Amee Parbhoo

Rob Stevens

Brazil

East Asia and Pacific

India

Indonesia

Kenya

Latin America and The Caribbean

Mexico

Middle East and North Africa

Nigeria

North America

Philippines

South Asia

Sub-Saharan Africa

United Arab Emirates

United States

Challenges and Crises

Consumer Credit

Credit

Credit Provision

Delivery Channels

Digital Financial Services

Enabling Environment

Entrepreneurs of MSMEs

Financial Service Providers

Financial Technology

Fintechs

Governance

Human Centered Design

Impact Investing

Insurance

Insurtech

MSME/SME Finance

Payments

Saving

Underserved Groups

Financial Health

Mobile Banking

Refugees and Migrants

Remittances

Resilience

Neobanks

Report

Podcast

Article

Press Release

India is a global leader in financial inclusion. For over a decade, Accion has worked with and learned from India’s innovators, investors, and policymakers to expand economic opportunity for its people and businesses.

The majority of Kenyans have mobile money accounts; their activity demonstrates digital financial services’ potential. Accion helps Kenyan innovators harness emerging technologies to create new financial services.

Most of Mexico’s people lack access to a formal bank account. Accion has worked in Mexico for decades to create a thriving and competitive financial sector that embraces innovation and protects its clients.

Though Nigeria’s government has set ambitious goals for financial inclusion, the majority of its people lack a formal bank account. Accion has worked in the country since 2007 to expand access to financial services.

This report is supported by the <a href="https://mastercardfdn.org/">Mastercard Foundation.</a>

<hr />

<h2>Executive Summary</h2>
The COVID-19 pandemic has altered the realities for inclusive fintech startups and the financially underserved customers they serve. Coping with lockdowns and social distancing, low-income people around the world are now turning to fintechs to save money, purchase insurance, or transact remotely. But fintechs are facing their own challenges, including unpredictable funding, a volatile investment market, and a severe economic downturn.

<a href="https://www.kpmg.us/content/dam/global/pdfs/2020/pulse-of-fintech-h1-2020.pdf" target="_blank" rel="noopener noreferrer">Investment funds seized up</a> soon after the pandemic began, and while <a href="https://www.cbinsights.com/research/coronavirus-fintech-financing-impact/" target="_blank" rel="noopener noreferrer">funding has </a><a href="https://www.cbinsights.com/research/coronavirus-fintech-financing-impact/" target="_blank" rel="noopener noreferrer">started flowing again</a>, venture capital may be less reliable and predictable for the foreseeable future. Startups need to focus on extending their financial runways while simultaneously finding ways to grow their businesses.

In the past, many fintech startups have followed a Silicon Valley model of chasing growth through customer acquisition. But customer acquisition can be costly: acquiring a new customer is anywhere from <a href="https://hbr.org/2014/10/the-value-of-keeping-the-right-customers" target="_blank" rel="noopener noreferrer">five to 25 times more expensive</a> than retaining an existing one (without considering opportunities for cross and upsell). Fintech startups should consider alternative pathways to growth, namely via increased usage, uptake, and earnings among existing clients.

This shift to increasing value for users is extremely relevant in the era of COVID-19. Lockdowns and sharp decreases in demand for goods and services have left many families and small businesses extremely vulnerable. These people need more and new financial service innovations to rebuild their safety nets and livelihoods as their savings and inventories have been depleted. Increasing value for these users means finding new and better ways to meet their needs via meaningful, customer-centric value propositions.

This paper features case studies on fintech startups around the world that have successfully grown their value propositions. These startups, all portfolio companies of Accion Venture Lab, illustrate three core strategies for growing value among existing users:
<ol>
 	<li>Motivate increased usage of existing products,</li>
 	<li>Broaden the suite of products specific to users’ needs, and</li>
 	<li>Create a graduation pathway to reward retention.</li>
</ol>
The first strategy seeks to improve the user experience through features that encourage more frequent or in-depth use of products and services. The second strategy requires studying and applying users’ needs to craft a suite of products that address their particular pain points and fulfill more of their needs. Finally, the third strategy boosts value for users by sweetening and improving their terms over time so that they stay engaged. To execute each of these strategies, startups must stay closely attuned to users’ needs and experiences, and apply that knowledge to develop products that meet those needs.

<img class="wp-image-22791 aligncenter" src="https://content.accion.org/wp-content/uploads/2020/11/AVL-MF-paper-graphic-1.png" alt="How fintechs can build value for existing users infographic" width="800" height="420" />

Win from within: How fintech startups can grow by building value for existing users

[embed]https://soundcloud.com/accioninternational/access-to-digital-finance-is-a-lifeline-now-moneys-katharine-budd/s-w1jNrWQIhBj[/embed]

Migrant workers in Gulf States like the UAE often send 70 percent of their earned wages home to their families through remittances each month. When COVID-19 hit the region, the physical bank branches and remittance houses they relied on were shuttered, and migrant workers were ordered to stay home. Their families back in their home countries were left without crucial financial support.

On the third episode of <a href="https://www.accion.org/series/venturekast-rebuild" target="_blank" rel="noopener noreferrer">VentureKast: Rebuild</a>, CEO and co-founder of <a href="https://nowmoney.me/" target="_blank" rel="noopener noreferrer">NOW Money</a>, Katharine (“Kat”) Budd, explains that with bank branches off limits, "having access to digital finance, as long as you’ve got an internet connection, is a lifeline.” Brick-and-mortar financial institutions without robust digital services are not positioned to serve customers during the COVID-19 crisis, leaving fintechs with a unique opportunity to fill a need in the market through innovative product offerings.

Kat shares how she built NOW Money, a <a href="https://www.accion.org/invested-in-now-money" target="_blank" rel="noopener noreferrer">digital platform for low-income migrant workers</a> to manage their money and remit money overseas to their families, to be ready to take advantage of this unprecedented acceleration in demand for digital services. She explains that, particularly for the financially underserved, “having access to digital — to be able to still send your money and manage your finances — is vital.”  Fintechs not only provide competitive pricing and convenience through their digital products — what Kat calls “nice-to-haves” — but they have also built safe, consistent, and resilient banking systems that can continue operating while the pandemic prohibits physical services. Kat reminds us that fintechs are, now more than ever, essential tools in uplifting the financially underserved and those who are hit hardest by this crisis.

Please join our host and co-Managing Director of <a href="https://www.accion.org/how-we-work/invest/accion-venture-lab" target="_blank" rel="noopener noreferrer">Venture Lab</a> <a href="https://www.accion.org/bio/vikas-raj" target="_blank" rel="noopener noreferrer">Vikas Raj</a> as he interviews industry leaders every Thursday about how COVID-19 is impacting their work.

"Access to digital finance is a lifeline" - NOW Money's Katharine Budd

Despite the fact that they are wealthy and modern, cities like Dubai in the Gulf Cooperation Council (GCC) actually face a big financial inclusion challenge. There are 8 million foreign-born migrant workers in the United Arab Emirates (UAE) alone, making up some 88% of that country’s total population. These workers come primarily from India, Pakistan, Bangladesh, and the Philippines, and are mostly in low-paying jobs such as construction or domestic labor. Across the Gulf region, migrants have faced tough working conditions and have been historically ignored by financial institutions. They lack access to basic financial services, including bank accounts and fast, convenient remittance channels for sending money to their families back home.
This is where <a class="markup--anchor markup--p-anchor" href="http://nowmoney.me/" target="_blank" rel="noopener noreferrer">NOW Money</a>, <a class="markup--anchor markup--p-anchor" href="http://www.accion.org/uae-based-fintech-start-up-secures-700k-investment-to-advance-financial-services-access-for-underserved-migrant-workers/" target="_blank" rel="noopener noreferrer">Accion Venture Lab’s newest portfolio company</a>, comes in. NOW Money was founded in 2015 by Katharine Budd and Ian Dillon, who were inspired by the digital-only <a class="markup--anchor markup--p-anchor" href="http://www.businessinsider.com/the-digital-only-challenger-banks-explaine-2017-5" target="_blank" rel="noopener noreferrer">“challenger banks”</a> that had begun to emerge across the US and Europe. While the UAE has over 50 banks in operation, none of them are able to reach the country’s massive and underserved low-income migrant population effectively. NOW Money provides a suite of products to its customers: current accounts for depositing and withdrawing wages; debit cards for use at ATMs and for merchant transactions; and a marketplace of online remittance platforms for cheaper and more convenient money transfer services. By reducing the cost of customer acquisition and reaching a relatively untapped market, NOW is able to offer these services (and eventually others) and cost-effectively serve customers that would otherwise be considered unprofitable by traditional banks.
NOW partners and integrates with large employers to pay workers’ salaries directly into NOW Money accounts. The value proposition is strong for both end customers and employers. For customers, NOW offers a suite of products otherwise unavailable in the market. In particular, during our due diligence we saw customers incredibly excited about the digital interface for access to remittances. In the UAE today, some 95% of remittances are cash-based transactions. The workers we spoke with remit 60% or more of their wages to family members in their home countries, and typically have to take time off work, wait in long lines at remittance houses, and pay high fees in order to make these regular transactions.
For employers, NOW provides a less expensive solution for payroll. In addition, the employers we spoke with were motivated to give their employees the benefits NOW offers for both moral and economic reasons. Some employers see a spike in absenteeism the day after pay is disbursed, as employees go to remittance houses. Lastly, many employers, especially in more skilled and technical professions, value NOW as a way to increase employee retention.
Venture Lab is excited to be supporting the NOW Money team as they grow and scale. We invested in the company — our first in the GCC and one of the first early-stage VC deals in the region — for a number of reasons:

<ul class="postList">
 	<li class="graf graf--li">Clear social impact: The migrant population in the GCC is historically underserved by basic financial services. The wages these workers earn are low ($200–300 per month, depending on occupation). Due to banking standards in the UAE, it is very difficult and costly for a customer to open an account if they earn less than $1,300 per month, thereby excluding a vast majority of the migrant worker population.</li>
 	<li class="graf graf--li">Large market with unmet need: The UAE is the third largest market in the world for remittances, trailing only the US and Saudi Arabia. Across the GCC (UAE, Saudi Arabia, Bahrain, Kuwait, Qatar, and Oman), the total addressable market is some 25 million low-income migrant workers believed to be remitting about $50 billion annually. The remittance corridors used are some of the most active in the world, and NOW fills a crucial gap by providing customers ease of access and lower costs.</li>
 	<li class="graf graf--li">Innovative “neobank” model: Accion Venture Lab looks to support fintech companies that have innovative approaches to increasing access to and quality of financial services for underserved markets. We have been actively watching the digital-only neobank/challenger bank models around the world and are excited about NOW Money, our very first neobank investment. We’re thrilled to be part of NOW as it expands and aims to become the financial service platform of choice for migrant workers. As NOW truly owns the customer relationship, it will be able to provide incremental value to customers’ financial lives with each further partnership, beyond simply account access and low-cost remittance tools.</li>
 	<li class="graf graf--li">Opportunity to learn from new customers, market, and product: NOW Money would be a first for Venture Lab in a number of ways. Venture Lab has never invested in the Gulf region, and NOW Money could serve as a way to learn about this fast-growing region and its market dynamics. In addition, Venture Lab has investments reaching many kinds of underserved customers, but we have limited experience serving migrant workers, which is a huge market with demonstrated, specific, and relevant financial needs. NOW Money would help us better understand this vast and growing population of underserved customers.</li>
</ul>
As is the case for all of our seed investments, NOW Money is early in its journey, but as investors in the company and proponents of financial inclusion for underserved populations, we are excited about their progress so far and the company’s plans going forward.
<a class="markup--user markup--p-user" href="https://medium.com/u/c50787175cb7" target="_blank" rel="noopener noreferrer">Rob Stevens</a> contributed to this article.

Why Accion Venture Lab invested in NOW Money

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<div class="content">
<div class="content-node">
Dubai, August 22, 2017 –<a href="http://www.nowmoney.me">NOW Money </a>has secured an investment of $700,000 from two U.S.-based venture capital investors – Accion Venture Lab, the seed-stage investment initiative of financial inclusion leader Accion, and Newid Capital.
Both Accion Venture Lab and Newid Capital make investments that target the financially underserved.Venture Lab invests capital in, and provides support to, innovative fintech start-ups that increase access to, improve the quality of, or reduce the cost of financial services for the underserved at scale. Newid Capital focuses on such investments outside of North America and Western Europe.
NOW Money uses mobile banking technology to provide accounts, financial inclusion and a range of low-cost remittance options to low-income migrant workers in the Gulf region. It aims to provide access to affordable financial services for everyone.
The investment comes a year after NOW Money’s initial seed funding, which allowed the company to expand the team and develop the technology and brand. With the latest investment, also a part of its seed round, the team plans to launch the service across the United Arab Emirates and expand into the other Gulf Cooperation Council (GCC) countries.
Co-founder of NOW Money, Ian Dillon said, “Having what’s understood to be the first early stage investment from U.S. venture capital into the Middle East is testament to the opportunities available here and how far the GCC has come in making itself a destination for investment. We hope this will be the first of many U.S. venture capital investments in the region, and will help to grow the ecosystem further.”
“We’re excited to be making such a big social impact in the region. Accion is one of the leading global institutions promoting financial inclusion, and Newid Capital was co-founded by Nigel Morris, who previously co-founded Capital One Financial Services. We’re excited to be working with them to bring financial inclusion to the 26 million unbanked in the GCC,” he added.
“Each year, migrant workers contribute more than $400 billion to their home economies, and the United Arab Emirates is among the top remittance-sending countries in the world,” said Michael Schlein, CEO and President of Accion. “NOW Money’s innovative approach and digital platform provide a faster and safer option for these workers to support their families and communities.”
“Our partnership with NOW Money marks a number of firsts for Accion Venture Lab – our first investment in the Middle East region, our first investment into a wholly-digital neobank, and our first opportunity to focus on reaching low-income migrant workers,” added Amee Parbhoo, Director of Investments at Accion Venture Lab. “As we reach this new group of financially underserved individuals, we’ll look to apply our learnings to Venture Lab’s work around the world.”
In the last 12 months, NOW Money has won six awards, including Chivas’ “The Venture” for the Gulf region. The co-founders Katharine Budd and Ian Dillon speak regularly at fintech events, such as Payfort and Wamda’s <a href="https://www.wamda.com/2017/06/fintech-middle-east-podcast">State of Fintech </a>report, and are featured regularly in publications such as <a href="https://www.entrepreneur.com/article/291944">Entrepreneur Middle East </a>and on the <a href="https://omny.fm/shows/drive-live/industry-insider-30-07-2017">Dubai Eye </a>radio station.
# # #
About NOW Money
NOW uses mobile banking technology to provide accounts, financial inclusion and a range of low-cost remittance options to low-income migrant workers in the Gulf Cooperation Council (GCC) countries, improving their lives and saving them and their families significant money, in a profitable and sustainable manner.
About Accion Venture Lab
Accion Venture Lab is the world’s leading seed-stage investor in fintech for the underserved. Venture Lab invests capital in, and provides support to, innovative fintech start-ups that increase access to, improve the quality of, or reduce the cost of financial services for the underserved at scale. Since launching in 2012, Venture Lab has deployed over US$10 million across more than 25 start-ups that work in over 20 countries worldwide. Venture Lab is a part of Accion, a global non-profit committed to creating a financially inclusive world, with a pioneering legacy in microfinance and fintech impact investing. Accion catalyzes financial service providers to deliver high-quality, affordable solutions at scale for the three billion people who are left out of – or poorly served by –  the financial sector. For more than 50 years, Accion has helped tens of millions of people through its work with more than 90 partners in 40 countries. For further information, visit <a href="https://www.accion.org/venturelab">https://www.accion.org/venturelab</a>.
About Newid Capital
Newid Capital is a direct-investment fund focused on financial services and financial technology companies in developing markets. Through its investments, Newid Capital aims to expand financial services to currently underserved markets and individuals. Newid actively seeks early- and mid-stage start-ups that are looking for investment and operational assistance. Newid is able to leverage personal experience in building, and exiting, financial services companies from the viewpoint of both the entrepreneur and the investor.
Media Contacts:
Bryony Travers (NOW Money)
050 374 1012
<a href="btr">btravers@nowmoney.me</a>
Katie Mounts (Accion)
+1 202.280.5859
<a href="mailto:kmounts@accion.org">kmounts@accion.org</a>

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UAE-Based Fintech Start-Up Secures $700K Investment to Advance Financial Services Access for Underserved Migrant Workers

United Arab Emirates

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Win from within: How fintech startups can grow by building value for existing users

"Access to digital finance is a lifeline" - NOW Money's Katharine Budd

Why Accion Venture Lab invested in NOW Money

UAE-Based Fintech Start-Up Secures $700K Investment to Advance Financial Services Access for Underserved Migrant Workers