As the spread of COVID-19 first escalated to frightening levels, nations around the world took drastic action. Lockdowns and travel restrictions caught millions of small businesses off guard. Many shuttered their doors, while others were able to adapt to the circumstances.
Chakrapani, a client of Accion’s partner Sub-K IMPACT Solutions Ltd., owns a small kirana (general goods) store with his wife, catering to the daily needs of neighborhood residents in Hyderabad, India. The store remained open during India’s lockdown because it provides essential goods. Given travel restrictions, more families started depending on Chakrapani’s store to meet daily needs, and traffic in his store doubled. To cater to growing demand, Chakrapani started accepting digital payments through his previously unused mobile wallet account. He also offered home deliveries, stocked up on a variety of in-demand items, and increased his distributor network, all through his mobile device.
Digital tools can help more micro, small, and medium enterprises (MSMEs) like Chakrapani’s build resilience in unpredictable times by expanding access to tools like credit, payments, insurance, and business management advice. This can lay the foundation for an inclusive economic recovery from the ravages of the pandemic.
In November 2018, the Mastercard Center for Inclusive Growth and Accion launched a partnership to transform millions of underserved MSMEs around the world and help them participate in, and benefit from, the digital economy. Among other efforts, the partnership is reaching this goal by driving the digital transformation of financial service providers (FSPs) to help them serve more small businesses and families more effectively.
This work coincides with broad changes in customer behavior that have accelerated as a result of COVID-19. Significant portions of the economy have moved online, and as more interactions become remote, they expose gaps in the operational resilience of traditional financial institutions. In turn, these providers have put more energy into digital transformation efforts to reach and support customers in need.
We are now two years into our four-year partnership, and our teams and the institutions we are working with around the world have learned (and continue to learn) so much. Accion’s advisory team has worked hand in hand with the institutions to create and shape digital strategies, implement and upgrade digital channels, design new digital products, and form strategic partnerships, navigating unprecedented challenges with creativity and vigor. Accion shares the insights gained from this work here, as a part of our effort to ensure our endeavors and accomplishments serve as demonstration models for the industry. Given the urgency of digital transformation to build an inclusive recovery, this paper provides timely insights to help FSPs and their partners navigate the digital transformation journey and addresses key questions surrounding digital transformation, including where to start and where to focus.
Written in collaboration with: Payal Dalal, Senior Vice President, Social Impact, International Markets, Mastercard Center for Inclusive Growth