We know from our work that digital technology can be a powerful tool for financial inclusion.
Yet, despite advancements in mobile connectivity, improvements in payments infrastructure, and investment in new technologies, cash is still used in the majority of transactions around the world. In fact, the use of cash is rising.
Cash is slow, expensive, and exacerbates a broader issue: without digital tools to record transactions, store owners struggle to build the credit history they need to obtain financing. That, in turn, keeps merchants from expanding their business and limits inclusive, sustainable growth.
In the past year of our ongoing project with the Mastercard Center for Inclusive Growth, we have built partnerships and shaped strategies to drive the digital transformation of millions of microbusinesses and the financial institutions that serve them. We are excited to be working with institutions that are making the digital economy more inclusive by developing meaningful and responsibly designed products and services. Our current partners, Accion Microfinance Bank in Nigeria, Bancosol in Bolivia, CÍVICO in Colombia and Mexico, and Sub-K in India, already serve more than 2 million microbusinesses.
As we think about what successful digital transformation looks like, we look to the small business owners that our partners serve for insight and inspiration. Their stories bring to light how microentrepreneurs benefit from financial technology innovation and digital transformation.
Promise appreciates a faster loan process in Nigeria
Accion Microfinance Bank in Nigeria (AMFB), an Accion partner, has invested in systems that make it easier for small business owners to get the funding they need. AMFB is using mobile tablet devices, SMS payment reminders, automatic loan deposits, and other digital features to make applying for and managing a loan much more convenient for its busy entrepreneur clients. And those clients notice the difference. Promise, a microentrepreneur, who has a business in which he imports leather for making shoes and bags, has been an AMFB client for 11 years. He appreciates the new digital banking service. For example, he says, the time it takes to apply for a loan has decreased dramatically. “I don’t have a lot of paperwork anymore because it’s all done digitally,” he says, adding, “Before, you waited for more than a week for your loan, and it would make you angry. But now I get it in three days.”
Alfonso is going digital in Mexico — and bringing the whole market with him
CÍVICO, a digital platform that maps micro and small businesses and connects communities in Colombia, Mexico, and Chile, is working with Accion to provide credit services to merchants. In Mexico City, Mercado Medellin (also known as “The Little Habana”) has over 500 market stalls, offering products from across Latin America. One of the merchants in the Medellín market, Alfonso López Carmona, sells international products, such as candies and beverages He appreciates CÍVICO’s efforts to bring Medellín market into the 21st century. He actively uses the platform to promote his business and also uses CÍVICO Pay and QR codes to receive payments. Alfonso hopes to leverage CÍVICO to increase the digital presence of his business. He believes this will enable him to attract more customers, sell a greater variety of products from other countries, and grow his business. He also actively promotes the adoption of CÍVICO among other merchants in the market.
In Bolivia, Carolina’s clothing business is powered by tech
Bolivia, like much of Latin America, has lagged behind other countries in the Global Innovation Index. To boost innovation in the country, Accion is working with BancoSol to create an innovation hub that would offer meaningful financial products and services to BancoSol’s nearly one million customers.
Carolina Yesica Rodriguez Alcon, an entrepreneur who runs her own clothing company under the “Jhonny Dey” trademark in Bolivia, has been a BancoSol client for several years. The loan from BancoSol helped her buy machinery and recruit staff to run her company. Carolina is a driven and ambitious entrepreneur — she is working towards expanding her brand nationally and internationally. She appreciates that she can manage her finances and grow her business with financial technologies offered by BancoSol, including AppSol and SolNet — BancoSol’s mobile and internet banking platforms. She even uses QR Pay to conveniently and swiftly collect payments from customers and make payments to suppliers. By prioritizing innovation, BancoSol will be able to help more entrepreneurs like Carolina spend less time at the bank so they can focus on their customers.
As we continue to work with Mastercard and partner with more forward-thinking institutions around the world, we hope to equip millions of microentrepreneurs with the tools and technology that accelerate the growth of their businesses and help improve the quality of their lives.
Arisha Salman contributed to this article.