products and services, and strengthen customer touchpoints. But financial service providers (FSPs) need to carefully consider when, how, and with whom to partner. As FSPs grow and evolve digitally, the right partners will help accelerate the transformation agenda, bringing in agility and expertise beyond the FSP’s core competencies.

Partnerships are also critical to expanding the reach and uptake of financial products among underserved people by supporting the development of a 360-degree digital financial ecosystem. Of course, providing customers with digital financial products is only useful insofar as the financial ecosystem in which the customer operates has digital capabilities across the value chain, including merchants and suppliers accepting digital payments. Failing to digitize the broader ecosystem creates bottlenecks within digital financial transactions that will slow the adoption of digital financial services. To drive the ecosystem’s transformation, FSP partnerships with enabling actors are emerging, such as those with mobile network operators focused on enhancing mobile payments and increasing the usability of payment-related technologies. As the density of digital services available within an ecosystem grows, so too will the digital comfort of end customers.

<img class="aligncenter wp-image-24083 size-large" src="https://content.accion.org/wp-content/uploads/2021/04/Accion-MAP-report-graphics-WEB_14-Digitizing-the-ecosystem-1024x512.png" alt="" width="1024" height="512" />

However, some FSPs tend to view partnerships through the narrow lens of a vendor relationship, rather than seeking to create something that is greater than the sum of its parts. While the sticking point for many partnerships is a question of who owns the customer relationship and their data and a lack of a clear business case that aligns the goals of all parties, there are many ways to address these issues to build effective partnerships.
<h3>Establish win-win partnerships</h3>
Partnerships are successful when both entities collaborate on how to reach shared goals, moving beyond a mere vendor-bank relationship. BancoSol, Bolivia’s largest microfinance institution, was able to develop their latest customer mobile banking app completely in-house with their first-class IT team. But when they planned to upgrade to a 3.0 version, they partnered with fintech startup <a href="https://flourishsavings.com/" target="_blank" rel="noopener noreferrer">Flourish</a> to get to market within 100 days. As a tactic to increase savings deposits to drive engagement within the revamped customer app, BancoSol layered Flourish’s gamification functionality on top of the bank’s digital assets. In this case, Flourish was able to combine its knowledge of behavioral science together with BancoSol’s strong understanding of their customer to develop a captivating engagement strategy. This partnership was a win-win for both entities: Flourish was able to enter the Bolivian market and BancoSol was able to get to market faster.

Partnerships can serve as a mutually beneficial go-to-market accelerator, benefitting both an FSP looking to scale their digital offerings and an e-commerce platform looking to grow their customer base, for example. That’s why Accion Microfinance Bank (Accion MfB) in Nigeria teamed up with African e-commerce giant <a href="https://www.jumia.com.ng/" target="_blank" rel="noopener noreferrer">Jumia</a> to help onboard their MSME customers onto the Jumia platform to boost sales and increase MSMEs’ comfort and trust in using digitally enabled tools to run their businesses. Through this partnership, Jumia will be able to grow its customer base and provide them with access to Accion MfB’s credit offering, while Accion MfB will be able to leverage e-commerce sales data to underwrite digital working capital loans.
<h3>Expand your definition of partner</h3>
Having invented a crowdsourcing model for Colombian citizens to map their own cities by posting missions and offering point-based rewards to those who complete tasks, CÍVICO was accustomed to thinking outside the box. With this methodology, they were able to build out the most comprehensive picture of local small businesses and gain a better understanding of what financial services those merchants might need.

But for CÍVICO’s new digital lending product to be viable, the company needed to find a cost-effective way to mitigate risk by verifying the business location of their online applications. Rather than deploying CÍVICO staff to visit every potential customer, which would be expensive and time-consuming, CÍVICO turned again to their crowd-sourcing platform. Reimagining the traditional concept of a partnership as an alliance between two independent entities, CÍVICO created new missions where individual citizens were asked to collect information related to perceived sales activity and verify the location of the business by taking a picture.

In the few cases where the business could not be verified in this way, CÍVICO would then deploy other more resource-intensive channels to verify the customer, either by phone or in-person visits themselves. This crowdsource-by-default design enabled an OPEX light business model by leaning on the existing relationships the company had created through their gamified crowdsourcing platform.

Our <a href="/mastercard-and-accion-partnering-for-inclusive-growth" target="_blank" rel="noopener noreferrer">global partnership with Mastercard</a> has laid a solid foundation toward our goal of helping millions of people and small businesses participate in and benefit from the digital economy. While digital transformation is a continual and never-ending process, strategic partnerships across the value chain can help drive the uptake and usage of digital products so that low-income individuals and merchants reap the benefits of digital financial services.

If you’re interested in partnering with us, please <a href="https://www.accion.org/advisory-contact">reach out</a> to see how we can work together.

<em>Malavika Krishnan contributed to this article.</em>

Scale financial inclusion through strategic partnerships

Liza Guzman

espanol

<p><em>Diseño de fintech con toque humano para los desatendidos</em></p>
<p>Para algunos, el término fintech sugiere aplicaciones espectaculares y API difíciles de entender. Estos tipos de tecnologías financieras raras veces se adaptan a las necesidades de los clientes desatendidos que suelen tener dispositivos antiguos, mala conectividad a Internet y escasos conocimientos digitales. Estos usuarios tienden a preferir el contacto personal, y a muchos les cuesta utilizar los teléfonos inteligentes e interfaces tecnológicos para manejar su dinero y sus negocios.</p>
<p>Aunque pareciera que la fintech no tiene mucho que ver con usuarios de bajos ingresos, resulta ser una herramienta valiosísima para llegar a poblaciones desatendidas cuando los proveedores se proponen crear productos con el usuario como norte. Una tecnología financiera eficazmente diseñada y desplegada brinda experiencias personalizadas, automatiza tareas engorrosas y proporciona las herramientas adecuadas para quienes carecen de experiencia con los servicios financieros digitales.</p>
<p>En México, <a href="https://cpcerano.com.mx/">Caja Popular Cerano</a> decidió utilizar este tipo de tecnología para llegar a un segmento de mercado de clientes desatendidos: el de los jóvenes urbanos. La institución financiera optó por <a href="https://www.accion.org/how-providers-can-build-products-that-improve-financial-health-examples-from-mexico-and-chile#case-study:-caja-popular-cerano">desarrollar una aplicación para atraer a más jóvenes</a>. En lugar de incorporar en su producto complicados menús, visualizaciones y análisis, el equipo trabajó junto con Accion para desarrollar una aplicación que brinda una experiencia personalizada, incluyendo divertidos avatares y mensajes motivacionales. La aplicación ofrece a los usuarios consejos útiles sobre cómo ahorrar y pagar préstamos, incorporando indicadores motivacionales que les muestran si van bien encaminados y qué tan cerca están de lograr una meta. Así, la tecnología ayuda a la cooperativa a brindar una experiencia más cálida y personalizada dentro de un servicio financiero basado en aplicaciones, mejor adaptado a un público joven.</p>
<p>En otro lugar de México, Accion se asoció con <a href="https://www.ahorrosbienestar.com/">Caja Bienestar</a> para desarrollar un <a href="https://www.accion.org/how-providers-can-build-products-that-improve-financial-health-examples-from-mexico-and-chile#case-study:-caja-bienestar">simulador digital para ayudar a los comerciantes a entender el impacto del crédito</a> en el resultado de sus negocios. El equipo se dio cuenta de que con frecuencia a los propietarios de pequeñas empresas les cuesta comprender sus propios márgenes y costos de capital, por lo que diseñaron un simulador para automatizar esos análisis e indicar si un préstamo específico resultará beneficioso para una tienda o no. En lugar de pedirle al comerciante que calcule los ingresos y cronogramas de reembolso, la herramienta simplemente le solicita un monto de préstamo y luego le muestra si las ganancias esperadas bastan para cubrir lo que cuesta. Luego guía al usuario en la evaluación de diferentes condiciones o montos en función de sus respectivos niveles de rentabilidad. El simulador es otra aplicación fintech innovadora y fácil de usar que mejora la experiencia de usuario en lugar de hacerla más compleja.</p>
<p>En Chile, <a href="https://redcapital.cl/">RedCapital</a> también utiliza la tecnología financiera de manera similar; el equipo <a href="https://www.accion.org/how-providers-can-build-products-that-improve-financial-health-examples-from-mexico-and-chile#case-study:-redcapital">desarrolló un sencillo simulador para modelar el uso y los beneficios de los préstamos</a>. Esta sencilla aplicación móvil ayuda a los empresarios a comprender cómo se divide un préstamo en cuotas, y cómo puede ser utilizado para mejorar las funciones de sus empresas. También desarrollaron un chatbot[1] para brindar soporte adicional al cliente y guiar a los usuarios a lo largo del proceso de solicitud de préstamos. Para los usuarios que no están familiarizados con la fintech, el chatbot y el simulador les generan mayor confianza y les ayudan a mejorar su comprensión de los detalles del producto.</p>
<p>En cada uno de estos casos, Accion y sus socios pudieron utilizar las tecnologías financieras para crear experiencias de usuario que benefician a las personas desatendidas sin olvidar llegarles con un toque humano. Por ejemplo, <a href="https://www.accion.org/a-family-hardware-store-stays-in-business-with-the-right-financial-tools">María Olga de Querétaro, México</a>, señala que su oficial de crédito la visita personalmente para cobrar sus cuotas, ya que no hay un lugar cercano al que pueda ir a hacerlo, y comenta: &#8220;Me resulta problemático alejarme de la tienda, así que [mi asesor] viene a recoger mis pagos &#8220;. De igual forma, José Medina destaca que su asesor lo llama para recordarle los pagos y preguntarle cómo van las cosas. Estos toques personales y altos niveles de servicio al cliente no pueden ser reemplazados por la tecnología, sino que la complementan al proporcionar un apoyo más directo a lo largo de la experiencia de usuario.</p>
<p><em>Para desarrollar servicios financieros que mejoren la salud financiera de las personas de bajos ingresos, Accion Global Advisory Solutions, con el apoyo de <a href="https://www.metlife.com/about/corporate-responsibility/metlife-foundation/index.html">MetLife Foundation</a>, se asoció con proveedores de servicios financieros como Caja Bienestar. Lea más sobre lo que hemos aprendimos con 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/">Cómo pueden los proveedores crear productos que mejoren la salud financiera: los ejemplos de México y Chile</a></em></p>
<p>[1] Dispositivo con inteligencia artificial que permite responder a muchas preguntas de texto o voz sin requerir de un agente humano.</p>


Designing fintech to work for underserved people without disregarding the importance of human touch

For some, the word <em>fintech</em> may bring images of flashy apps and difficult-to-understand APIs to mind. Such examples of fintech are rarely a good fit for underserved customers who tend to have old devices, poor internet connectivity, and low digital literacy. These users are often more comfortable with in-person conversations, and many struggle with using smartphones and tech-based interfaces to manage their money and businesses.

Although fintech may feel less relevant for low-income users at first consideration, it’s an extremely valuable tool to reach underserved populations when providers focus on building products that put the user first. When designed and deployed effectively, fintech offers personalized experiences, automates burdensome tasks, and provides tools that work for those with limited experience with digital financial services.

In Mexico, <a href="https://cpcerano.com.mx/" target="_blank" rel="noopener noreferrer">Caja Popular Cerano</a> decided to use fintech to reach an underserved customer segment: the urban youth market in Mexico. The financial institution chose to <a href="https://www.accion.org/how-providers-can-build-products-that-improve-financial-health-examples-from-mexico-and-chile#case-study:-caja-popular-cerano" target="_blank" rel="noopener noreferrer">develop an app to attract more young people</a>. Rather than incorporate complex menus, visualizations, and analyses into their product, the team worked together with Accion to build an application that creates a tailored, personalized experience, including fun avatars and motivational messages. The app provides users with helpful tips about saving and paying back loans and has built-in motivational markers that show users whether they’re on a ‘streak’, and how close they are to finishing a goal. In this case, the technology helps the cooperative provide a warmer, more personal experience within an app-based financial service that’s better suited to a young audience.

Elsewhere in Mexico, Accion partnered with <a href="https://www.ahorrosbienestar.com/" target="_blank" rel="noopener noreferrer">Caja Bienestar</a> to develop a <a href="https://www.accion.org/how-providers-can-build-products-that-improve-financial-health-examples-from-mexico-and-chile#case-study:-caja-bienestar" target="_blank" rel="noopener noreferrer">digital simulator to help shopkeepers understand how credit</a> might affect their shops’ bottom line. The team realized that small business owners often struggle to understand their own margins and costs of capital, so they designed a simulator to automate those analyses and indicate whether a particular loan would be profitable for a shop or not. Instead of asking the shopkeeper to calculate revenues and repayment schedules, the tool simply asks for a loan amount and then displays whether expected profits will be enough to cover its cost. It then guides the user to consider different terms or amounts based on their profitability levels. The simulator is another innovative, user-friendly fintech application that improves the user’s experience rather than adds a layer of complexity.

In Chile, <a href="https://redcapital.cl/" target="_blank" rel="noopener noreferrer">RedCapital</a> is also uses fintech in similar ways; the team <a href="https://www.accion.org/how-providers-can-build-products-that-improve-financial-health-examples-from-mexico-and-chile#case-study:-redcapital" target="_blank" rel="noopener noreferrer">developed a simple simulator to model loan usage and benefits</a>. This simple, mobile-first application helps owners understand how a loan is broken down into repayment amounts and can be used to improve business functions. They also developed a chatbot to provide additional customer support and walk users through the loan application process. For users unfamiliar with fintech, the chatbot and the simulator offer greater confidence and help them improve their understanding of the product details.

In each of these cases, Accion and our partners were able to use fintech to create a user experience that benefits underserved people without disregarding the importance of human touch and outreach. For example, <a href="https://www.accion.org/a-family-hardware-store-stays-in-business-with-the-right-financial-tools" target="_blank" rel="noopener noreferrer">María Olga in Querétaro, Mexico</a> notes that her loan officer personally visits to collect her deposits since there isn’t a location for her to visit nearby, saying, “It is a problem for me to get away from the shop, so [my officer] comes to me to collect my deposit.” Similarly, Jose Medina highlights that his representative calls him to remind him about payments and ask how things are going. These personal touches and high levels of customer services cannot be replaced by technology but rather complement the technology by providing more direct support throughout the user experience.

<em>To develop financial services that improve financial health for low-income people, Accion Global Advisory Solutions, with support from </em><a href="https://www.metlife.com/about/corporate-responsibility/metlife-foundation/index.html" target="_blank" rel="noopener noreferrer"><em>MetLife Foundation</em></a><em>, partnered with financial service providers like Caja Bienestar. Read more about the insights we learned from this project in our new paper, </em><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"><em>How providers can build products that improve financial health: Examples from Mexico and Chile</em></a><em>. </em>

User-friendly fintech creates comfort over complexity

“It has been a battle”: A small business rebuilds in Mexico

Gift Mahubo

Balaji Parthasarathi

Diego  Gaviria Martinez

To succeed at digital transformation, financial service providers must balance long-term vision and a fundamental openness and flexibility

<em>This article is the fifth of a six-part series on scaling financial inclusion to accompany our </em><a href="https://www.accion.org/the-digital-transformation-guide-six-strategies-to-scale-financial-inclusion" target="_blank" rel="noopener noreferrer"><em>digital transformation guide</em></a><em>. </em>

In the wake of the pandemic, technology maturity is more crucial than ever. However, financial service providers (FSPs) have traditionally struggled to build flexible, agile, and adaptable core IT and data management systems. The need to improve in this area is a challenge, but a necessary one to overcome when the ability to evolve and refine business models is increasingly a <a href="https://www.cgap.org/blog/after-storm-how-microfinance-can-adapt-and-thrive" target="_blank" rel="noopener noreferrer">defining factor in the digital age</a>.

What makes digital transformation so challenging is balancing the necessary planning required to transform with the agility needed to innovate quickly — often conflicting concepts. Technology decisions made today will impact what’s possible tomorrow, so organizations need to design for the future while understanding the constraints they face today, including legacy systems and budget limitations. Through a <a href="https://www.accion.org/mastercard-and-accions-partnership-to-unlock-millions-of-underserved-microbusinesses" target="_blank" rel="noopener noreferrer">first-of-its-kind partnership</a> with the Mastercard Center for Inclusive Growth, we uncovered three key design principles for building future state architecture.
<h3><strong>1. Balance vision and improvisation</strong></h3>
Balancing infrastructure planning (vision) with agility (flexibility to improvise) often requires a phased approach that enables an organization to make long-term strategic investments in technology infrastructure while maintaining the ability to get products to market quickly. At the onset of BancoSol’s digital transformation journey, senior leadership articulated ambitious digital adoption targets and an implementation plan to execute the bank’s five-year digital strategy. While daunting, the team recognized the importance of starting somewhere and designed their first digital minimum viable product while planning to roll out additional functionality in line with the broader technology roadmap.

The decision to build in-house or outsource is also an important consideration when balancing vision and improvision.  Sub-K, a banking correspondent in India, initially planned to develop their digital marketplace, <a href="https://www.accion.org/banking-goes-digital-to-reach-rural-entrepreneurs" target="_blank" rel="noopener noreferrer">SARTHI</a>, in-house. However, after realizing that it would not be worthwhile to develop all of the capabilities needed internally, especially for solutions that were already commoditized in India, Sub-K decided to partner with several vendors to build a flexible platform that showcased their core value-add — a unique methodology and agility to add new products and partners to the platform.

Finally, a strong and coherent technology team is critical to delivering on the vision and maintaining focus. Here, Sub-K established a “change control board” tasked with prioritizing change requests and governing approvals. This approach helps IT manage their workload by prioritizing requests based on feasibility and strategic importance and continually reevaluating the current backlog.

<img class="alignnone size-large wp-image-24082" src="https://content.accion.org/wp-content/uploads/2021/04/Accion-MAP-report-graphics-WEB_12-Prioritization-process-1024x563.png" alt="Digital transformation: Prioritization process" width="1024" height="563" />
<h3><strong>2. Think strategically about APIs to modernize legacy systems</strong></h3>
Open banking has created opportunities for FSPs to benefit from partnering with third parties and using APIs. APIs allow FSPs to access, interact, and engage with third-party data and functions, and can also be an effective tool to modernize legacy systems in a low-cost and efficient way.

After finding the right partner to help develop their new digital loan product, Nigeria’s Accion Microfinance Bank (Accion MfB) conducted an API inventory to determine the feasibility of building the APIs needed to connect with their partner’s systems. They examined each party’s data management capabilities, handoffs between the technology and operations teams, and whether the required integration points between the two systems existed. This process allowed the team to identify next steps and build new APIs to upgrade their existing systems.
<h3><strong>3. As you go digital, ensure you are resilient</strong></h3>
Digital transformation requires great reliance on the external and internal technological environment. As an FSP begins to digitize, the more vulnerable their systems are to failure or cyberattacks, and the more resilient internal architecture needs to be.

To build resiliency, it is important to have thorough and structured disaster recovery plans with remote sites, such as physical server rooms and on-cloud architecture, set up with appropriate failover, and switch back parameters in place. Cloud technologies can improve technology resilience through greater regional autonomy, data backups, and automated insights for decision-making. Though financial regulators often perceive using cloud architecture to safeguard customers’ personal and financial information as risky, FSPs can and should explore using the cloud given the low cost and benefits it offers.

With cyber threats and attacks more prevalent than ever, effective mitigation against cyber risks is critical. This requires layers of governance, accountability, policies, and procedures, all while creating and adhering to new data protection norms and guidelines. With this in mind, we worked with Accion MfB, Sub-K, and BancoSol to recommend the necessary systems for greater resilience.

Strengthening an organization’s underlying technology platforms — through planning, prioritizing, and partnerships — can help teams achieve their digital aspirations while staying at the forefront of cutting-edge innovation.

Please <a href="https://www.accion.org/advisory-contact" target="_blank" rel="noopener noreferrer">reach out</a> if you’d like to partner with us to future-proof your organization.

<em><a href="https://www.linkedin.com/in/malavika-krishnan/" target="_blank" rel="noopener noreferrer">Malavika Krishnan</a> contributed to this article.</em>

3 steps to design a technology platform built for the future

Leonardo Tibaquira

<p>La pandemia enfrentó a Jorge Luis con dos grandes retos: no solo se detuvieron las obras de construcción, lo que lo afectó directamente como proveedor de insumos, sino que a su padre también le diagnosticaron cáncer. Justo cuando sus ingresos se desplomaban, sus gastos comenzaron a aumentar de forma descontrolada. Para pagar el tratamiento de su padre y atender a su familia, Jorge Luis necesitaba sacarle dinero a su empresa. Su tono de voz indica lo difícil que fue aquel momento: “No entraba el dinero, pero los gastos eran muy elevados; y como cabeza de familia, mucha gente depende de uno &#8230; el negocio se afectó mucho &#8220;. A medida que avanzaba la pandemia, Jorge Luis redujo su negocio de cuatro locales a dos, vendió cuatro de sus cinco camiones, redujo el tamaño de su equipo y vendió su excavadora, poniéndole fin así a esa línea de negocio. “Había sábados en los que sólo nos ingresaban 100 pesos. Es difícil de imaginarse tratando de cubrir los gastos familiares con eso solamente”, dice.</p>
<p>La empresa de Jorge Luis vende materiales de construcción en Querétaro, México. Antes de la pandemia, los vendía a granel a ingenieros y arquitectos. Podía hacerlo porque disponía de mucho inventario en sus cuatro puntos de venta, y de suficiente capacidad logística como para proveer materiales dónde y cuándo los clientes los necesitaran. Y con frecuencia lo hacía a crédito, a sabiendas de que las obras deben avanzar incluso cuando los constructores no disponen de mucha liquidez. “Cuanto más rápido puedo proveer, más vendo. El disponer de inventario tiene que ver en realidad con el nivel del servicio… con poder brindar a los clientes un alto nivel de servicio”, comenta.</p>
<p>Sin embargo, con la desaceleración de las ventas y las facturas que no le pagaban, ya no disponía de liquidez para ofrecer crédito a los clientes. Sus propios proveedores, que le daban facilidades de pago, también enfrentaban las mismas limitaciones. La liquidez se agotó en todo el sector y muchos, como Jorge Luis, se vieron obligados a liquidar activos y reducir sus operaciones, y recuerda: &#8220;Los proveedores que solían darme crédito, ya no podían hacerlo&#8221;. Descubrió que los pocos proveedores dispuestos a ofrecer crédito cobraban tasas tan altas que consumían la mayor parte de su margen de beneficio; la única forma de mantener la competitividad era comprar en efectivo, y pagar el inventario por adelantado.</p>
<p>Finalmente tuvo un respiro cuando su proveedor, Depósito San Francisco, le presentó a <a href="https://www.ahorrosbienestar.com/" target="_blank" rel="noopener">Caja Bienestar</a>. Dado que Jorge Luis compraba anteriormente a crédito en Depósito San Francisco, sabían que sería un buen candidato para la institución financiera. Caja Bienestar le otorgó el crédito necesario para reabastecer sus almacenes en cuanto Jorge Luis notó que el negocio comenzaba a recuperarse. Pudo comprarle suministros a San Francisco a precios ventajosos, mejorando su competitividad en el mercado. Con suficiente inventario, Jorge Luis pudo nuevamente satisfacer las necesidades de sus clientes e incluso pedir más cuando no tenía en stock los materiales requeridos, y comenta: “Una vez que pudimos llenar la bodega, sentí que íbamos a salir de esta situación. Y lo pudimos lograr gracias a Bienestar. Puedo pasar días de ventas flojas sin sentirme ansioso. Sé que Bienestar me apoya y está a mi lado”.</p>
<p>Los tiempos han cambiado en la tienda de Jorge Luis: ahora está de nuevo repleta de clientes. Que los pedidos sean grandes o pequeños, tiene lo que necesita para satisfacerlos en el acto. Dice que las cosas han cambiado y ahora se centra en la reconstrucción: “Quiero abrir más puntos de venta nuevamente y brindar un servicio más rápido a los clientes. La sensación de alivio es enorme &#8220;.</p>
<p><em>Para desarrollar servicios financieros que mejoren la salud financiera de las personas de bajos ingresos, Accion Global Advisory Solutions, con el apoyo de </em><a href="https://www.metlife.com/about/corporate-responsibility/metlife-foundation/index.html" target="_blank" rel="noopener"><em>MetLife Foundation</em></a><em>, se asoció con proveedores de servicios financieros como Caja Bienestar. Lea más sobre las ideas que aprendimos de este proyecto en nuestro nuevo documento, </em><a href="https://www.accion.org/how-providers-can-build-products-that-improve-financial-health-examples-from-mexico-and-chile/" target="_blank" rel="noopener"><em>Cómo pueden los proveedores crear productos que mejoren la salud financiera: los ejemplos de México y Chile</em></a>.</p>


The COVID-19 pandemic hit small businesses like Jorge Luis Leal’s hard. With support from our partner Caja Bienestar, he got back on his feet.  

The pandemic hit Jorge Luis with two major setbacks: not only did construction work come to a halt, directly impacting his construction supplier business, his father was also diagnosed with cancer. Just as his income plummeted, his expenses also shot out of control. To pay for treatment for his father and care for his family, Jorge Luis needed to take money out of his business. His tone of voice indicates just how difficult a time it was as he says, “There wasn’t money coming in, and expenses were also high; as head of household, there are many who depend on you...the business really suffered.” As the pandemic progressed, Jorge Luis shrunk his business from four locations to two, sold four of his five trucks, downsized his team, and sold his excavator, thereby ending that line of business. “There were Saturdays when we earned just 100 pesos. You can imagine trying to cover expenses for the family on just that,” he says.

Jorge Luis’ business sells construction materials in Querétaro, Mexico. Before the pandemic, he sold construction materials in bulk to engineers and architects. He was able to sell in bulk because he had plenty of inventory between his four outlets and sufficient logistical capabilities to get materials when and where clients needed them. He provided many of these supplies on credit, knowing that construction schedules must move ahead even when cash is slow for builders. “The faster I can provide, the more I sell. Having inventory is really about service levels and being able to provide clients with a high level of service,” he says.

However, with slowdowns in sales and bills due, he no longer had liquidity to offer clients. His own suppliers, who used to offer him flexible payment schedules, also faced the same constraints. Liquidity dried up across the sector, and many like Jorge Luis were forced to liquidate assets and downsize. He remembers, “Suppliers that used to give me credit could not anymore.” He found that the few suppliers willing to offer credit were charging such high rates that would eat the bulk of his profit margin; the only way to stay competitive was to purchase in cash and pay for inventory upfront.

He finally caught a break when his supplier, Deposito San Francisco, introduced him to <a href="https://www.ahorrosbienestar.com/" target="_blank" rel="noopener noreferrer">Caja Bienestar</a>. Since Jorge Luis formerly depended on credit from Deposito San Francisco, they knew he would be a good candidate for the financial institution. Caja Bienestar gave him the credit needed to replenish his stockrooms as Jorge Luis noticed business was starting to pick up again. He was able to purchase supplies from San Francisco at advantageous prices, improving his competitiveness in the market. With stock on his shelves, Jorge Luis was again able to meet his customers’ needs and even order more when he didn’t have the relevant materials in stock. He says, “When we could fill the bodega, I first felt we would get out of this. We were finally able to do that with the money from Bienestar. I can get through slow days without feeling anxious. I know that Bienestar supports me and is by my side.”

Times have changed at Jorge Luis’ shop. Now, the shop is bustling with customers again. Between big orders and small orders, he has what he needs to fill them all on the spot. He says things have turned around, and now he is focused on rebuilding, “I want to open more outlets again and provide faster service to customers. The feeling of relief is enormous.”

[embed]https://vimeo.com/657538644[/embed]

<em>To develop financial services that improve financial health for low-income people, Accion Global Advisory Solutions, with support from </em><a href="https://www.metlife.com/about/corporate-responsibility/metlife-foundation/index.html" target="_blank" rel="noopener noreferrer"><em>MetLife Foundation</em></a><em>, partnered with financial service providers like Caja Bienestar. Read more about the insights we learned from this project in our new paper, </em><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"><em>How providers can build products that improve financial health: Examples from Mexico and Chile</em></a><em>. </em>

Timely credit helps small businesses rebuild in Mexico

<p>Francisco Romero Heda es el propietario de segunda generación de Depósito San Francisco. Su padre inició el negocio hace más de 40 años en Querétaro, México, y Francisco espera pasar el negocio a la próxima generación de su familia dentro de 40 años. Vende materiales de construcción a grandes distribuidoras y empresas constructoras, así como a pequeñas empresas y contratistas individuales. Como muchos dueños de empresas, Francisco descubrió que su liquidez se redujo durante la pandemia, y notó que muchos de sus clientes también tenían problemas con el flujo de caja. Sabía que estaba perdiendo ventas porque sus clientes necesitaban crédito para comprar materiales para sus proyectos, pero su negocio carecía de liquidez y capacidad para proporcionarlo.</p>
<p>Las restricciones de flujo de caja son particularmente desafiantes en la industria de la construcción. Se espera que los contratistas consigan y compren los materiales para realizar sus trabajos, pero a menudo solo se les cancela luego de completarlos. Puede que reciban un pequeño adelanto al comenzar, pero la mayoría debe financiar los suministros y la mano de obra por su cuenta, por lo que buscan crédito en las tiendas y distribuidores donde compran los materiales. Esta necesidad de liquidez se extiende a lo largo de la cadena de valor y perjudica especialmente a los propietarios de pequeñas empresas que carecen de fondos para comprar suministros por adelantado, u otorgar crédito directamente. Aunque los pequeños contratistas y las empresas de construcción pueden estar bien establecidos, tienden a ser pequeños y no son un segmento de clientes atractivo para la banca tradicional.</p>
<blockquote class="pullquote--right">
<h4>“Mi mayor satisfacción es ayudar a los emprendedores a obtener las herramientas que necesitan para acercarse un poco más a lo que sueñan para sus negocios”.</h4>
</blockquote>
<p>Caja de Ahorro Bienestar busca atender precisamente a este segmento de pequeñas empresas: aquellas que no cuentan con el servicio de los bancos tradicionales. Como gerente de ventas institucionales, Elías Nahmad Buenfil señala, &#8220;los conocemos y confiamos en ellos, y podemos llevar a cabo un análisis diferenciado para darles acceso a las oportunidades que hoy no tienen&#8221;. Durante más de 25 años, la Caja ha encontrado formas creativas e innovadoras de ofrecer servicios financieros a empresas y particulares en Querétaro. Se han centrado especialmente en atender a nuevos empresarios, desde pequeños fabricantes hasta empresas de catering que cocinan en casa para grandes empresas, pero que los bancos tradicionales pasan por alto. “Estamos más orientados a las personas. No solo estudiamos los márgenes de ganancia, sino también al emprendedor, sus planes y el crecimiento del sector en general”, dice Elías. Este trabajo le resulta gratificante, así como a su equipo: “hoy les puedo decir que mi mayor satisfacción es ayudar a los emprendedores a obtener las herramientas que necesitan para acercarse un poco más a lo que sueñan para sus negocios”.</p>
<div id="attachment_25402" style="width: 380px" class="wp-caption alignleft"><img aria-describedby="caption-attachment-25402" class=" wp-image-25402" src="https://content.accion.org/wp-content/uploads/2021/12/Elias-holds-his-phone-1024x683.jpg" alt="Elias Nahmad Buenfil, Caja Bienestar’s Manager of Institutional Sales" width="370" height="246" /><p id="caption-attachment-25402" class="wp-caption-text"><em>La leyenda: Elías Nahmad Buenfil, gerente de ventas institucionales de Caja Bienestar</em></p></div>
<p>Junto con Global Advisory Solutions de Accion, y con el <a href="https://www.accion.org/accion-and-metlife-foundation-announce-expanded-partnership-to-advance-financial-inclusion" target="_blank" rel="noopener">apoyo de MetLife</a> Foundation, Elías y el equipo de Caja Bienestar se dieron cuenta de que los distribuidores como Francisco son una fuente de inteligencia inexplorada sobre las pequeñas empresas del sector de la construcción que necesitan crédito. A lo largo de los años, Francisco y su equipo han atendido a muchos clientes, e incluso les han proporcionado materiales a crédito. En otras palabras, los registros de clientes de Francisco son en la práctica un historial crediticio y laboral sobre muchas pequeñas empresas de la construcción.</p>
<p>Caja Bienestar ahora trabaja codo a codo con Francisco y su equipo para ofrecer crédito a los contratistas y otros clientes para que puedan obtener los suministros que necesitan para realizar trabajos que de otra manera tendrían que rechazar. Cuando los clientes vienen a comprar suministros a Francisco, pueden solicitar un crédito de Caja Bienestar. Bienestar desarrolló una metodología de calificación crediticia a la medida para estas pequeñas empresas, aprovechando la experiencia de Francisco con ellas. Los dos equipos trabajan en estrecha colaboración para entender las necesidades financieras de los clientes, evaluar su solvencia y entregar productos de manera oportuna.</p>
<p>Gracias al financiamiento, los empresarios pueden adquirir los suministros que necesitan a precios asequibles, y Francisco no tiene que preocuparse por otorga créditos con fondos propios. Este arreglo libera a Francisco para que se concentre en las ventas y la distribución, mientras que Caja Bienestar asume la carga de la evaluación crediticia y los cobros, y asume el riesgo de impagos. “Es un gran alivio no tener que preocuparme por las cobranzas y la administración de los créditos ahora que Bienestar asume esa parte del trabajo, analizando a los clientes y asumiendo los riesgos. Podemos enfocarnos en vender y atender a nuestros clientes”, dice Francisco.</p>
<p>Tal como señala Francisco, el objetivo de la asociación con Caja Bienestar es no solo el de otorgar créditos y vender materiales; es también el de ayudar a los propietarios de pequeñas empresas a obtener los recursos y la información que necesitan para hacer crecer sus negocios. &#8220;El tema del crédito es extremadamente complicado y puede terminar perjudicando a los clientes en lugar de ayudarlos, por lo que los apoyamos y asesoramos para asegurarnos de que sus negocios se beneficien&#8221;. Gracias a la asociación con Bienestar, los clientes pueden crecer y desarrollar sus negocios a través de una relación que ya conocen y en la que confían; y agrega: “nuestro objetivo es ir más allá de proporcionar a nuestros clientes los materiales que necesitan. También queremos ayudarles con su capacidad para conseguir otros recursos importantes como el financiamiento, para que podamos crecer juntos”.</p>
<p>Señala que la colaboración crea un círculo virtuoso al generar beneficios para su empresa, sus clientes y sus familias, y las comunidades. Francisco cree que esta asociación puede ayudar a su empresa a lograr mucho más; “Estamos apenas arañando la superficie con nuestra asociación con Bienestar. Tenemos la capacidad de vender, asignar y llegar aún más lejos, para crear una economía más inclusiva y un mundo de oportunidades para todos”.</p>


How Caja Bienestar leverages data from suppliers to extend credit to support small shops not served by traditional banks

Francisco Romero Heda is the second-generation owner of Deposito San Francisco. His father started the business in Querétaro, Mexico over 40 years ago, and Francisco hopes to pass the business onto the next generation of his family 40 years from now. He sells construction materials to large distributors and construction firms, as well as to small businesses and individual contractors. Like many business owners, Francisco found that cash became tight during the pandemic and noticed that many of his customers have struggled with cashflow. He knew that he was losing sales because his customers needed credit to purchase materials for their projects, but his business lacked the liquidity and ability to provide it.

Cashflow constraints are particularly challenging in the construction industry. Contractors are expected to source and purchase materials to get their work done, but they often only get paid after completing their projects. They may receive a small deposit at the outset, but most must finance supplies and labor themselves, so they seek credit from the shops and distributors where they purchase materials. This need for liquidity stretches across the value chain and especially disadvantages small business owners who lack the cash to buy supplies upfront or extend credit themselves. Though small contractors and construction businesses may be well established, they tend to be small and aren’t an attractive customer segment for traditional banks.
<blockquote class="pullquote--right">
<h4>“My greatest satisfaction is helping entrepreneurs get the tools they need to get one step closer to their dreams for their businesses.”</h4>
</blockquote>
Caja Bienestar seeks to serve exactly this segment of small businesses, those unserved by traditional banks. As Manager of Institutional Sales, Elias Nahmad Buenfil notes, “We know them and trust them, and can provide a differentiated analysis to give them access to opportunities they don’t have today.” For over 25 years, Caja Bienestar has found creative, innovative ways to extend financial services to businesses and individuals in Querétaro. They’ve especially focused on serving new entrepreneurs, from small manufacturers to caterers cooking in home kitchens to large firms, that traditional banks overlook. “We are more people-oriented. We don’t just look at profit margins, but also the entrepreneur, their plans, and the overall growth of the sector,” says Elias. The work is rewarding for Elias and his team: “Today, I can tell you that my greatest satisfaction is helping entrepreneurs get the tools they need to get one step closer to their dreams for their businesses.”

[caption id="attachment_25402" align="alignleft" width="355"]<img class=" wp-image-25402" src="https://content.accion.org/wp-content/uploads/2021/12/Elias-holds-his-phone-1024x683.jpg" alt="Elias Nahmad Buenfil, Caja Bienestar’s Manager of Institutional Sales" width="355" height="237" /> <em>Caption: Elias Nahmad Buenfil, Caja Bienestar’s Manager of Institutional Sales</em>[/caption]

Together with Accion’s Global Advisory Solutions and with <a href="https://www.accion.org/accion-and-metlife-foundation-announce-expanded-partnership-to-advance-financial-inclusion" target="_blank" rel="noopener noreferrer">support from MetLife Foundation</a>, Elias and the Caja Bienestar team realized that distributors like Francisco are an untapped source of intelligence about small businesses in the construction sector that need credit. Over the years, Francisco and his team have accumulated many customers and have even provided some with materials on credit. In other words, Francisco’s customer records are functionally a credit and work history for many small construction businesses.

Caja Bienestar is now working hand-in-hand with Francisco and his team to offer credit to contractors and other customers so they can get the supplies they need to complete jobs that they may otherwise have to turn down. When customers come to buy supplies from Francisco, they can apply for credit from Caja Bienestar. Bienestar developed a tailored credit-scoring methodology for these small businesses by leveraging Francisco’s experience with them. The two teams work in close partnership to understand customers’ financing needs, assess their creditworthiness, and deliver products in a timely manner.

With financing, the entrepreneurs can purchase the supplies they need at affordable rates, and Francisco doesn’t have to worry about extending credit from his balance sheet. The arrangement frees Francisco to focus on sales and distribution, while Caja Bienestar takes on the burden of credit evaluation and collections and carries the risk of non-payment. “It is a great relief not to worry about collections and administration of credit now that Bienestar takes on that part of the work, analyzing the clients and carrying the risk. We can focus on selling and serving our clients,” says Francisco.

As Francisco notes, the goal of the partnership with Caja Bienestar is not just to deploy credit and sell materials; the objective is to help small business owners get the resources and information they need to grow their businesses. “The issue of credit is extremely complicated that can easily harm rather than help clients, so we handhold and advise them to ensure they see the benefits in their own business.” With the Bienestar partnership, clients can grow and develop their businesses via a relationship they already know and trust. He says, “We aim to go beyond getting our customers the materials they need. We also want to help with their capacity to get other important resources like financing, so that we can grow together.”

He notes that the collaboration creates a virtuous circle by creating benefits for his business, his customers, and their families and communities. Francisco believes this partnership can help his business achieve more and for more; “We are just scratching the surface with our Bienestar partnership. We have the capacity to sell, allocate, and reach even farther, to create a more inclusive economy and a world of opportunities for all.”

Entrepreneurs get one step closer to their dreams in Mexico

Kathleen Yaworsky

<p>La pandemia mundial ha representado un gran desafío para la mayoría de las micro y pequeñas empresas. En los Estados Unidos, la Reserva Federal estima que <a href="https://www.wsj.com/articles/covid-19s-toll-on-u-s-business-200-000-extra-closures-in-pandemics-first-year-11618580619" target="_blank" rel="noopener">200.000</a> pequeñas empresas cerraron durante el primer año de la pandemia; y en Sudáfrica, <a href="https://businesstech.co.za/news/business/455100/lockdown-forced-nearly-half-of-small-businesses-in-south-africa-to-close-study/" target="_blank" rel="noopener">casi la mitad</a> de las pequeñas empresas se vieron obligadas a cerrar sus puertas. Pero para algunas de ellas, la pandemia también aportó nuevas oportunidades.</p>
<p>En las afueras de Santiago de Chile, una joven emprendedora llamada Daniela Romero encontró una manera de expandir su negocio durante la pandemia. Durante el día, Daniela trabaja como enfermera técnica. Cuando surgió el COVID-19 descubrió que muchos de sus pacientes necesitaban ayuda para comprar suministros médicos. Comenzó a ganar dinero extra haciendo entregas de mascarillas, gel antibacteriano y otros suministros a pacientes que no podían salir de sus hogares.</p>
<div id="attachment_25392" style="width: 1034px" class="wp-caption alignnone"><img aria-describedby="caption-attachment-25392" class="size-large wp-image-25392" src="https://content.accion.org/wp-content/uploads/2021/12/DSCF3272-1024x683.jpg" alt="RedCapital Client Daniela and her husband" width="1024" height="683" /><p id="caption-attachment-25392" class="wp-caption-text"><em>La leyenda: Daniela y su esposo tras el mostrador de su tienda</em>.</p></div>
<p>Daniela se dio cuenta de que su negocio paralelo podía convertirse en algo más permanente y sustancial. “Nos percatamos de otras necesidades a medida que se imponían las cuarentenas, por lo que agregamos otros artículos como comida para mascotas, ropa de trabajo y cosas que en la zona hacían falta a la gente”. Pero a medida que aumentaron sus ventas, también aumentó la demanda de los clientes por otros productos; pero no disponía de fondos para abastecer su tienda con más artículos. “Fue un momento complicado”, menciona ella. “No estaba bancarizada. No teníamos acceso a ningún tipo de apoyo. Los bancos no me reconocían como emprendedora o profesional, ni siquiera como particular”.</p>
<p>Las cosas cambiaron cuando Daniela supo de <a href="https://redcapital.cl/" target="_blank" rel="noopener">RedCapital</a>, una plataforma de crowdfunding para micro y pequeñas empresas en Chile. “Gracias a Dios que existe RedCapital”, dice Daniela. “Necesito crédito de forma constante. Por ejemplo, un cliente quiere algo que yo no tengo y puede que el costo sobrepase lo que tengo en caja.” Entonces llena una simple solicitud y recibe el crédito que necesita para adquirir inventario para su tienda, lo que le ha permitido realizar más ventas y hacer crecer su negocio.</p>
<p>Si bien el financiamiento fue fundamental, la relación con RedCapital es más importante para Daniela. Ella comenta: “Es realmente cuestión de confianza. El poder contar con alguien que tenga confianza en ti, que crea que trabajas duro y que podrás pagar. Eso te hace sentir bien”. Después de encontrarle solución a su problema de flujo de caja, anticipa con alegría su futuro como propietaria de una pequeña empresa y dice: “Me motiva poder apoyar a la comunidad, y aprovechar las oportunidades para mi negocio”.</p>
<p>Desde que trabaja con RedCapital, ha recomendado el servicio a sus amigos. “Cuando tienes un negocio, siempre surgen cosas, por eso es muy importante contar con apoyo. RedCapital es mi apoyo”.</p>
<p><a href="https://www.accion.org/how-daniela-grew-her-small-business-in-chile" target="_blank" rel="noopener">Vea la historia de Daniela</a>:</p>
<p><iframe title="How Daniela grew her small business in Chile" src="https://player.vimeo.com/video/624565782?h=eb58d577e0&amp;dnt=1&amp;app_id=122963" width="500" height="281" frameborder="0" allow="autoplay; fullscreen; picture-in-picture" allowfullscreen></iframe></p>
<p>En <a href="https://www.accion.org/accion-and-metlife-foundation-announce-expanded-partnership-to-advance-financial-inclusion" target="_blank" rel="noopener">asociación con Metlife Foundation</a>, Accion ha apoyado a la fintech <a href="https://redcapital.cl/" target="_blank" rel="noopener">RedCapital</a> para desarrollar un producto de crédito digital centrado en la salud financiera de los microempresarios. Cuando los emprendedores obtienen el financiamiento y el apoyo que necesitan, <a href="https://www.accion.org/as-agribusinesses-grow-so-does-food-security" target="_blank" rel="noopener">pueden hacer crecer sus negocios y fortalecer sus comunidades</a>.</p>


With access to the right financial services, entrepreneurs like Daniela have managed to seize new opportunities during the pandemic.

The global pandemic has been extremely challenging for most micro and small businesses. In the United States, the Federal Reserve estimates<a href="https://www.wsj.com/articles/covid-19s-toll-on-u-s-business-200-000-extra-closures-in-pandemics-first-year-11618580619" target="_blank" rel="noopener noreferrer"> 200,000</a> small businesses closed during the first year of the pandemic, and in South Africa, <a href="https://businesstech.co.za/news/business/455100/lockdown-forced-nearly-half-of-small-businesses-in-south-africa-to-close-study/" target="_blank" rel="noopener noreferrer">nearly half</a> of small businesses were forced to shut their doors. But for a few businesses, the pandemic has also presented new opportunities.

Outside of Santiago, Chile, an entrepreneurial young woman named Daniela Romero found a way to expand her business during the pandemic. During the day, Daniela works as a nurse technician. When COVID-19 hit, she found that many of her patients needed help purchasing medical supplies. She started to earn extra money delivering masks, antibacterial gel, and other supplies to patients unable to leave their homes.

[caption id="attachment_25392" align="aligncenter" width="1024"]<img class="size-large wp-image-25392" src="https://content.accion.org/wp-content/uploads/2021/12/DSCF3272-1024x683.jpg" alt="RedCapital Client Daniela and her husband" width="1024" height="683" /> <em>Caption: Daniela and her husband stand behind the counter at their store.</em>[/caption]

Daniela realized that her side business could become something more permanent and substantial. “We saw other needs as the quarantines were put in place, so we added other items like pet food, work clothes, and things that people in the area were missing.” But as her sales increased and customer demand for more products rose, she didn’t have the capital to stock her store with more items. “It was a complicated moment,” she says. “I wasn’t banked. We didn’t have access to support from any direction. Banks didn’t recognize me as an entrepreneur or a professional or even a private citizen.”

Things changed when Daniela learned about <a href="https://redcapital.cl/" target="_blank" rel="noopener noreferrer">RedCapital</a>, a crowdfunding platform for micro and small businesses in Chile. “Thank God for RedCapital,” says Daniela. “I need credit on a regular basis. For example, a client will want something I don’t have, and the investment may be slightly higher than the cash I have on hand.” She filled out a simple application and received the credit she needed to buy inventory for her store, allowing her to make more sales and grow her business.

While the financing was critical, the relationship with RedCapital is more important to Daniela. She says, “It is really an issue of trust. To be able to count on someone who has confidence in you, that believes you are working hard and that you will be able to pay. It feels good.” After finding a solution to her cashflow problem, she looks forward to her future as a small business owner, saying, “I am motivated to support the community and see the opportunity for my business.”

Since working with RedCapital, she has recommended the service to her friends. “When you have a business, things always come up, so it is extremely important to have support. RedCapital is my support.”

<a href="https://www.accion.org/how-daniela-grew-her-small-business-in-chile" target="_blank" rel="noopener noreferrer">Watch Daniela’s story</a>:

[embed]https://vimeo.com/624565782[/embed]

In <a href="https://www.accion.org/accion-and-metlife-foundation-announce-expanded-partnership-to-advance-financial-inclusion" target="_blank" rel="noopener noreferrer">partnership with Metlife Foundation,</a> Accion has supported the fintech <a href="https://redcapital.cl/" target="_blank" rel="noopener noreferrer">RedCapital</a> to develop a digital credit product focused on the financial health of microentrepreneurs. When entrepreneurs can get the funding and support they need, <a href="https://www.accion.org/as-agribusinesses-grow-so-does-food-security" target="_blank" rel="noopener noreferrer">they can grow their businesses and strengthen their communities</a>.

How Daniela grew her small business during the pandemic

Digital customer experiences require quality and curated data that is readily consumable. Here’s how financial service providers can get started.

<em>This article is the fourth of a six-part series on scaling financial inclusion to accompany our <a href="/the-digital-transformation-guide-six-strategies-to-scale-financial-inclusion" target="_blank" rel="noopener noreferrer">digital transformation guide</a>.  </em>

Data capabilities are essential to an organization’s digital transformation: from informing strategies that increase efficiency and revenue to creating new business models where data assets become products. In today’s world, where financial service providers (FSPs) must make unprecedented and rapid decisions, adjust business strategies, segment customers to understand portfolio risks, rethink credit models, and reach customers and staff remotely, data capabilities go hand-in-hand with digital transformation.

The explosion of available data, data-analytics services, and a growing digital ecosystem <a href="https://www.centerforfinancialinclusion.org/data-for-inclusive-finance-delivering-on-the-promise-for-consumers" target="_blank" rel="noopener noreferrer">creates unprecedented opportunities</a> for underserved communities and FSPs alike. The potential to unlock <a href="https://www.centerforfinancialinclusion.org/data-for-inclusive-finance-delivering-on-the-promise-for-consumers" target="_blank" rel="noopener noreferrer">greater financial health</a> for FSP customers is extraordinary, from prospecting and credit scoring for thin-file consumers to well-timed nudges for saving to intelligent chatbots, personalized recommendations, and remote client onboarding.

<img class="aligncenter wp-image-24081 size-large" src="https://content.accion.org/wp-content/uploads/2021/04/Accion-MAP-report-graphics-WEB_11-Using-data-1024x512.png" alt="Using data to drive financial inclusion (examples)" width="1024" height="512" />

However, many organizations become overwhelmed by all the different ways they can use data and lose alignment when creating a focused data strategy. FSPs can take several steps to integrate data and analytics activities with their digital transformation goals:
<h3>Start with existing data</h3>
In the early stages of developing a digital loan product, Accion Microfinance Bank (Accion MfB) in Nigeria explored potential data-sharing partnerships to build a robust credit scoring model. But they struggled to find the right third-party data provider, so Accion MfB decided to look inwards at the lending data they had already amassed. For example, using what they knew about customers’ willingness and capacity to pay, they designed a pilot digital loan product and created a benchmark profile to compare incoming data against when onboarding new customers. Using their own internal data involved fewer operational and commercial complications, which helped Accion MfB quickly launch a viable pilot.
<h3>Be practical in moving from insights to action</h3>
Similarly, our longtime partner BancoSol, one of Bolivia’s largest banks, realized that leveraging their untapped data could uncover insights to help address four key challenges: driving digital adoption and improve usage, increasing cross-product usage, increasing savings balances, and maintaining customer relationships. A <a href="https://nextbillion.net/covid19-small-businesses-digital-financial-services-data/" target="_blank" rel="noopener noreferrer">36-hour datathon organized in partnership with Accion and Mastercard</a> yielded three key recommendations to tackle these challenges:

<strong>1. Start by understanding your typical digital customer.</strong> Analyzing customer demographic data and banking patterns can help identify, prioritize, and nudge those customers who are most likely to go digital. BancoSol learned that their typical digital app customer is more likely to be female and younger than the average BancoSol client.

<strong>2. Equip loan officers with insights to match customers with products that meet their needs.</strong> The datathon revealed that app users made nearly twice as many deposits as other users, linking digital adoption with increased use. As <a href="https://www.centerforfinancialinclusion.org/data-for-inclusive-finance-delivering-on-the-promise-for-consumers" target="_blank" rel="noopener noreferrer">research has shown</a>, greater use of financial products makes small businesses more resilient to shocks.

With these insights, BancoSol developed clear messaging for loan officers about the benefits of going digital and respecting privacy and security measures and implemented continuous testing and streamlining to improve the app experience so it matched customer expectations.

<strong>3. Retain customers by being proactive, not reactive</strong>. The datathon also showed that when customers stop saving or communicating with the bank, their risk for a loan default rises, while those who used digital channels maintained consistent relationships with the bank. With that in mind, data analysts created a risk propensity score, which BancoSol can use to intervene before a customer begins to disengage.

Having dedicated resources skilled in data analytics embedded within the product innovation team is crucial to jumpstarting a virtuous cycle of data-driven design.
<h3>Prioritize data management and governance</h3>
To derive value from data and ensure customers’ privacy is protected, microfinance institutions need to invest in structuring their data appropriately and maintaining deliberate data governance (policies and procedures) and management (use of data in decision-making).

While many institutions know they possess valuable data, it’s often stored in various places and multiple formats, leaving the organization to only manage the limited data they are required to, or that is easily accessible. To get ahead of the curve before messy data accumulates, Annapurna Finance Limited in India invested heavily in data management solutions that improve data reporting, data migration, and data storage for new digital platforms and products.

Nearly every financial institution struggles to maintain accurate customer contact information, a simple yet critical example of data management. For microfinance institutions with high-touch models whose loan officers regularly visit their customers, having a current phone number on file seemed like a low priority. But when lockdowns brought on by the COVID-19 pandemic began, Annapurna’s loan officers found themselves unable to communicate critical loan information — like payment dates, updates on moratoriums, or even introduce new loan offers via SMS to their group lending customers — without up-to-date contact details.

To address this challenge, Annapurna introduced a standard process to ensure that at every customer touchpoint — from field visits from a loan officer to customer visits to a branch — bank staff would confirm the customers’ phone numbers to ensure a high-quality database. In parallel, they implemented a new communication system that integrates their SMS system with their loan origination system. These two initiatives standardize communications with customers, create greater engagement, and ensure a more transparent flow of information.

A clear data strategy can help inclusive FSPs accelerate their digital transformation, make organizational changes to better leverage their data and become more customer-centric, and ultimately set low-income households and microentrepreneurs on a path toward greater financial health.

To assess your organization’s current data capabilities and gain insights into priority areas, take our <a href="/you-cant-go-digital-without-the-right-data-strategy" target="_blank" rel="noopener noreferrer">Data Maturity Diagnostic</a>. <a href="https://www.accion.org/advisory-contact">Reach out to us</a> to see how we can help plan a roadmap of strategic data initiatives to support your institution’s digital transformation journey and business goals.

<em>Malavika Krishnan contributed to this article.</em>

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