How does a traditional bank go digital to serve more customers? Recently I visited Lagos, Nigeria, and La Paz, Bolivia, to see — and help drive — that process. In Lagos, Accion Microfinance Bank hopes to triple the number of people it serves through a digital-first model for acquiring new clients and improve internal processes. In La Paz, Accion is working with BancoSol to establish an innovation hub — a unit tasked with bringing better digital products to market, using a data-driven approach. Both projects are part of Mastercard’s ongoing partnership with Accion.
For the last 14 years, I’ve worked with Mastercard to fulfill the mission of bringing smart, data-driven decision making to the banking, retail, consumer packaged goods (CPG), hospitality, and automotive sectors. We help companies test ideas like “should I dramatically overhaul my stores and brand?” or “should I offer a 30 percent promotion, 35 percent, or buy one, get one free?” Getting these questions right can mean significant impacts on top and bottom lines.
In August, Mastercard gave me the opportunity to take on a new mission for three months: bringing a similar approach to solving big questions with data, analysis, and testing to Accion’s Global Advisory Solutions team. We are working with Accion’s partner organizations to leverage analytics to drive financial inclusion.
During my travels with Accion, I had the opportunity to speak with Accion Microfinance Bank and BancoSol’s senior leadership teams about their use of data and technology in building out their digital strategy. I also gave a presentation to each team’s leadership on how to conduct testing and analytics, and how it can help organizations achieve their growth ambitions.
I spent time with clients of each bank in their homes and at their places of business to learn more about how they use financial services. I was surprised at how accessible financial technology is for many entrepreneurs — one vendor’s stall in Lagos was no bigger than my cubicle but featured a Point-of-Sale (POS) machine for credit cards. Even though that vendor was equipped to receive digital payments, they were hesitant to make electronic payments and deposits of their own. This disconnect reflects how much less customers trust their banks in Nigeria compared to customers in the U.S. One takeaway from speaking with customers in Lagos: we have a big task ahead in giving underbanked people reason to trust that digital banking will be safe, reliable, and easy to use.
We have a big task ahead in giving underbanked people reason to trust that digital banking will be safe, reliable, and easy to use.
In Bolivia, the challenge is less about trust-building and more about increasing people’s comfort and literacy around digital tools. Many entrepreneurs told us that they have a digital product but aren’t using it.
Like customer needs, degrees of digitization vary dramatically. At Accion Microfinance bank, the team is working to build a data warehouse to make analytics and reporting less manual. At BancoSol, the data warehouse has existed for several years and is impressive. It captures critical elements into a data server and then extracts commonly used information into reports automatically. It rivals the systems in place for banks in the U.S., and there are plans in place to make it even more powerful. BancoSol’s next goal is to leverage this well-captured data more effectively. That’s one of the mandates for the new innovation hub, and something we will be supporting them to implement.
In many ways, the challenges facing microfinance institutions look a lot like the ones facing the commercial banks that I work with at Mastercard. In both worlds, companies are looking to understand their customers’ wants and needs and create a niche in a rapidly evolving market. They’re both working to take down the overhead of branches and field staff while trying to expand reach digitally.
My visits were educational and eye-opening. It’s amazing to be part of an effort to expand the benefits of the global financial system to people who have not had them historically. The opportunity to speak directly to customers about their relationship with their financial providers was a good reminder that the customer should always be at the center of any initiative. Upon returning to Mastercard, I will be reminding my clients of this as well.
I am excited to support the Accion team to identify the role of data in making digital banking more accessible. From risk analysis to customer segmentation to operations and payments, when we leverage data, we can make financial tools more available — and more useful — to everyone.