<strong>New York, NY (February 26, 2018) </strong>— MetLife Foundation provides $5.4 million to Accion for programs in Latin America, Eastern Europe, and Asia to leverage digital solutions to enhance underserved customers' financial capabilities and engagement.

Accion and MetLife Foundation Announce Expanded Partnership to Advance Financial Inclusion

Advisory Services

Customer Centricity

Delivery Channels

Digital Financial Services

Financial Capability

Human Centered Design

Press Release

Risk and Credit Analysis

Amit Gupta

Senior Manager, Credit and Business Processes

Amy Stewart

Director, Customer Strategy and Digital Products

Archana Kejriwal

Manager, Customer Engagement

Dandan Wang

Senior Project Manager, China Management

Emma Morse

Manager, Special Projects

Priya Punatar

Mona Kapoor

Yanina Seltzer

Kathleen Yaworsky

Shweta Pereira

Victoria White

Michael Schlein

Megan Peterson

Chile

Latin America and The Caribbean

Mexico

India

South Asia

Colombia

Nigeria

Sub-Saharan Africa

East Asia and Pacific

Myanmar

China

Middle East and North Africa

North America

Haiti

Uganda

Appropriate Product Design and Delivery

Behavioral Insights

Challenges and Crises

Consumer Protection

Data Analytics

Enabling Environment

Entrepreneurs of MSMEs

Financial Health

Financial Service Providers

Financial Technology

Fintechs

Responsible Digital Finance

Underserved Groups

Resilience

Access Usage Gap

Agent Banking

Agricultural and Rural Finance

Banks

Credit

Digital Credit

Microfinance Institutions

Mobile Banking

MSME/SME Finance

Partnerships

Payments

Rural Populations

Women

Governance

Personal Financial Management

Insurance Companies

Microfinance

Crowdfunding

Financial Inclusion Strategy

Risk Management

Client Treatment

Human Touch

Insurance

Saving

Alternative Data

Credit Provision

Supply Chain Finance

Impact Investing

Refugees and Migrants

Policy, Regulation and Government Initiatives

Transparency

Article

Brief

Webinar

Report

Toolkits and Guides

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.

Over the past decade, human-centered design methodologies have made their way from Silicon Valley to the financial inclusion sector. These methodologies, which are based on deep customer understanding, blue sky ideation, and rapid prototyping, have been touted as the silver bullet to address ongoing access and usage problems at the base of the pyramid, particularly with regard to digital financial services. <a href="https://www.cgap.org/sites/default/files/CGAP_Insights_into_Action_final.pdf" target="_blank" rel="noopener noreferrer">Initial results were promising</a>: in collaboration with leading design firms, institutions were able to develop innovative product concepts and prototypes grounded in the realities of customers’ lives.

However, these products haven’t always been as successful as expected. Many products do not ultimately gain traction with customers, and others are discontinued as institutional priorities shift. Some institutions have focused on customer needs but overlooked real operational and business constraints. Others miss the complexities surrounding customer behavior and financial decision making and inadvertently solve the wrong problem.

The need for digital, customized and responsive financial products and services is greater than ever. The economic fallout from COVID-19 has disproportionately affected those without the access, resources, or network to weather the storm. Innovative financial products can help people to recover from the crisis and restart in the new normal.

<img class="wp-image-22353 alignright" src="https://content.accion.org/wp-content/uploads/2020/09/accionGraphics_Aug26_Key-Tenets.png" alt="Key tenets of innovation: feasibility, desirability, and viability" width="461" height="332" />Innovative digital products must balance customers’ needs with organizational capacity and should be built upon a solid business case to ensure that the product is sustainable in the long term. This trifecta of desirability, feasibility, and viability seems intuitive but is not easy to implement — institutions must navigate competing priorities, limited resources, and tradeoffs between each area. <a href="https://www.accion.org/to-succeed-innovative-financial-products-must-be-desirable-feasible-and-viable/" target="_blank" rel="noopener noreferrer">Our latest white paper</a> explores the interplay between desirability, feasibility, and viability, and shares lessons learned from our recent experiences <a href="https://www.accion.org/achieving-financial-health-in-mexico-and-chile" target="_blank" rel="noopener noreferrer">working with five financial services providers and fintechs in Chile and Mexico.</a> With the <a href="https://www.accion.org/accion-and-metlife-foundation-announce-expanded-partnership-to-advance-financial-inclusion" target="_blank" rel="noopener noreferrer">support of MetLife Foundation</a>, we are working with these institutions to design and launch behaviorally informed products that build customers’ financial capabilities and ultimately improve their financial health.

A few key takeaways from the paper:
<ul>
 	<li><strong>There are many ways to learn from your customers</strong>: In-depth field interviews are an important channel for understanding people’ lives, but they can be time-consuming and aren’t always feasible — particularly during a pandemic. Customer data is a rich and often underutilized resource to identify trends and user pain points. We start our customer understanding with data analysis to build hypotheses that we can later test and refine through user research, in-person where possible, or remote.</li>
 	<li><strong>The most valuable feedback will come post</strong><strong>-product</strong> <strong>launch</strong>: No research or data analysis is as valuable as customer engagement with an actual product. Even prototyping has its limits: customers may sit and look at an application for an hour with an interviewer, but in reality, they may only have five minutes to use the product during their daily lives and experience constant interruptions, connectivity challenges, and competing demands for their time. Financial institutions should seek to go to market quickly with a minimum viable product, build in robust feedback loops, and plan for ongoing improvements.</li>
 	<li><strong>Consider innovation you can sustain: </strong>In the quest for innovation, institutions often feel they must ‘go big’ and develop completely new, groundbreaking solutions. But these products often don’t make it past pilot because the gaps required for long term success are too large. Innovative products often require new skills, updated technology, or new partnerships. A more feasible product can still be innovative without requiring a full-blown overhaul of the institution. It is critical to assess operational and technological capabilities from the start, understand the implications of proposed product design, and actively plan to address gaps. Incremental innovation can be just as powerful to drive customer usage and growth.</li>
 	<li><strong>Build a business case from the beginning: </strong>In the product design process, some design efforts prefer to focus on the idea before considering business case implications. While helpful to think out the box, we’ve found this can be dangerous. Without a business case, product ideas may never get the buy-in to move to pilot; or worse, they may lead the institution to invest time and money in products that don’t make business sense. It is not enough to create a product that customers love — it must drive growth, reduce costs, or generate revenue. We always start with a preliminary business case at the concept stage and then flesh out a detailed projection of user growth, revenue, break-even analysis, and assumptions.</li>
</ul>
Innovative ideas will not help customers reach their goals or recover from the pandemic if they cannot be implemented and scaled. In the long run, products that truly drive financial inclusion are those that balance desirability, feasibility, and viability. For customers, this approach translates to more intuitive financial products and services that are aligned with their behaviors and help build their financial health. For financial service providers, this approach leads to innovative products that are sustainable, use internal resources efficiently, and achieve business goals. Learn more about how we created sustainable and innovative products in Mexico and Chile by reading our paper, <a href="https://www.accion.org/to-succeed-innovative-financial-products-must-be-desirable-feasible-and-viable/" target="_blank" rel="noopener noreferrer">To succeed, innovative financial products must be desirable, feasible, and viable.</a>

Built to last: How to turn innovative ideas into scalable products

<em>Photo caption: By keeping desirability, feasibility, and viability in mind in product innovation, Accion worked with institutions across Latin America to develop scalable and sustainable products, including a financial health portal with </em><a href="https://www.accion.org/fintech-founders-have-a-formula-for-building-financial-health" target="_blank" rel="noopener noreferrer"><em>Destácame</em></a><em> in Chile. </em>

The financial services landscape is crowded with a wide array of offerings, but vulnerable and low-income people across the globe still struggle to find products that are designed to meet their needs. This gap has been amplified though the economic fallout from COVID-19, which has disproportionately affected those without the access, resources, or network to weather the storm. Now more than ever, low-income populations need customized and responsive financial products and services to recover from the crisis and restart in the new normal.

To address this gap, in recent years many financial service providers have turned to human-centered design (HCD) methodologies to better understand their clients’ wants, needs and aspirations, hoping to update their product offering and drive usage. While many organizations have this goal, very few have been able to deliver on it. Many human-centered products are based on thoughtfully designed and innovative ideas, but ultimately do not end up gaining traction with customers or are disbanded when institutional priorities shift. Sometimes institutions focus on customer needs but overlook real operational and business constraints. Others design from the board room, without taking into account the customer’s life and the complexities around financial decision making and end up solving for the wrong problem. To be sustainable, innovative digital products must balance the customer’s needs with organizational capacity and should be built upon a solid business case to ensure that the product is supported in the long term.

Accion, <a href="https://www.accion.org/accion-and-metlife-foundation-announce-expanded-partnership-to-advance-financial-inclusion" target="_blank" rel="noopener noreferrer">in partnership with MetLife Foundation</a>, is committed to delivering high quality, affordable solutions for the billions of individuals who are still underserved by the financial sector. We do this by working alongside financial institutions to design, build, launch and optimize innovative products, services, and experiences for low-income customers that are desirable (wanted by and useful for clients), feasible (achievable given the institution’s operations, technology and resources), and viable (make business sense)—so that the products make it from concept to commerce.

<img class="wp-image-22353 alignleft" src="https://content.accion.org/wp-content/uploads/2020/09/accionGraphics_Aug26_Key-Tenets.png" alt="Key tenets of innovation: feasibility, desirability, and viability" width="436" height="314" />

This paper outlines how financial institutions can develop innovative and sustainable financial solutions. It draws on our recent experiences working with financial services providers and fintechs in <a href="https://www.accion.org/achieving-financial-health-in-mexico-and-chile">Chile and Mexico</a> over the last two years to design and launch behaviorally-informed products that build customers’ financial capabilities and ultimately improve their financial health. While the products were not specifically designed to respond to the impacts of COVID-19, they aim to build resiliency to financial shocks and enable users to pursue opportunities over time.

This paper will cover how we leverage human-centered design and a strong focus on behavior to create more desirable products, how we evaluate institutional capacity to ensure feasibility, and how we get the business model and KPIs right to ensure the product is viable and justifiable for the business for the long term—even during economic shocks. For customers, this approach translates to more intuitive financial products and services that are aligned with their behaviors and help build their financial health. For financial service providers, this approach leads to innovative products that are sustainable, use internal resources efficiently, and achieve business goals.

<em>Using this approach in Chile, we developed a business management application with </em><a href="https://www.accion.org/this-new-app-is-helping-small-business-owners-build-financial-health-and-resilience" target="_blank" rel="noopener noreferrer"><em>Organizame and Banigualdad</em></a><em>, a financial health portal with </em><a href="https://www.accion.org/fintech-founders-have-a-formula-for-building-financial-health" target="_blank" rel="noopener noreferrer"><em>Destácame</em></a><em>, and a crowd-funding platform for microentrepreneurs with </em><a href="https://redcapital.cl/" target="_blank" rel="noopener noreferrer"><em>RedCapital</em></a><em>. In Mexico, we developed a savings product for youth with </em><a href="https://www.accion.org/young-people-in-mexico-need-finance-that-fits-their-lives" target="_blank" rel="noopener noreferrer"><em>Caja Popular Cerano</em></a><em>, and a supply chain finance product with </em><a href="https://www.ahorrosbienestar.com/" target="_blank" rel="noopener noreferrer"><em>Caja Bienestar</em></a><em>. </em>
<h2>Desirability — are we solving customer problems?</h2>
To combat the persistent issue of dormant accounts, financial service providers must design <strong><em>desirable</em></strong> products that people will want to use, that are intuitive, and that will generate value. Desirable products solve customer problems, and to identify the right problem, institutions need to go to the customer. HCD methodologies stress talking to and observing potential customers to gain perspective and empathy for their lives. We’ve found it just as important to analyze how customers make decisions — both consciously and subconsciously — and how they behave, using qualitative and quantitative data.
<h2>How can we ensure products are desirable?</h2>
<h3>Conduct client-centric user research that seeks to understand customer behavior</h3>
We begin every design process by conducting user research to understand what customers want and <em>why</em> they act the way they do. Interviewers are trained to take note of physical and emotional reactions, feelings, and expressions as well as customer surroundings, observing their daily lives and understanding their broader context.

While social distancing measures make in-person interviews difficult, we found that this can also be done remotely.  In Mexico, the team conducted remote video interviews with youth customers, and found that they were still able to capture non-verbal cues and build trust. Questions explore underlying attitudes that inform client decision-making. We listen closely to understand when participant behavior may have been affected by emotion, stress, or biases. This process helps us to ensure that we are building products that accommodate client realities, will align with how customers actually behave, and will make their lives easier.

To succeed, innovative financial products must be desirable, feasible, and viable

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.

Chandra Kanthayadav was first inspired to open her business during the Festival of Rakhi one year in her hometown of Raipur, India. The popular Hindu festival is a celebration of the love between siblings and close friends, symbolized by people tying special woven bracelets called rakhis on their loved ones’ wrists. She saw how other shops in her community had great success during the festival, so she decided to open her own stall to sell rakhis and other items. Chandra quickly sold out of her inventory during that first festival and in the next festival after that.

Recognizing an opportunity to build a permanent business, Chandra opened a storefront adjacent to her family home and began searching for a way to stock her store with everyday household goods and seasonal items. At first, she borrowed from her family, friends, and other informal sources to pay for her inventory, but the higher interest rates and inconsistent availability of these informal loans prevented her from reaching her goals. Chandra found a better solution when she learned she could get funding through a more formal channel.
<h2>The power of financial services for women in India</h2>
Microcredit, small loans for low-income entrepreneurs, gives women in rural India access to the financing needed to strengthen their businesses and earn their own income. Chandra first took a group loan from Sub-K with women in her community that she’s known for over 17 years. Sub-K, a partner of Accion, is a financial provider focused on reaching underserved populations in India, especially focusing on women entrepreneurs in rural areas. Chandra has continued to work with Sub-K to purchase her inventory, eventually quadrupling her store inventory (stock) value from 5,000 rupees to 20,000 rupees. Next, she plans to expand her store to make room for increased inventory.

Sub-K celebrated their 10th anniversary in August this year. Over the past decade, they’ve helped millions of women like Chandra realize their entrepreneurial dreams, in turn instilling confidence, expanding financial literacy and stability, and improving household conditions for women and their families. As Chandra’s business continues to grow, she feels more respected in her community, and her success helps her provide for her children’s education. To reach more underserved micro, small, and medium enterprises (MSMEs) and individuals, Sub-K has launched a new digital financial tool called SARTHI.
<h2>Advancing financial inclusion through technology</h2>
[caption id="attachment_22266" align="alignright" width="146"]<img class="size-medium wp-image-22266" src="https://content.accion.org/wp-content/uploads/2020/09/Sub-K-SARTHI-platform-146x300.png" alt="" width="146" height="300" /> <em>Sub-K’s fintech platform called SARTHI, which stands for Seamless Advanced Resourceful Tech-driven Hybrid Interface.</em>[/caption]

Sub-K uses an extensive agent network to <a href="/finding-a-new-way-to-reach-the-last-mile-in-india" target="_blank" rel="noopener noreferrer">reach micro, small, and medium entrepreneurs in rural areas</a> who lack access to traditional banks. The company recently launched their new SARTHI fintech platform to complement this model and provide entrepreneurs with the tools they need to manage and grow their businesses. SARTHI will offer products like MSME credit, digital microloans, and health insurance that customers can access on their own mobile devices or with assistance from Sub-K’s staff and agents. SARTHI is integrated with multiple banks and third-party partners to provide customers with a wide variety of products and payment choices and quick application processing.

“This platform marks a major milestone in our digital transformation journey. We genuinely believe that the future is digital, and we are committed to bring a large segment of the excluded population into the mainstream by effectively leveraging the power of fintech,” says Sasidhar N. Thumuluri, Sub-K managing director and CEO. SARTHI was developed with advisory services provided by Accion through a <a href="/mastercard-and-accions-partnership-to-unlock-millions-of-underserved-microbusinesses" target="_blank" rel="noopener noreferrer">global partnership between Accion and Mastercard</a>.

Small businesses like Chandra’s are the backbone of the Indian economy, and they need financial services to weather challenging times and succeed in the future. We are proud to support Sub-K in their efforts as they move to the next chapter of advancing financial inclusion. Victoria White, the managing director of Accion’s Global Advisory Solutions, says, “Sub-K’s proven commitment to reaching last-mile customers, their expansive reach through their agent network and bank partnerships, and their demonstrated embrace of digital technologies made them an ideal partner for our efforts with Mastercard to help microbusinesses benefit in a digital economy. The launch of this platform is an important milestone in that effort.” By investing in digital tools that help microentrepreneurs build better businesses and better lives, we can bridge the financial services gap in rural India and bring financial inclusion to more people.

Banking goes digital to reach rural entrepreneurs

The pandemic has spurred a global economic downturn and widespread uncertainty about the future. The <a href="https://www.accion.org/four-ways-we-can-empower-financially-underserved-people-and-businesses">3</a> <a href="https://www.accion.org/four-ways-we-can-empower-financially-underserved-people-and-businesses">billion</a><a href="https://www.accion.org/four-ways-we-can-empower-financially-underserved-people-and-businesses" target="_blank" rel="noopener noreferrer"> peopl</a><a href="https://www.accion.org/four-ways-we-can-empower-financially-underserved-people-and-businesses">e</a> who are still left out or poorly served by the global financial system are uniquely vulnerable to the effects of COVID-19. They typically rely on daily, in-person interactions to get paid or buy food for their families and the unexpected loss of income for many families has made financial services and a focus on financial health more important than ever.

Financial health assesses whether people are spending, saving, borrowing, and planning in a way that will enable them to be resilient and pursue opportunities over time, as stated by <a href="https://finhealthnetwork.org/research/eight-ways-to-measure-financial-health/" target="_blank" rel="noopener noreferrer">The Financial Health Network</a><u>.</u>

A person’s financial health is determined by their:
<ol>
 	<li>ability to manage day-to-day expenses,</li>
 	<li>resilience against shocks and risks, and</li>
 	<li>effective planning for the future and upward mobility.</li>
</ol>
As economies fluctuate, individuals are turning to financial institutions for added support and security in their lives. Having financial services can enable people to better manage their finances as they navigate the current crisis, save money for a brighter future, protect their families from future shocks, and rebuild their businesses—promoting resilience in the face of crisis.

However, according to a <a href="https://news.gallup.com/reports/233399/gallup-global-financial-health-study-2018.aspx" target="_blank" rel="noopener noreferrer">Gallup Global Financial Health</a> study, access to traditional financial products does not automatically result in improved financial stability, resilience, and access to opportunity. Many traditional financial products were not developed with these pragmatic goals in mind. As a result, they are often poorly suited to helping people, especially low-income individuals, achieve their financial goals. To serve customers as they seek to recover from the economic fallout caused by COVID-19, financial service providers have an opportunity to better utilize customer data, behavioral science, and design thinking to create products and services that support households through shocks, that build resilience and enable them to better manage their financial lives. Well-designed products relevant to customers’ lives can lead to feelings of stability, peace of mind, and hope.

To do this, financial service providers should expand their financial inclusion strategy to focus on financial health. This goes beyond traditional access to services, in order to support people’s lived experiences and aspirations. These lived experiences are influenced by several aspects, including but not limited to age, sex, gender, occupation, marital status, dependents, household responsibilities, financial standing, physical and mental health, and emotional characteristics. Financial health is a perpetual journey — not just a snapshot in time. By developing personalized financial products, services, and experiences that better meet users’ needs and preferences, providers can ultimately create more meaningful change in people’s lives.

Financial products and services that truly work for users and fit their lives will ultimately drive more (and better) business for financial service providers. A business strategy oriented around consumer financial health offers <a href="https://finhealthnetwork.org/research/building-your-business-case-for-financial-health-providing-guidance-and-support-to-increase-customer-well-being/" target="_blank" rel="noopener noreferrer">providers an avenue for growth, organizational resilience, and profitability</a>. In addition, it will offer financial service providers better opportunities to differentiate from the competition, especially today, when users are more and more sophisticated and demanding better interfaces that enable faster ways to interact with their financial reality.

The World Economic Forum <a href="http://www3.weforum.org/docs/WEF_White_Paper_Advancing_Financial_Inclusion_Metrics.pdf" target="_blank" rel="noopener noreferrer">noted</a> that “[b]y aligning the success of their business with the success of their customers, financial providers have seen that the future of financial services is one in which the industry will thrive when their customers prosper.”
<h3>Designing services for the people who need them</h3>
To ensure that financial services deliver greater benefits to customers and that our aspirations for achieving financial health are attainable, Accion’s Global Advisory Solutions is advocating for a new approach to product design that combines <strong>data science, behavioral science, and design thinking</strong>. Together these three disciplines put the customer, rather than the product or the service provider, at the center of product or service design. These methods give providers better visibility into household cash flow fluctuations and customer pain points to design products, services, or experiences that are more useful, convenient, and beneficial. These methods can also help providers reach new market segments, retain customers, and improve customer lifetime value across their business.

Despite increasing access to financial services, <a href="https://www.findevgateway.org/blog/2018/may/new-global-findex-what-you-need-know" target="_blank" rel="noopener noreferrer">use of formal financial products continues to lag</a>, particularly in emerging markets. There are many reasons for this lack of uptake. Accion investigated this lag through hundreds of customer interviews globally in the last few years. The interviews revealed that customers do not find the few formal services available to them valuable or trustworthy, and that they are difficult to understand and cumbersome to use. What people really want is to pay tuition, expand or repair their homes, and to be prepared in case of weather or health emergencies. For this, many rely on informal services, like rotating credit groups and store credit, which are embedded in their communities, and are convenient, flexible, and available when and where people need them.

Data, behavioral science, and design thinking can serve as a starting point for financial service providers as they build greater trust with their customers and incorporate a financial health approach, while articulating the business reasons for doing so.

Placing financial health at the heart of financial institutions to create business and customer value

Access to financial products alone does not automatically equip people to improve their finances, build resilience, and seize opportunities. A <a href="https://news.gallup.com/reports/233399/gallup-global-financial-health-study-2018.aspx" target="_blank" rel="noopener noreferrer">Gallup Global Financial Health study</a> found that having a bank account does not guarantee a sense of financial control or security in emerging markets. In the U.S., where financial access is widespread, <a href="https://www.federalreserve.gov/2015-report-economic-well-being-us-households-201605.pdf" target="_blank" rel="noopener noreferrer">nearly half of Americans do</a><a href="https://www.federalreserve.gov/2015-report-economic-well-being-us-households-201605.pdf"> not</a><a href="https://www.federalreserve.gov/2015-report-economic-well-being-us-households-201605.pdf"> have $400 in savings</a> and <a href="https://s3.amazonaws.com/cfsi-innovation-files/wp-content/uploads/2017/01/24183123/Understanding-and-Improving-Consumer-Financial-Health-in-America.pdf" target="_blank" rel="noopener noreferrer">almost half have trouble paying bills every month</a>.

That’s why organizations are focusing on the concept of financial health as a means to develop financial ecosystems that go beyond just access and usage of products and ultimately create meaningful change in people’s lives. Financial health assesses whether people are spending, saving, borrowing, and planning in a way that will enable them to be resilient and pursue opportunities over time, as stated by <a href="https://finhealthnetwork.org/research/eight-ways-to-measure-financial-health/" target="_blank" rel="noopener noreferrer">The Financial Health Network</a>.

During the COVID-19 pandemic, it is more critical than ever to find innovative ways to support those disproportionately affected by an economic downfall outside of their control. A more holistic understanding of financial health will help financial service providers to support and maintain their client base, even in times of uncertainty.
<blockquote>People want to pay tuition, maintain their homes, and be able to weather health emergencies.</blockquote>
As consumer protection bureaus and financial authorities focus on systemic change, they’ve dedicated less attention to developing products that improve financial health, especially in emerging markets. People want to pay tuition, maintain their homes, and be able to weather health emergencies. They need financial products that help them achieve these goals and empower them to make good decisions through both economic upturns and hardships.

Unfortunately, many traditional financial products were not developed with these pragmatic goals in mind. As a result, they are often poorly suited to helping people, especially low-income individuals, achieve their financial goals. It is not always obvious how providers can design more appropriate products, but we recommend that they analyze available data, draw on behavioral insights, and employ design thinking to uncover ways forward.
<h2>Expanding the concept of financial health</h2>
Despite the number of financial institutions that view financial health as core to their mission, many financial health strategies have not thoroughly considered customers’ needs, aspirations, or behaviors in their product innovation. In fact, financial health efforts have primarily focused on what can be tracked and measured, like maximizing profitability or savings balances rather than strategies that allow customers to meet their personal financial goals.

The financial lives of low-income people do not follow the linear pathway of “earn, save, invest, grow, and repay” implied by traditional financial products. Instead, their lives are more turbulent, and the categories may be far more blurred. For example, a typical microfinance customer may accept payment in the form of construction materials like bricks or cement. These materials function as both savings and investment. They are illiquid so cannot easily be spent like savings can, but they may be liquidated at reduced prices at times of emergencies. These materials can also be considered the first step towards future physical improvements, however, they are also likely to deteriorate with exposure to weather and are subject to value fluctuations, so they’re not as secure as traditional savings. Today’s financial products do not reflect the unique ways in which low-income individuals manage their assets and liquidity.

Moreover, current products do not accurately reflect the diversity of low-income individuals’ needs. A young student who depends on cash injections from his family to make ends meet will use a microfinance loan very differently than an established entrepreneur who is trying to expand her business. Most providers currently offer both customers a fundamentally identical credit product without considering their different needs.
<h2>Approaches to adapting financial products</h2>
Financial health strategies must encourage innovation to create financial products that improve customers’ lives — in health, education, and overall well-being. They should also consider emotional dimensions — such as feelings of stability, peace of mind, and hope — as these are closely intertwined with our perception of our own financial health. The sector needs to reimagine traditional financial products, rethink our approach, and start designing more appropriate products. Fortunately, the growth of digital finance and advances in human-centered design have given us data, methods, and theories that can power analysis of users’ needs to improve the products we offer. New innovative approaches will also allow financial institutions to introduce new business models and serve customers in a way that adds value not only to the individual but to the institution itself.

To ensure that financial services deliver greater benefits and that our aspirations for achieving financial health come into reach, Accion’s Global Advisory Solutions team is advocating for a <a href="/placing-financial-health-at-the-heart-of-financial-institutions-to-create-business-and-customer-value">new approach to product development that combines design thinking, behavioral science, and data science</a>. Together these three disciplines put the customer at the center of product design. These approaches apply insights from psychology, economics, statistics, and data science to design products that are better connected to customers’ behaviors, ambitions, and aspirations — empowering them to achieve their goals. The key to this approach is to grounding good design within the business and operational reality of the financial service provider so that the product is sustainable over the long-term.

To learn more about these strategies for product development, read our latest brief developed in partnership with Mastercard Center for Inclusive Growth: “<a href="/placing-financial-health-at-the-heart-of-financial-institutions-to-create-business-and-customer-value">Placing financial health at the heart of financial institutions to create business and customer value.</a>”

Products that truly work for users will ultimately drive more and better business for financial service providers. A business strategy oriented around consumer financial health offers providers an avenue for <a href="https://finhealthnetwork.org/research/building-your-business-case-for-financial-health-providing-guidance-and-support-to-increase-customer-well-being/" target="_blank" rel="noopener noreferrer">growth, organizational resilience, and profitability</a>.

The ultimate goal of financial inclusion should be ensuring everyone has access to financial tools that improve their lives. By making financial health the central principle of product design, we can make this goal attainable and better serve a greater number of individuals.

The crucial but overlooked factor for financial health? Humans.

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.

[embed]https://vimeo.com/452316055[/embed]

Why are we celebrating failure? Innovation can’t happen without it — and we should understand how failure leads to greater insights and future success. In this webinar, Accion leads an open and honest discussion on the potential pitfalls and roadblocks to successfully applying data analytics to better serve underserved populations globally. During this session, leaders of Accion Microfinance Bank Nigeria and CÍVICO – all undertaking digital transformation efforts through Accion’s global partnership with Mastercard – discuss how their data failures shaped their path to success in digital transformation.

Data is a critical part of financial service providers’ digital transformation efforts. Success stories of providers using alternative data and artificial intelligence to better serve their customer are all around us, but what failures or challenges led to these successes?

Learning through failures: Data challenges during digital transformation

In this time of uncertainty, it is more critical than ever to support small businesses and microentrepreneurs as they strive to exist within this new, socially distanced reality. In Chile, where COVID-19 infections have <a href="https://www.npr.org/sections/goatsandsoda/2020/07/02/885207834/covid-19-exploits-cracks-in-chilean-society" target="_blank" rel="noopener noreferrer">recently soared</a>, nearly <a href="https://oecdecoscope.blog/2020/06/29/reaching-out-to-informal-workers-in-latin-america-lessons-from-covid-19/" target="_blank" rel="noopener noreferrer">30 percent of the population works in the informal sector</a>, with no access to social protection and little savings to draw from if their businesses are closed. These challenges underscore the importance of financial health.

In <a href="https://www.accion.org/accion-and-metlife-foundation-announce-expanded-partnership-to-advance-financial-inclusion" target="_blank" rel="noopener noreferrer">partnership with Metlife Foundation,</a> Accion has supported the fintech <a href="https://redcapital.cl/" target="_blank" rel="noopener noreferrer">RedCapital</a> to develop financial health resources for microentrepreneurs over the last two years. Founded in 2014, RedCapital is the first crowdfunding platform with a sole focus on small and medium enterprises (SMEs) in Chile. On this platform, individual investors lend money to SMEs. Accion's support has enabled RedCapital to offer services through their platform to benefit microenterprises too. Serving this new segment meant that RedCapital needed to revisit their end-to-end customer experience — product, processes, credit scoring, etc.

More than 40 percent of RedCapital's client base within the microentrepreneur segment is under 35, with businesses that have been in operation for only a few years. As these young business owners strive to create stability, their financial health is critical. In interviews with Red Capital customers, we learned that many microentrepreneurs are unsure about their monthly revenues. Many told us that they know how much they make in income but do not keep an accurate record of their costs. They said that they would like to have more control over their finances, but they need help.

<img class="wp-image-22090 aligncenter" src="https://content.accion.org/wp-content/uploads/2020/08/redcapital.png" alt="" width="750" height="363" />

Manuela Iribarren, an entrepreneur and client of RedCapital, has faced many challenges in managing her pickle business, <a href="https://bymaria.cl/" target="_blank" rel="noopener noreferrer"><em>By Maria</em></a>, which opened in 2012. When she and her brother had the idea to start a pickle company, she had never made a spreadsheet, let alone run her own company. Learning business and financial management skills helped her organize her business's finances for both busy and slow seasons.

We carefully adapted RedCapital's platform from the original to meet microentrepreneurs' needs and goals. To ensure that these microbusinesses were able to maximize their use of both the platform and any credit products they might take up, RedCapital sought to build their customers' financial capabilities in four distinct areas: (1) help them to organize their finances, (2) control costs, (3) plan for their future, and (4) manage debt.

For each of these four categories, the Accion and RedCapital team developed relevant, actionable, and easy-to-digest advice for busy microentrepreneurs, structured as a series of blogs. The blogs were published weekly on the RedCapital website as part of a comprehensive customer engagement campaign. In a blog titled "Managing your Debt," clients learn to calculate how much of their earnings they should save to pay off their debt. They also learn to identify whether they can reasonably manage to take on credit based on their income level.

[caption id="attachment_22085" align="aligncenter" width="750"]<img class="wp-image-22085" src="https://content.accion.org/wp-content/uploads/2020/08/redcapital2.png" alt="" width="750" height="714" /> <em>Blogs accessible to RedCapital customers: "Manage your Debt," "Plan Your Future," "Control your Costs," "Organize your Finances" (top left to bottom right)</em>[/caption]

To ensure that microentrepreneurs take action after reading the blogs, each post contains a gamified, simple activity that demonstrates the financial capability explained in the post. These <em>calls to action</em> use <a href="https://www.ideas42.org/dfsplaybook/" target="_blank" rel="noopener noreferrer">behavioral design principles</a> to encourage customers to engage with the concepts and, over time, build their financial health. For example, in one of the activities, users are asked to develop a concrete plan for managing their current debt. As they complete these activities, users unlock membership benefits, such as higher loan amounts. To assess the impact of the blogs and corresponding exercises, the team used various indicators to measure the perception of financial well-being for those who engaged with the content, compared to a control group. Data gathered through this study showed that RedCapital clients who completed the calls to action said that they felt better able to manage their businesses and debt.

[caption id="attachment_22086" align="aligncenter" width="750"]<img class="wp-image-22086" src="https://content.accion.org/wp-content/uploads/2020/08/redcapital3.png" alt="" width="750" height="231" /> <em>Calls to action available in the "Manage your Debt" blog: Calculate the percentage of Debt, Credit Financing, Credit Rules (from left to right)</em>[/caption]

RedCapital piloted this newly designed lending product for microentrepreneurs in October 2019. To date, 715 microentrepreneurs have registered their business on RedCapital's redesigned portal. This product's initial results signify an interest in personalized digital financial resources that let microentrepreneurs learn about financial health and access appropriate credit, which can help them weather crises and plan better for the future.

For RedCapital, it's all in the name. <em>Red</em> means <em>network</em> in Spanish, thus signaling that when individuals choose to engage with RedCapital, they become more than a client, but a member of a network. In reaction to this campaign, one client shared, "Everything that is education and help is welcome — it helps me not to make the financial mistakes that I [have made in the past]." As Accion continues to support RedCapital in the rollout of this adapted platform, we will also be further assisting the microentrepreneur community, as they navigate challenges imposed during these uncertain times.

This product is a part of our <a href="https://www.accion.org/accion-and-metlife-foundation-announce-expanded-partnership-to-advance-financial-inclusion" target="_blank" rel="noopener noreferrer">Building Financial Capabilities and Strengthening Institutions through Customer-Centered Innovations project</a>, supported by MetLife Foundation.

<em>Megan Skaggs also contributed to this article.</em>

How we built a network for microentrepreneurs in Chile

Daw Amar Myint owns a small restaurant serving up traditional Myanmar cuisine in the Mingaladon Township of Yangon. When the pandemic hit, she was forced to close her doors. Without customers coming in, she couldn't provide for her family, including her son, who lost his job because of the pandemic. Before the pandemic hit, Daw Amar's restaurant was always busiest at lunchtime, so she decided to keep her kitchen open and start delivering lunch boxes to her customers who couldn't come eat at the restaurant in person. She turned to social media to market her new delivery service and began selling on Facebook. As her online sales picked up, her income has rebounded — she was even able to give a job to her son. She’s now receiving monthly pre-orders, allowing her to estimate her future income and minimize waste when she orders ingredients.
<h2>Providing small businesses with financial support during the pandemic</h2>
Microentrepreneurs like Daw Amar can build stronger businesses, better manage their expenses, and earn reliable incomes to care for their families when they can access financial services like group and individual loans. Accion portfolio company <a href="https://www.dawn.com.mm/" target="_blank" rel="noopener noreferrer">DAWN Microfinance</a> provides these services for low-income microbusinesses in Myanmar, and now they are helping these businesses make it through the pandemic and its economic effects. The dramatic spread of COVID-19 has disrupted lives, livelihoods, communities, and businesses in Myanmar. In response, DAWN quickly mobilized a COVID-19 response team to limit the disruption to clients’ businesses and to adapt their own business.

Micro and small business owners already face many struggles in Myanmar — <a href="https://www.worldbank.org/en/country/myanmar/publication/poverty-report-myanmar-living-conditions-survey-2017" target="_blank" rel="noopener noreferrer">where 1 in 4 people live in poverty</a>, and most people still don't have the financial services they need to manage their daily lives and grow their businesses. These entrepreneurs are experiencing additional challenges during the pandemic, like shortages of imported raw materials, declines in sales and revenue, forced closures of brick and mortar businesses, and the inability to cover day-to-day expenses. DAWN has implemented several changes to help their clients, including:
<ol>
 	<li><strong>Providing alternative repayment options:</strong> DAWN is encouraging clients to transfer repayments digitally through collaborations with banks and mobile money agents. For clients who aren’t comfortable making digital repayments through these third parties, especially group lending clients who normally make cash payments at collection points, staff are continuing field visits while following social distancing measures. Clients also have the option to visit DAWN’s branch locations where staff is practicing social distancing. DAWN is also reimbursing the transport cost to their customers who choose to visit in-person.</li>
 	<li><strong>Offering new products to help clients adapt:</strong> DAWN created a new “Emergency Top-Up Loan” product to support clients’ businesses that have been impacted negatively by coronavirus. This loan is being disbursed in parallel with the client’s existing loan.</li>
 	<li><strong>Rescheduling repayments and providing prepaid loans:</strong> DAWN is proactively contacting customers to reassess their repayment capacity and determine rescheduling options. In some cases, customers can request a prepaid loan and deduct a certain amount from it to offset the remaining balance of their existing loan.</li>
 	<li><strong>Setting up help desks in response to COVID-19:</strong> DAWN’s customer service representatives at their head office and branches are available to help clients in any way that they can.</li>
</ol>
<h2>Meeting customers’ evolving needs</h2>
DAWN’s new efforts allow them to help the people and businesses that are struggling most right now, and to support entrepreneurs that have found new opportunities to grow their businesses and serve their communities despite the circumstances. U Kaung Htike Kyaw, a DAWN customer located in Yangon, runs a small business that produces personal care products, including a wide range of soaps and hand sanitizers. When the pandemic arrived, he expanded his offerings and began producing different types and sizes of hand sanitizers to fill a need in the market. He was able to expand his market even further by selling his products online. By adjusting his business operations to suit his customers’ new and evolving needs, he’s keeping his business running and continuing to earn an income.

[caption id="attachment_22008" align="aligncenter" width="800"]<img class="wp-image-22008" src="https://content.accion.org/wp-content/uploads/2020/08/Kaung-Htike-Kyaw_1-Swenyein-Swenyein-1.jpg" alt="" width="800" height="450" /> <em>U Kaung Htike Kyaw expanded his personal care business’s line of hand sanitizers during the pandemic.</em>[/caption]

We’ve seen how <a href="https://www.accion.org/the-future-of-finance-in-myanmar-is-digital" target="_blank" rel="noopener noreferrer">digital financial tools can open up opportunities for people in Myanmar</a>. Most adults in Myanmar have a cell phone and the vast majority of those phones are smartphones, giving a significant portion of the population access to the internet. The opportunity of digitization has never been more critical for entrepreneurs than it is now. Beyond creating new ways to access financial services, digitization allows small business owners like U Kaung to continue selling online so they can withstand this downturn. By finding ways to continue serving customers during the pandemic, DAWN is giving entrepreneurs the support they need to adapt to challenging times and build new capabilities that will help them continue to thrive in the future.

Digital tools open opportunities for struggling business owners

China’s economy has experienced tremendous growth in recent years, with a booming micro, small, and medium enterprise (MSME) market. There are over 50 million MSMEs in China that collectively account for over 60% of China’s GDP and over 50% of the government’s tax income. These businesses create 80% of total employment in China’s urban areas.

Despite China’s overall economic growth, the need to foster full financial inclusion is still imperative. In 2010, 38 million MSMEs lacked access to formal financial services, forcing them to borrow informally from friends, family, and moneylenders.

Guangwen Liu started his sportwear business with one shop and a dream to expand his business to a chain of retail stores in Inner Mongolia. By partnering with <a href="http://grassfin.com/" target="_blank" rel="noopener noreferrer">Grassland Finance Limited</a>, a financial service provider focused on micro and small businesses across China, he grew his business from eight stores to 43 in ten years. But his business success hit a major obstacle when the coronavirus outbreak escalated and lockdowns went into place, forcing his storefronts to close and cashflow to plummet. When his sales dried up, Guangwen needed to find a way to pay for his rent, staff, and loan repayments.

Without any foot traffic in his stores, Guangwen had to explore new sales and marketing channels to continue getting his products in front of consumers. With encouragement from Grassland and inspiration from the rising trend of using streaming to sell products, he quickly decided to hire an online streamer and employees began livestreaming product demonstrations from inside the stores to engage with customers remotely. Across China, livestreaming has gained huge popularity, thanks to new platforms like Taobao, TikTok, Kuaishou, and Huoshan. Guangwen’s business gradually build a firm footing on livestreaming platforms. Many businesses have joined their customers online and began using these popular livestreaming platforms to showcase their products and answer customer questions in real time. Even farmers are using livestreaming to promote and sell agriproducts in China, especially flowers and fruits, during the pandemic.
<h3>Grassland evolves to support small business clients</h3>
Many of Grassland’s small business clients have quickly adapted their businesses to solve for coronavirus-related challenges, from livestreaming products like Guangwen to opening online stores on e-commerce platforms. To help these clients succeed, Grassland itself also needed to adapt in order to support these small businesses in new ways. They began offering increased business advisory services to help their clients generate sales and rebuild their cashflow during China’s lockdown and reopening.

[caption id="attachment_21880" align="alignleft" width="355"]<img class=" wp-image-21880" src="https://content.accion.org/wp-content/uploads/2020/07/grassland2.jpg" alt="" width="355" height="514" /> <em>Limin Liu’s shops sell specialty foods and snacks in an airport in Inner Mongolia.</em>[/caption]

Grassland client Limin Liu owns several specialty food stores located at airports in Inner Mongolia. When airport traffic stopped at the beginning of the year, he was forced to close his stores and all staff stayed home for safety. With no ability to sell goods in airports without any travelers, Limin found himself with a sudden need to pursue multiple sales channels. For the first time, he is selling online. Grassland helped Limin transition to digital sales by connecting his business with local e-commerce platforms. As air travel slowly resumed in China, the Grassland team advised the business to attract customers back into stores by offering free masks with each purchase and services to assist senior travelers with filling out the new required health check forms. Store traffic improved with these new services.

While Grassland supports microentrepreneurs like Limin on an individual basis, they’re also considering the impact of the pandemic on broader client segments. Grassland conducted an analysis with the support of Accion to identify the best ways to serve their clients across different industries during this difficult time. As a result, they’ve implemented other measures to help their clients, like offering flexible loan repayment terms and restructuring, applying to waive COVID-19-induced delinquency from client’s credit record, and increasing digitalization of their products. Entrepreneurs are finding new ways to survive in our new normal, but they need support from their financial providers to succeed.

Entrepreneurs get creative to rebuild their businesses in China

<em>Cover image: As a farmer, Rose Kilonzo knows that a good harvest isn't a given. With farming advice and insurance from our partner Pula in Kenya, she has been able to optimize her crop yield.</em>

Accion 2019 Annual Report

Digital transformation — the use of digital technology to help businesses work better — has been top-of-mind for many financial service providers (FSPs) over the past several years, and now the COVID-19 pandemic has added new urgency. Many even equate digital transformation with survival in a <a href="/covid19">post COVID-19 world</a>. Despite the need to bring businesses online as soon as possible, digital transformation cannot occur overnight. It requires a holistic approach that supersedes any one product, business function, or initiative. When done well, it transforms an organization to be more insight-driven, agile, and efficient.

<strong>Data capabilities play an essential role in an organization’s digital transformation.</strong> Data can inform optimization strategies that increase efficiency and revenue. Data itself can also be monetized creating entirely new business models where data assets become products. Especially today, when FSPs must make unprecedented and rapid decisions, adjust business strategies, segment customers to understand portfolio risks, rethink credit models, and enable remote engagement with customers and staff. Unfortunately, the <a href="/are-you-unleashing-the-full-potential-of-your-data">data foundations</a> of financial providers are rarely robust enough to enable them to quickly adopt a digital business model.

To support FSPs as they work to build their data capabilities, Accion has developed a <a href="https://dtsurveydev.accion.org/data-maturity" target="_blank" rel="noopener noreferrer">Data Maturity Framework</a> to provide a clear and consistent tool for organizations to assess their current maturity, set benchmarks, and plan a roadmap of strategic data initiatives that support digital transformation and priority business goals. The Data Maturity Diagnostic was designed to supplement the Digital Transformation Framework by evaluating the data capabilities required to advance to each Digital Transformation Maturity Stage. The Data Maturity Diagnostic can also be used as a standalone tool to assess the data capabilities needed to achieve other goals, such as:
<ol>
 	<li>Determining the status of the organization along the data maturity continuum. By looking at the status of specific parts of your business, you can identify areas for improvement and assess where most progress has already been made.</li>
 	<li>Setting your data strategy — a plan for how you will use data to achieve your priority business objectives — and defining specific maturity targets for each area. These targets will be relevant to your market, customers, budget, and organization capabilities.</li>
 	<li>Benchmarking against peers. Comparing the state of your data capabilities to your peers can be valuable for your investors and donors.</li>
 	<li>Defining and prioritizing your organization’s many strategic data initiatives.</li>
 	<li>Articulating to your staff how strategic data initiatives support your digital transformation vision, provide context, and measure progress.</li>
</ol>
[caption id="attachment_21325" align="alignnone" width="704"]<img class="wp-image-21325 " src="https://content.accion.org/wp-content/uploads/2020/06/data-maturity-diagnostic-results-1024x576.jpg" alt="Accion's Data Maturity Diagnostic " width="704" height="396" /> <em>Data Maturity Diagnostic results help financial service providers assess their data capabilities and identify areas of improvement.</em>[/caption]

Any digital customer experience requires quality, curated data that is readily consumable as close to real-time as possible. For example, let’s consider a digital marketplace lender. In order to acquire, underwrite, disburse, and service loans remotely, multiple systems need to integrate and work together to provide a seamless customer experience — both on the front-end for customers to get what they need, and on the back-end for staff to do their jobs. This requires capacity and integration across the entire data value chain: from identifying the right strategy, to giving the right people access to the data they need in an easy-to-use format, to developing and operationalizing models and algorithms that solve priority business problems, all while adhering to the highest standards of responsible data governance.

At Accion, we’re using our Data Maturity Framework in all these ways and more to understand, map, and accelerate the building of digital capabilities so we can enable the transformation journeys of <a href="/helping-small-businesses-and-communities-thrive-with-digital-financial-services">our partner FSPs</a> and their customers. To be truly customer-centric, assist their customers in their recovery, and <a href="https://www.accion.org/data-is-crucial-for-driving-inclusive-growth">drive inclusive growth</a>, institutions must become data-centric first. Learn more about our <a href="https://dtsurveydev.accion.org/data-maturity">Digital Maturity Framework here</a>.

You can’t go digital without the right data strategy

As the economic effects of the coronavirus pandemic hit cities and towns around the world, small business owners face major challenges, on both the supply and demand side, to keep their businesses running. These entrepreneurs are often risking their savings, and sometimes their health, to generate income to survive, and they need urgent support to keep going. Beyond providing essential goods and services in their communities, these businesses account for nearly half of the world’s jobs. If they collapse, global economies won’t be able to recover.

Financial service providers (FSPs) that serve low-income individuals and businesses need to act now to support families and communities. These providers must consider near-term challenges while positioning themselves for a very different future. Though we don’t know what the post-crisis world will look like, one thing is certain: given the speed at which the virus has spread and the depth of its devastation, a passive response from financial service providers is not an option. Once the immediate crisis has passed, the future viability of these institutions will depend on how quickly they can <a href="https://www.accion.org/how-three-financial-service-leaders-are-adapting-to-covid-19" target="_blank" rel="noopener noreferrer">adapt to new circumstances</a> and gain momentum that will drive efficiency and growth.

Accion Global Advisory Solutions is focused on building the resilience of financial service providers and their ability to support their clients who need their help to weather this crisis. Innovations in fintech and digital transformation will help financial service providers continue to offer needed services to their clients and remain viable themselves during these extraordinary times. We are working with our partners around the world to <a href="https://www.accion.org/responding-to-the-pandemic-guidance-for-financial-service-providers" target="_blank" rel="noopener noreferrer">help them navigate the crisis</a> so they can help their clients rebuild and relaunch their businesses.

[caption id="attachment_21265" align="aligncenter" width="800"]<img class="wp-image-21265" src="https://content.accion.org/wp-content/uploads/2020/05/chart.png" alt="Accion services to support MSMEs" width="800" height="352" /> <em>Accion Global Advisory Solutions services to support MSMEs recovery from the COVID-19 crisis </em>[/caption]

To fuel the recovery for low-income individuals and micro, small, and medium enterprises (MSMEs), we are working with our partners to:
<ol>
 	<li><strong>Conduct data-driven client impact analysis:</strong> Quarantine measures have impacted businesses and industries in different ways. Retailers selling essential items like food and toiletries have remained open, whereas hairdressers, apparel stores, and restaurants, have been forced to close and suffer losses. Because the pandemic has impacted sectors differently, it is important to be sensitive and responsive to the unique needs of clients. <a href="https://www.accion.org/data-management-and-analytics-capabilities" target="_blank" rel="noopener noreferrer">Data-driven client impact analysis</a> helps FSPs respond to clients in a targeted manner — delivering relevant education, marketing messages, and innovative disbursal and collections strategies. Additionally, this analysis allows FSPs to understand how their portfolio will be impacted based on which segments of the economy they serve.</li>
 	<li><strong>Develop a collections and delinquency management plan:</strong> Because of their reduced income, many clients are struggling to make repayments. It is critical to develop a customer-centric collections strategy and delinquency management plan. Evidence from past crises shows that the majority of clients want to repay loans to trusted FSPs and maintain a good relationship for future financial needs. Collections management should be clearly defined and follow client protection principles.</li>
 	<li><strong>(Re)launch digital channels with vigor:</strong> In an environment of mandated social distancing and lockdowns, <a href="https://www.accion.org/aye-finance-tackles-msme-credit-gap-in-india" target="_blank" rel="noopener noreferrer">digital and alternative channels</a> — mobile, card, ATM, internet banking, and agent networks — have become even more important as they ensure that clients can still complete transactions. FSPs need their digital channels to be stable and robust enough to handle more transactions as clients turn to digital channels to repay loans and seek other financial services. Many of these clients will need guidance and training to build comfort and trust in digital channels, especially those that are first-time users.</li>
 	<li><strong>Build a client engagement plan:</strong> Financial service providers should be a trusted partner to their clients. To provide immediate support, FSPs should relay important health and safety guidelines from local health authorities and share updates about their own response in a friendly and understandable way. They should also communicate information regarding loan moratoria and adjusted repayment schedules clearly and through a variety of channels. Providers can offer <a href="https://www.accion.org/margarita-prepares-her-business-for-the-digital-age" target="_blank" rel="noopener noreferrer">education, mentoring, and tools</a> to help microbusinesses rebuild or, in some cases, pivot and start a new business while embedding best practices to build financial health and resilience.</li>
 	<li><strong>Assess liquidity requirements:</strong> Maintaining sufficient financial liquidity is vitally important for on-lending, operating expenses, and capital purchases. As the risk of defaults has risen, levels of portfolio-at-risk will increase. In many countries, FSPs have faced government moratoriums on client repayments, but not always been able to negotiate rescheduling their own borrowing, which exacerbates the liquidity pressures. These combined factors have triggered a more urgent need for <a href="https://www.accion.org/the-financial-engine-for-half-the-worlds-jobs-is-about-to-seize-up" target="_blank" rel="noopener noreferrer">debt liquidity from third parties</a>, many of whom are themselves facing liquidity pressures. Developing a cohesive funder strategy is critical to an FSP’s ability to manage through such shocks.</li>
 	<li><strong>Embrace digital business models:</strong> The need for digitization of FSPs, to help reduce their operating cost and to support micro and small businesses remotely, is more apparent than ever. This includes the development of data-driven, technology-enabled products, channels, underwriting, and operating processes. Through <a href="https://www.accion.org/navigating-digital-transformation-is-complicated-so-we-made-a-map" target="_blank" rel="noopener noreferrer">digital transformation</a>, FSPs can build business models that serve existing clients better and help new clients through remote onboarding.</li>
 	<li><strong>Reignite seized supply chains:</strong> <a href="https://www.accion.org/how-supply-chain-finance-can-help-microentrepreneurs-during-a-global-pandemic" target="_blank" rel="noopener noreferrer">Supply chains depend heavily on MSMEs</a>, both for production and sales. These MSMEs can constitute up to half of revenues for the largest consumer goods companies. Supply chains everywhere are being impacted by decreased demand from these businesses or suppliers’ inability to complete orders. While production will require concerted efforts of supply chain anchor firms, retail sales can be sustained through greater financing flexibility for merchants and their distributors. Supply chain finance offers a realistic and short-term means of extending funds using data and technology.</li>
 	<li><strong>Support the digital transformation of microbusinesses:</strong> Given the massive impact this crisis is already having on the economy worldwide, there is an urgent need to reimagine how MSMEs — which account for <a href="https://www.un.org/en/events/smallbusinessday/" target="_blank" rel="noopener noreferrer">90 percent of businesses</a> in emerging countries — buy, sell, and operate. As digital platforms become ever more pervasive, businesses can leverage new tools to rebuild and relaunch. One way to enable the digital transformation of small businesses is through <a href="https://www.accion.org/the-digital-transformation-of-microenterprises-a-path-forward-in-a-post-covid-19-world" target="_blank" rel="noopener noreferrer">an ecosystem approach</a>: a marketplace for business opportunities, training for entrepreneurs to plan for the future and leverage these platforms, and the financial support to fund capital needs. E-commerce marketplaces and FSPs need to collaborate to identify MSMEs that could embrace new business opportunities, share data responsibly to build pragmatic data-driven risk models, and offer financial products.</li>
</ol>
In almost every crisis in the past, underserved <a href="https://www.accion.org/how-some-small-businesses-are-thriving-during-the-covid-19-crisis-in-india" target="_blank" rel="noopener noreferrer">MSMEs have proven themselves to be resilient</a>. They are hardworking and industrious, and they have little choice but to rebuild their livelihoods and thrive. But they don't have to do it on their own. For these businesses and the communities they serve, financial inclusion is more important than ever. Financial service providers have a critical role to play in mitigating the immediate effects of the crisis on low-income individuals and small businesses and building the financial health of their clients in the long run.

Accion is helping our partners to leverage digital technologies and respond effectively to help their staff, businesses, and clients to cope with the crisis and build resilience for the future. Accion Global Advisory Solutions stands ready to advise and assist as we collectively adapt to a new normal. <a href="mailto:GLASSupport@accion.org" target="_blank" rel="noopener noreferrer">Contact us</a> to learn more about how we help financial service providers put these strategies in action.

Eight ways financial service providers can drive economic recovery

[embed]https://vimeo.com/420740705[/embed]

Micro, small, and medium sized enterprises (MSMEs) account for 90 percent of all businesses and half of the world’s jobs, according to the World Bank Group. Due to COVID-19, many of these businesses are struggling to make ends meet amid lockdowns, facing new hardships, and dealing with a lack of liquidity. There is an urgent need to reimagine how MSMEs buy, sell, and operate.

We are already seeing how businesses that can accept digital payments or respond to digital orders are proving to be more resilient. Looking ahead, MSMEs that can leverage digital tools will more easily be able to rebuild and relaunch their businesses. Going digital is not optional — it’s essential. But barriers to digitization still exist —including cost, access, and lack of familiarity. The effective digitization of MSMEs will require the collaboration of industry players to develop effective digital platforms, offer training for MSMEs to leverage these platforms, and provide financial tools and resources to help them plan for the future.

Watch this webinar for key learnings from our partners, as well as Accion’s recommendations to MSMEs during this unprecedented time.

Going digital: An essential move for MSMEs in a post COVID-19 world

The pandemic has taken a devastating toll on the world’s working poor. Typically they rely on daily cash transactions to earn money and buy food for their families. They lack a safe place to save money, or the means protect themselves from financial ruin brought by a sudden illness or natural disaster. The pandemic has spurred real fears of starvation that precede fears of sickness.

Accion’s mission is to change this reality by building a financially inclusive world. We are doing that by supporting and investing in financial service providers who are reaching underserved populations around the world.

The crisis has shone a spotlight on the importance of our work in building resilient communities. For example, Dr. David Akinpelu in Lagos, Nigeria, relied on <a href="https://www.accion.org/one-doctors-story-facing-a-health-and-economic-crisis-head-on-in-nigeria">financing from our partner Accion Microfinance Bank</a> to buy the medical equipment he needed to grow his private community hospital. The hospital is now providing care to patients with little ability to pay and educating people on preventing the spread of COVID-19.

If we do nothing, the financial engine supporting people like Dr. Akinpelu could <a href="https://www.accion.org/the-financial-engine-for-half-the-worlds-jobs-is-about-to-seize-up">seize up</a>. Meanwhile, three billion people still lack the tools they need to save, build a business, or purchase insurance to guard against emergencies. Without support for the financial service providers reaching out to these populations, existing disparities will only widen, and creating pathways out of poverty will grow more difficult.
<h2>Inclusive finance is key to recovery and resilience</h2>
The communities we serve certainly aren’t strangers to disruptive shocks, and our partners have shown a remarkable ability to meet their needs in challenging times. Following the devastating 2010 earthquake in Haiti, the poorest country in the Western Hemisphere, Accion’s partner <a href="https://www.sogebank.com/" target="_blank" rel="noopener noreferrer">Sogesol</a> helped <a href="https://www.accion.org/helping-small-businesses-farmers-resilient-haiti">more than 8,000 Haitians restore their homes and small businesses</a> through microcredit and distributed emergency grants to 2,000 of its most vulnerable clients.

In Uganda, which hosts almost <a href="https://data2.unhcr.org/en/country/uga" target="_blank" rel="noopener noreferrer">1.4 million refugees</a>, Accion partner <a href="https://www.ugafode.co.ug/" target="_blank" rel="noopener noreferrer">UGAFODE Microfinance Limited </a> launched a digital program in 2019 to serve people fleeing conflict or hardship. UGAFODE is also <a href="https://www.accion.org/its-a-group-effort-to-help-refugees-build-new-lives-in-uganda" target="_blank" rel="noopener noreferrer">the first financial institution in Uganda to open a branch inside a refugee settlement</a>.

Today, our partners are rapidly adapting to meet new needs arising from the pandemic. In India, <a href="https://www.accion.org/a-start-up-innovates-to-give-the-uninsured-a-safety-net">Toffee Insurance is introducing new products</a> to help underinsured people build financial resilience to the impact of COVID-19 and challenges that may arise in the future. <a href="https://toffeeinsurance.com/">Toffee</a> has successfully reached India’s uninsured by offering specific, simple policies covering risks that are most relevant to consumers, like dengue, malaria, bicycle damage, and theft.
<h2>What Accion is doing now</h2>
Accion’s work to build inclusive, resilient communities through access to quality financial services, including credit, savings, and insurance, is more critical than ever.

The global nature of the pandemic looms larger than any local crisis—emergencies can lead to financial ruin for low-income and underserved populations, while <a href="https://www.accion.org/the-financial-engine-for-half-the-worlds-jobs-is-about-to-seize-up">small businesses are especially vulnerable</a> to disruptions and shifts in supply and demand. The crisis also raises <a href="https://www.centerforfinancialinclusion.org/building-resilience-how-to-ensure-women-are-not-left-behind-as-a-result-of-covid-19" target="_blank" rel="noopener noreferrer">unique challenges for female entrepreneurs</a> and threatens to reverse gains made in including women in the global economy.

Accion has acted quickly to support our partners and the vulnerable communities they serve.

We’re assisting inclusive financial providers through advisory engagement and helping leaders around the world share lessons gained from evolving challenges. We’re aggregating <a href="https://www.accion.org/covid19">resources</a> and <a href="https://www.accion.org/five-crucial-insights-from-china-for-facing-the-pandemic">sharing insights</a> from China that can help partners in other countries prepare for the months ahead. And we are actively exploring how to connect our partners with emergency funding and are coordinating with them to work on both short- and long-term challenges related to COVID-19. We know there is much more to be done.
<h2>We need your support</h2>
In this unprecedented time, donors will play a more important role in sustaining Accion and our partners. Accion relies on philanthropic support to fuel everything that we do. Philanthropy from institutions and individuals allows us to be pioneering and create demonstration models that encourage further action. Because we’re a nonprofit, we can take risks that for-profit entities can’t, and cultivate new products, markets, and policies that benefit underserved people.

Donors are already stepping up in response to this crisis. Over 700 philanthropic organizations have signed <a href="https://www.fordfoundation.org/the-latest/news/top-foundations-pledge-flexible-funding-to-grantees-in-wake-of-covid-19-crisis/" target="_blank" rel="noopener noreferrer">a pledge</a> to commit more flexible funding in response to COVID-19. And just last week, our partner Mastercard announced <a href="https://mastercardcontentexchange.com/newsroom/press-releases/2020/april/mastercard-builds-on-covid-19-response-with-commitment-to-connect-1-billion-people-50-million-small-businesses-25-million-women-entrepreneurs-to-the-digital-economy-by-2025/" target="_blank" rel="noopener noreferrer">a pledge</a> to bring a total of 1 billion people and 50 million micro and small businesses into the digital economy by 2025, with a focus on women entrepreneurs.

We are grateful for our partners who have already shown support through additional funding commitments and offering increased flexibility for existing grants. This will enable us to work shoulder-to-shoulder with our financial service provider partners to make sure they can continue serving their customers – not only during the immediate response to the pandemic, but over the entire course of recovery. We must act quickly to secure even more funding and make sure it’s  directed toward developing countries, mobilized to reach <a href="https://www.centerforfinancialinclusion.org/can-financial-inclusion-moderate-impacts-to-coronavirus" target="_blank" rel="noopener noreferrer">those who need it most</a>.

This is a challenging moment. But together, we can give people the financial tools they need to manage through this crisis.

Your support can help continue building a financially inclusive world

As the global coronavirus pandemic threatens the livelihoods of millions around the world, our mission to give people the financial tools they need is more urgent than ever. The populations we serve are particularly vulnerable right now, without access to affordable healthcare, savings, or loans to stay solvent in a crisis. As the whole world faces this challenge, we have an opportunity to learn from each other and improve how we offer inclusive financial services to those who need them. We’re committed to sharing the knowledge we have to help our global community remain resilient.

While we aggregate and <a href="https://www.accion.org/responding-to-the-pandemic-guidance-for-financial-service-providers">share resources</a> across the globe, we’ve been working closely with two of our partners in China, <a href="http://grassfin.com/#/" target="_blank" rel="noopener noreferrer">Grassland Finance Limited</a> and <a href="https://www.cdfinance.com.cn/en/index" target="_blank" rel="noopener noreferrer">CD Finance</a>, and learning from their experience. Before the coronavirus pandemic spread across the globe, it hit China, devastating some areas and creating challenges for small businesses everywhere. After a two-month nationwide lockdown to contain the virus, businesses have reopened across China. Though China is very unique in many aspects, as other nations are facing this same contagion, we can learn from China’s experience.

We recently hosted a webinar for our partners with Ms. Hooi Koon Seah, COO of Grassland Finance Limited, and Mr. Dongwen Liu, CEO of CD Finance, and they shared their top lessons learned from navigating this crisis:
<h2>Protect the wellbeing of staff and clients</h2>
Above all else, prioritize the safety of employees and clients. By taking the virus seriously and taking immediate action, organizations can protect both their business and their clients. Institutions must comply with all official quarantine requirements and health protocols to protect employees and customers. Grassland and CD Finance adjusted their budgets as needed to increase the number of protective masks and cleaning supplies available to staff in regions that were hit harder by the virus. “Most of all, we want our staff to know that they belong and that the company holds their wellbeing as the highest priority,” said Ms. Seah.
<h2>Communication is critical</h2>
While in-person contact is restricted, maintaining a close connection with employees through other communication channels ensures that they feel secure and supported. Good communication channels should be in place for both employees and clients to stay connected while working remotely. In China, the top digital communication platforms were already widely adopted and became critical for both employees and clients to stay in touch. Our partners in China found that using these existing platforms helped them stay connected to clients. Mr. Liu notes, “It’s really important for our clients to recover their business in the coming days. What we can do is to have a close connection with them and ask what kind of support we can give to them and help them to recover their abilities gradually.”
<h2>Develop and execute emergency plans immediately</h2>
Companies need to identify possible worst-case situations and determine how they will respond. Now is the time for the financial services industry to take this crisis seriously and make every effort to support their staff and clients. The crisis moves fast, and its effects are far-reaching. By being prepared in advance and unafraid to act quickly and boldly, financial service providers can help their customers stay afloat through an unprecedented challenge.
<h2>Evaluate risk by sector and develop segment-specific response plans</h2>
Due to dramatically reduced cash flow during and after the lockdown, overdue loan payments increased greatly. Grassland learned in an impact assessment conducted with support from Accion that the crisis hit certain sectors harder than others and required a differentiated strategy for each. Depending on the sector and market, Grassland Finance prolonged the payment period, granted additional loans, or deferred loan repayments.

The agricultural sector faced unique challenges during the lockdown, which occurred during the planting season. Farmers faced challenges in securing the agricultural inputs they needed, like fertilizers. CD Finance was able to disburse $5 million USD in loans for farmers to buy fertilizers through a partnership with an agricultural inputs company.
<h2>Focus on building digital capacity</h2>
As this crisis unfolded, China had several factors working in its favor for business to continue. Digital payment and e-commerce platforms like WeChat Pay and Alipay are widely adopted, reducing the need for cash. With good infrastructure in place, including electricity, telecommunications networks, and internet access, many employees were already equipped to work remotely.

During the national lockdown, loan officers were unable to visit clients, and clients were unable to visit banks. Mobile communications and digital payment options were critical. Educating customers about digital payment platforms reduces dependence on cash. CD Finance relied on their existing digital platform to manage payments. Based on previous loan history and credit assessments, they were able to make quick determinations on whether or not to offer credit and loan extensions through this digital channel.

Every market will face unique difficulties and China has some aspects that enable it to act faster and more effectively than other countries. Yet, these insights can help as financial service providers guide their clients through this hard time. As we continue to face daunting challenges, know that there will be a time for recovery. “Although the disaster remains a serious challenge for both financial institutions and small businesses, we should stay remain optimistic. We believe that things are slowly getting better in China, and it will be in the rest of the world as well. This can be an opportunity where we show our worth and commitment to our mission,” says Ms. Seah. We know that Accion’s mission is more urgent than ever, and we will continue to share as many resources as we can to help underserved populations to endure the pandemic.

<a href="https://www.accion.org/responding-to-the-pandemic-guidance-for-financial-service-providers"><em>View</em><em> Accion's recommendations for financial service providers on protecting customers, employees, and business operations during the COVID-19 pandemic.</em></a>

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Five crucial insights from China for facing the pandemic

Accion is closely assessing how the COVID-19 pandemic is affecting the financial inclusion industry and we are continually looking at ways we can help financial service providers prepare and adapt for disruptions that will occur in the markets and communities in which they work. The virus continues to spread to all corners of the globe and the financial inclusion industry needs to act promptly.

We have developed <a href="https://content.accion.org/wp-content/uploads/2020/03/COVID-19-Briefing-1.pdf">the attached briefing note</a> to share our findings on how COVID-19 is impacting the financial inclusion industry, and to provide recommendations and guidance for senior leaders of financial service providers to protect their customers, employees, and business operations. The findings included in this document and resulting recommendations were based on interviews with our partners to understand how they are addressing this unprecedented global pandemic.

Responding to the pandemic: Guidance for financial service providers

For financial inclusion to benefit women equally, we need women leading and bringing perspective at every level. At Accion, we’re proud to have many driven women leading the charge as we work to tackle the problem of financial exclusion around the world.

We’re highlighting some of these leaders who are working to build a more inclusive world in our <a href="https://www.accion.org/series/women-of-accion">annual International Women’s Day blog series</a> on the women of Accion and our partners. You can learn about more inspiring women in <a href="https://www.accion.org/women-leaders-are-crucial-for-enabling-sustainable-development-part-one">our previous article</a> for this series.

Here are a few of the leaders we’re proud to work with:
<h3>Tharasree Amarnath, Head of Technology, Prayaan Capital</h3>
<img class="alignright wp-image-20579" src="https://content.accion.org/wp-content/uploads/2020/03/Tharasree-Amarnath-805x1024.jpeg" alt="Tharasree Amarnath" width="472" height="600" />Growing up, Tharasree Amarnath was always acutely aware of how much potential is lost when women aren't economically empowered and how much everyone can benefit when women are financially included. "Every woman either works for her family or to contribute to the financial needs of her family," she says. "I grew up in a scenario watching women who had the zeal to do more but lacked the next push towards financial independency. This trait grew within and motivated me to do something which could fulfill my commitments and as well fuel my passion to do something for those financially deprived women. This led me into fintech for inclusion."

To make sure more women are empowered to take control of their finances, Tharasree advocates for a grassroots approach to educating women about financial services and how to use technology to access services. Tharasree looks to technology as a solution because she's seen firsthand what an impact it can have. She's spent 20 years working in IT, and today she's the head of technology for Prayaan Capital, a fintech company serving India's small business owners — and one of our newest portfolio companies at Accion Venture Lab.

Women leaders are crucial for enabling sustainable development, part two

While most businesses want to use data to serve their customers better, they don't always know where and how to get started. They understand the promise of data: data-driven risk management means lower prices for the customer and better margins for the provider. Processes that produce data can increase transparency for the customer and support efficiency. Partnerships between organizations have a better chance of succeeding if they are built on a solid base of external and internal data. And data on customers can be used to inform market segmentation and design products relevant to people’s lives.

For all of these benefits, some financial service providers (FSPs) believe that it's too expensive to use data — worrying that this will require expensive IT systems and new staff. However, the business case shows that <a href="https://www.accion.org/are-you-unleashing-the-full-potential-of-your-data">FSPs cannot afford not to use data —</a> especially those that work with low-income customers.

[caption id="" align="alignnone" width="790"]<img class="" src="https://content.accion.org/wp-content/uploads/2020/02/DMAC.jpg" alt="" width="790" height="403" /> <em>Building data management and analytics capabilities can address many business problems.</em>[/caption]

The <a href="https://www.opml.co.uk/projects/deepening-financial-inclusion-in-sub-saharan-africa">Data Management and Analytics Capabilities</a> (DMAC) program aimed to address this important need head-on by building the capacity of FSPs in sub-Saharan Africa so they can use data more effectively. DMAC worked closely with seven partner institutions to enhance their capabilities to manage and analyze data, develop and innovate new business models, and <a href="https://www.accion.org/helping-families-in-zambia-cope-with-a-health-crisis">design inclusive and affordable financial products and services</a> that meet the needs of unserved and underserved adults. Through this project, the DMAC team helped fintechs, banks, and insurance providers develop new or enhanced products — including four digital microinsurance products and three savings products — that aim to reach over 1.2 million clients at scale.

To share what we learned with providers around the globe, the team developed a toolkit, <a href="https://www.accion.org/data-management-and-analytics-capabilities">Unleashing the power of data to transform your business.</a> This guide will help FSPs understand the different data sources available to them and how they can use this information to serve their clients better, improve their business, and potentially reach new markets. It will also be useful for organizations that work with FSPs and want these institutions to make more and better use of data.

The toolkit has three parts:
<ol>
 	<li><strong>The case for using data: </strong>The guide explores the business case for using data. It explains how a provider can ensure that their organization has the requirements in place to effectively use data to improve product design and service delivery. This includes a useful data readiness checklist to assess your organization’s capacity.</li>
 	<li><strong>Data-driven product design and delivery: </strong>Product development serves as a use case for how data can be integrated into one area of a business. The second section of the toolkit takes users through each step of the product development cycle, highlighting where they can use data to enhance product development. We've included resources to support this process, including a template to help FSPs set key performance indicators and tools that can be used for monitoring product performance.</li>
 	<li><strong>Data management and partnerships for better data analytics: </strong>In the final section, the toolkit explores broader data management and how data analytics can help move an organization for It also discusses the possibilities and pitfalls of working in partnership with others to move towards greater data-centricity.</li>
</ol>
The <a href="https://www.accion.org/data-management-and-analytics-capabilities">toolkit</a> includes many practical examples of how we worked with our DMAC partners, within their respective country contexts, and the lessons learned. We also included many of the easy-to-use tools we used throughout the program. As users will be at different stages in their data journey and have various needs, readers should focus on the areas where they need to build capacity or have limited understanding.

After exploring this toolkit, your organization should have the information and tools needed to understand how to use data well, and even how to make an internal case for data-driven changes. Accion’s Global Advisory Solutions knows that data has an essential role in making digital financial services more accessible and useful for people around the world. We work with providers globally to enhance their data capabilities in all aspects of their business to enable them to reach the 3 billion people that are still underserved by the financial sector. We hope this toolkit proves useful and would <a href="mailto:GLASsupport@accion.org">welcome any feedback</a> you have on the toolkit and your experience of using it.

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<em>DMAC was designed by </em><a href="https://www.fsdafrica.org/"><em>Financial Sector Deepening Africa</em></a><em> (FSDA) and the </em><a href="https://www.idrc.ca/"><em>International Development Research Centre</em></a><em> (IDRC) in partnership with </em><a href="http://www.fsdt.or.tz/"><em>FSDT</em></a><em> and </em><a href="https://www.fsdzambia.org/"><em>FSDZ</em></a> <em>and was implemented in Sierra Leone, Tanzania, and Zambia by </em><a href="https://www.opml.co.uk/"><em>Oxford Policy Management</em></a><em> (OPM), in collaboration with </em><a href="https://www.accion.org/how-we-work/advise/accion-global-advisory-solutions"><em>Accion Global Advisory Solutions</em></a><em> and </em><a href="https://www.masterdata.co.za/"><em>Master Data Management Ltd</em></a><em> (MDM). </em>

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How to use data to transform financial services