Preparing Financial Service Providers for Digital Transformation

Accion helps chart the journey

Financial service providers (FSPs) often want to incorporate technology into their systems and services, with the goal of enhancing efficiency, effectiveness, and profitability.  However, exactly what will be digitized and how is unique to every institution.  Accion’s Global Advisory Solutions team understands the challenges that come with navigating digital transformation, and works with institutions to develop and define their digital strategy. The most important part of this process is people—the staff of the institution, and the clients they serve. Digital solutions should make life better for clients and create efficiencies for staff, and both clients and staff must be part of developing these solutions.

Digital Strategy Workshops

As a first step in the digital transformation process, Accion conducts digital strategy workshops with FSPs, which allows the institution to evaluate where they are, where they want to go, and where they need to begin as they embark on their digital transformation journey. In preparation for the workshop, a team of Accion advisers comes in to work with the institution’s staff over the course of one to two weeks, hone in on the key challenges they’re facing and carry out an analysis of the client and market (existing infrastructure, current business model, customers to date, performance statistics, etc.).

Accion’s advisory team, Global Advisory Solutions is a unique offering in the world of consulting. The team comprises of professionals with deep knowledge, experience and passion in their respective areas of work. They engage with client organisations at various levels and curate their advice based on ‘real need’. They work like partners rather than advisors. We have been fortunate to collaborate with this highly talented team for the past 15 months and look forward to a deeper engagement as we implement our digital strategy in the next 18-24 months.
Sasidhar N. Thumuluri, Managing Director, Basix Sub-K iTransactions Ltd.

Many questions, many paths

Some of the most common questions institutions have at the beginning of the digital transformation workshop include:

  • “What does it mean to ‘go digital’? Do I have to digitize everything?”
  • “We developed a digital product, brought it to market, but it’s not performing as well as expected. Why is this happening?”
  • “We want to scale sustainably and triple our customer base in three years. Where are the opportunities in the market? Where can we leverage tech-enabled solutions to help us scale while keeping costs low?”
  • “Competitive, data-driven fintechs in the market are serving our customers more quickly and more nimbly… how can we compete with these new entrants? Are there opportunities for us to partner with them?”

Accion frames such questions and challenges as opportunities and works with the institutions to develop solutions. Ultimately, this involves developing a digital strategy that aligns with the institution’s business plan to drive and accelerate growth.  During the workshop Accion leads the provider through a series of strategy exercises utilizing a variety of tools – such as a digital maturity matrix, business model canvas, and customer journey maps – to analyze the existing business and promote ideation for new initiatives.

CFPA Microfinance employees participate in a product design workshop led by Accion Global Advisory Solutions

Charting the journey

These co-creation exercises help the provider to arrive at proposed solutions, which are then prioritized by assessing their do-ability versus their strategic value for the institution. To conclude the workshop, Accion works with the institution to develop a roadmap that helps determine what systems, skills, data and partnerships are required to execute these ideas. This helps the institution understand what infrastructure may be required to implement these solutions, what new hires or skill sets may be necessary to implement new digital products, and ultimately allows it to assess the dependencies and costs of each additional system, skill, data, or partnership requirement. These roadmaps serve as a blueprint, outlining the steps needed to achieve its strategic objectives. With these results, Accion develops recommendations on how the provider can capitalize on opportunities, serve new clients, offer new products, improve its value to clients, improve the customer experience, and drive operational efficiencies.

Roadmap of systems, skills, partnerships and data requirements

Every digital journey is unique to the provider—both the path, and the destination. Accion’s advisory team works with institutions to customize and chart their roadmap to create the most value for their company and the end customer.

Digital strategy engagements

FSPs that have worked with Accion’s Global Advisory Solutions team on their digital strategy and transformation frameworks include

Established in 2006, Accion Microfinance Bank (Accion MfB) is one of Nigeria’s leading microfinance institutions, dedicated to economically empowering micro-entrepreneurs and promulgating a mission of deepening financial inclusion for the underserved. Headquartered in Lagos, Accion MfB operates in over 130 locations across Nigeria to facilitate loans and savings products for micro-, small- and medium-sized enterprises (MSMEs) and low-income earners. Accion MfB is one of the most profitable microfinance banks in the country today.

The China Foundation for Poverty Alleviation (CFPA) Microfinance is China’s largest microfinance institution and has been focusing on poverty alleviation for 16 years, targeting economically active low-income people in rural areas of China. As of 2016, CFPA has served over 3 million clients in China.

Founded in 2011, PEG Africa is an asset financing company that provides solar energy products to off-grid customers in Ghana and the Ivory Coast. It leverages pay-as-you-go technology, and offers ‘and offers solar home a solar home device, that gives off-grid customers access to TV, light, mobile phone charging, and appliances, such as radios. After 12 months of payments, the customer owns the solar system, generating up to $1,000 of energy savings over the 5-year life of the system.

Sociedad de Ahorro y Crédito Integral (SAC Integral) is the leading regulated microfinance institution in El Salvador, with an experienced management team and shareholders committed to supporting the development of micro-entrepreneurs. Integral specializes in supporting entrepreneurs: without guarantees (or with insufficient guarantees); without access to financial resources (or with limited access); by investing in primary basic studies, female head of families, rural/semi-urban residences, and workspaces (local massive markets or informal low-income markets).

Originally a project of Save the Children Myanmar, Early Dawn Microfinance Ltd (DAWN) began providing loans to low-income women in peri-urban areas of Yangon in 2002. DAWN became an independent microfinance company in 2015, and now serves over 160,000 clients in five regions of Myanmar. DAWN was one of the country’s earliest microfinance institutions (MFI), and is now the fourth largest MFI in Myanmar. DAWN focuses on providing credit for small business, educational, and agricultural purposes.

Founded in 2010, Basix Sub-K iTransactions Ltd. (Sub-K), started with a vision to provide financial access to the unbanked population by leveraging technology. Sub-K serves as a bridge between financial service providers and under-banked customers. As of February, 2018, the company is operational in 23 states of India and manages a loan portfolio of INR 6.66 billion for various banks. Sub-K has deployed as many as 13,000 agents or customer service providers to interface with customers on the ground. The company has partnered with over 14 private and public banks and serves a customer base of 1.8 million with a bouquet of financial services.

Aye Finance (AYE) is a NBFC, and lends to micro businesses in manufacturing, trading and service sectors which cannot access capital from mainstream financial institutions in India, as they lack sufficient documentation and credit history. It uses an Industry Cluster Enablement approach to gain insights and strong connections within specific manufacturing, trading and service industries (e.g., shoes, brass works, garments), enabling it to efficiently target, acquire, and underwrite small-scale businesses within each cluster.

Accion's team has played an invaluable role in guiding our strategy to digitalize our processes and derive insights from our customer data. Accion's team has actively matched our steps as we have moved beyond traditional business MIS to the realm of analytics. Their role in the last 3 years has seen us complete projects on setting up delinquency dashboards, deploying a sophisticated data-warehouse platform, developing a mobile app for empowering the customers and building data models for underwriting the origination and repeat loan business. These steps will help us build our data-analytics initiative to unlock strategic value for the company.
Sanjay Sharma, Managing Director, Aye Finance Pvt. Ltd.

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