In Mexico, 99 percent of all businesses are micro, small, and medium enterprises (MSMEs). These small businesses contribute 52 percent of GDP and generate 72 percent of jobs. Although these businesses play a crucial role in Mexico, fewer than 10 percent of them have received a bank loan and can’t get what they need to stay open long-term. “MSMEs in Mexico are short-lived. They last about two to five years, and then they fade,” says José Eduardo Ruiz, Commercial Director Caja Bienestar, a financial provider in central Mexico.
Since 2019, Accion has partnered with five financial service providers in Latin America, with support from MetLife Foundation, to develop financial health-focused products that solve the problems that small businesses face and help people to improve their lives. In Mexico, we worked with Caja Bienestar and Caja Popular Cerano to build innovative products that meet their customers’ needs. Our approach focused on the people using these products: their needs, circumstances, abilities, and aspirations.
Our partnership with Caja Bienestar in Querétaro, Mexico, started with a deep-dive qualitative research effort with small and medium business owners. The findings from that research informed every aspect of the product design, from acquisition and marketing to user experience to payment terms.
Often, small shops will offer to sell products to their customers on credit in an effort to make sales. Fairly soon, they are spending more time and effort managing debt than they are managing their business. When their capital is tied up in credit, they lack the liquidity needed to pay their own debtors, or replenish inventory to stock their shelves. José Eduardo doesn’t fault them though, noting that the customers of these businesses can’t find anyone else who will lend to them; they depend on these businesses to provide the credit they need.
“Zapatero a tus zapatos” is the saying that José Eduardo comes back to, an idiom about competitive advantage that captures what José Eduardo and his team realized was going wrong for small businesses. Rather than focus on selling concrete and construction materials, small business owners like Francisco were operating as lenders for their customers and taking on all the risk that implies. The Accion and Bienestar team recognized a win-win opportunity: for the coop to bring its financial lending expertise to the table and serve as the financing partner for small businesses looking to offer credit to their customers. As José Eduardo says, “We are the financial experts, so we take that on, and the business owner can focus on his work.” Now, Bienestar partners with small businesses to provide credit to their portfolio of customers. The business owners can focus on their operations and reserve the capital that was previously used for lending to invest in their business, pay off debt, or save.
Not only is the product structured around the real-life relationships and rhythms of small business life, Bienestar has ensured the user experience is comfortable and natural for customers. With Accion, the team realized that many microentrepreneurs utilize WhatsApp as a critical tool for conducting business. They place orders, confirm receipt, and even register complaints via the application. To fit within these habits, the team designed a bot that mimics the WhatsApp experience so that users can release payments with just a few messages. The digital experience is quick and easy for users and saves time and effort for the cooperative.
With another partner in Mexico, a financial cooperative called Caja Popular Cerano, we worked to expand their reach to more customers that would benefit from financial services but haven’t used them before. We found that young people within their market wanted to build their lives and careers but were wary of banks and taking on debt. In fact, only 33 percent of the youth population (ages 15-24) in Mexico are clients of a banking institution. We knew we needed to do things differently to reach youth, so the team created a gamified app that makes saving money accessible for people of all ages. By encouraging financially healthy behaviors like saving in younger clients, Caja Popular Cerano will help customers thrive throughout their financial lives, starting with the app, which may be their first interaction with a financial institution.
These products show how customer insights, research, and innovation can combine to meet the needs of underserved small businesses and people who haven’t been able to get the financial support they need in the past. As José Eduardo says, “If my work can generate an impact — especially if that impact is for the community where I live — well, that is my greatest source of inspiration.”