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<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

Risk and Credit Analysis

Amit Gupta

Senior Manager, Credit and Business Processes

Anyelo Ascencio

Customer Support Specialist

Archana Kejriwal

Manager, Customer Engagement

Emma Morse

Manager, Special Projects

Iain Brougham

Director, Digital Transformation

Gift Mahubo

Charlene Navarra

Abhishek Agrawal

Libby Morley

Laura Glenny

Sandra Calderon

Leonardo Tibaquira

Michael Schlein

Vishal  Ajmera

Liza Guzman

Balaji Parthasarathi

Diego  Gaviria Martinez

Kathleen Yaworsky

Amy Stewart

India

South Asia

Nigeria

Sub-Saharan Africa

Latin America and The Caribbean

Mexico

United States

Chile

Bolivia

Colombia

Guatemala

Advisory Services

Challenges and Crises

Consumer Protection

Credit

Delivery Channels

Digital Credit

Digital Financial Services

Enabling Environment

Financial Service Providers

Payments

Responsible Digital Finance

Access Usage Gap

Agricultural and Rural Finance

Customer Centricity

Entrepreneurs of MSMEs

Financial Technology

Fintechs

Impact Investing

Microfinance

MSME/SME Finance

Partnerships

Rural Populations

Underserved Groups

Women

Banks

Digital Transformation

Human Touch

Microfinance Institutions

Financial Health

Resilience

Youth

Appropriate Product Design and Delivery

Consumer Credit

Human Centered Design

Mobile Banking

Supply Chain Finance

Agent Banking

Alternative Data

Behavioral Insights

Credit/Debit Cards

Data Analytics

Financial Capability

Privacy

Crowdfunding

Financial Inclusion Strategy

Personal Financial Management

Smallholder Farmers

One of the silver linings of the COVID-19 pandemic is the key role that digital financial services have played in helping countries worldwide weather the crisis and explore new opportunities. Many expanded social protection measures and sought innovative ways to deliver financial aid, encouraging digital payments and direct money transfers into the bank accounts or mobile wallets of citizens hit hard by the pandemic. In countries with traditionally cash-based financial systems, the rising prevalence of digital technologies has supported the growing shift from in-person to online transactions for goods and services, opening access to the digital economy for more people.

While the shift to digital has benefited many, it comes at a cost. Low-income people in developing countries — who are already struggling with the health and economic impacts of the pandemic — are increasingly targeted by online fraudsters. Social engineering attacks, data breaches, and system outages inflict real harm; the consequences of losing even small amounts of money can be devastating to the poor. Even more so when the customer is liable for losses and must carry the burden of proof when a cyber incident occurs, which is the case in most of the developing world. Customers affected by successful cyber breaches lose trust in their financial institution and in the system, threatening progress on digital financial inclusion.

For financial service providers (FSPs), increasing the use of digital channels also increases the risk of exposing identity and other sensitive information that could lead to severe economic, reputational, and regulatory costs. However, many providers also recognize that digitalization remains key to long-term competitiveness and sustainability, so a balance must be struck between the need to continuously innovate with the need to focus on security. With these factors in mind, FSPs are increasingly compelled to bolster their institutional capacity for cybersecurity and build cyber resilience. Doing so is essential to protecting their businesses and vulnerable customers from the significant and often irreparable damages that can result from cybercrime, and to ensure longevity.
<h3><strong>Introducing the Cyber Resilience Toolkit </strong></h3>
To guide financial providers through the process of building cyber resilience, we have collated the learnings from our experience helping our FSP partners around the globe strengthen cybersecurity into a <a href="https://www.accion.org/building-cyber-resilience-for-digital-financial-inclusion-and-innovation/" target="_blank" rel="noopener noreferrer">practical toolkit</a>, broken down into five key recommendations:
<ol>
 	<li><strong>Build secure apps</strong> and ensure security considerations are incorporated into the digital product design and development process.</li>
 	<li><strong>Test</strong> <strong>regularly for breaches </strong>and understand the processes, capabilities, and remedial actions required.</li>
 	<li><strong>Create a culture of cybersecurity awareness rooted in strong organizational design</strong> to build and sustain a culture of cyber awareness and improve incident handling.</li>
 	<li><strong>Build a resilient technology environment </strong>with robust infrastructure to proactively protect and sustain the institution and customers before, during, and after a cyber threat.</li>
 	<li><strong>Strengthen cybersecurity with partnerships</strong> to reduce cyber risk and manage service delivery at minimal cost.</li>
</ol>
We hope this toolkit is helpful for FSPs seeking to develop or improve their cyber resilience and deepens understanding of cyber risks, how to mitigate those risks, and how to cultivate client trust and confidence in digital financial services.

<em>This toolkit was developed through </em><a href="https://www.accion.org/mastercard-and-accion-partnering-for-inclusive-growth" target="_blank" rel="noopener noreferrer"><em>our partnership with the Mastercard Center for Inclusive Growth</em></a><em> and with support from the </em><a href="https://newsroom.mastercard.com/press-releases/mastercard-announces-initial-contribution-to-500-million-inclusive-growth-fund/" target="_blank" rel="noopener noreferrer"><em>Mastercard Impact Fund</em></a><em>.</em>

Why is cyber resilience essential for digital financial inclusion?

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.

Mamata Padhi lives near Khurda in the Odisha province of eastern India with her husband and three children. When the income from her husband’s farming was not enough to meet their household needs and cover their children’s school fees, Mamata decided to start a tailoring business to earn money for her family. She began as a group lending client of Annapurna Finance Ltd. and used her first loan to open her tailoring shop. As she grew her business over four years, she was able to hire another woman to share the workload in the shop.

<a href="https://annapurnafinance.in/" target="_blank" rel="noopener noreferrer">Annapurna Finance Ltd.</a>, a longtime Accion partner which serves two million customers across India, is committed to reaching the poorest and most underserved; more than 90 percent of customers are women, and more than 80 percent live in rural areas. In addition to group lending, specialized loan products such as housing, individual business loans, and other financial products, Annapurna also provides financial and technical support to its clients to strengthen their entrepreneurial skills. During the COVID-19 pandemic, Annapurna offered additional financial and non-financial support to their clients, like Mamata. COVID-19-related lockdowns left Mamata unable to pay the rent in her tailoring shop, and she came close to going out of business permanently. Annapurna offered her a new midterm loan product to help her through this challenging time, allowing her to reopen her shop, rehire her employee, and rebuild her business.

Accion has worked with Annapurna for nearly a decade on various projects such as financial inclusion for people with disabilities and financial capability building. Currently, Annapurna works with Accion through the <a href="https://www.accion.org/mastercard-and-accions-partnership-to-unlock-millions-of-underserved-microbusinesses" target="_blank" rel="noopener noreferrer">Mastercard and Accion partnership</a> to drive digitization in product innovation, customer engagement, and risk management.

[caption id="attachment_26035" align="alignright" width="300"]<img class="wp-image-26035" src="https://content.accion.org/wp-content/uploads/2022/04/Rosina-Das-853x1024.jpg" alt="Rosina Das sits in her shop" width="300" height="360" /> <em>Rosina Das in her small grocery shop</em>[/caption]

We’re also supporting the development of a Just-in-Time financing product that can be offered to existing customers through various digital channels as an emergency loan option. This product allows Annapurna to support clients like 26-year-old <a href="https://www.accion.org/women-entrepreneurs-get-back-to-business-in-india" target="_blank" rel="noopener noreferrer">Rosina Das in Odisha</a>, who was able to reopen her small grocery shop in her village despite challenges faced during the coronavirus pandemic. Rosina worked with Annapurna to reschedule her payment dates and receive an emergency loan through Annapurna’s midterm loan offering. This allowed her to quickly purchase the supplies she needed for her store and resume providing groceries to her community.

Annapurna’s vision of financial inclusion is closely aligned with Accion’s, and we are excited to deepen our commitment by investing in the company as they continue to grow, innovate, and expand their impact. Annapurna is already providing a host of individual lending products for microenterprises and is planning to expand its product offerings to include housing loans, MSME loans, and savings products to continue to meet client needs.

Annapurna is working toward transforming itself into a fully digital financial services entity with the help of Accion’s investment and advisory services. We started by conducting our <a href="https://www.accion.org/critical-lessons-from-a-survey-of-small-businesses-in-india" target="_blank" rel="noopener noreferrer">Digital Maturity Assessment</a> to better understand how Annapurna can design products that meet their clients’ needs through digital tools. This focus on digital strategy will further boost the financial inclusion objectives of Annapurna as distributing products through digital channels increases the speed and convenience for their customers. By providing faster and easier access to women borrowers in rural India, they’ll continue to bring more women and families into the formal financial ecosystem.

We are excited about Annapurna’s future and look forward to continuing to support the company’s work to innovate and find new ways to make microcredit as relevant and effective as possible for low-income communities across rural India.

Going digital to reach women entrepreneurs in rural India

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.

For rural communities where people must walk hours to their bank to make a deposit or pay back a loan, the ability to make those deposits or payments instead by mobile phone can be life-changing. Now that the world has changed during the pandemic, the move towards digital banking is not just about convenience but about health and safety, arguably making it even more imperative. But shifting services from in-person to digital necessitates change. And change requires education, a shift in mindset, and a step away from human contact into the digital age. The thought of stepping away from a personal relationship — where someone can answer your questions on the spot, read your body language, and knows you personally to relying on a digital tool that asks questions, judges past behavior, and makes the decisions — can be a roadblock for many of us. Which begs the question, how are financial institutions bridging the gap between relational and digital transactions?

Olamide Akinlamilo is an account officer with Accion Microfinance Bank (Accion MfB), our partner in Nigeria. He works with underserved microbusiness owners across Nigeria and understands the true nature of a digital transformation from both customer and employee perspectives. Not only has he taken advantage of financial products in his own life, but he has also worked closely with customers, helping them grow their businesses, send their kids to school, and prepare for the future.

Many microfinance institutions like Accion MfB are in the process of transforming their operating model to increase the speed of service and offer customized products at a distance to serve customers at scale. This digital evolution requires increased use of digital channels, leveraging data, and automated processes – all of which <em>appear </em>to create an invisible barrier between the institutions and their customers.

Globally, institutions like Accion MfB pride themselves in knowing their customers’ wants, needs, and pain points well. This knowledge forms the basis of the relationship with their customer. How should they support employees through a change that, on the surface, looks like it is commoditizing the customer relationship?
<h3><strong>Employee engagement leads to customer satisfaction. </strong></h3>
The best marketer of a digital product to a customer is a happy employee, and the best marketer of a product is a happy customer. As microfinance institutions always strive to put their clients first, <a href="https://hbr.org/2019/08/the-key-to-happy-customers-happy-employees" target="_blank" rel="noopener noreferrer">the latest research shows</a> that the best way to achieve this is through engaged employees. It is important that, as an organization undertakes a digital transformation, its employees are engaged in the process. Not only should employees understand the possibilities that come with going digital, but they should also feel valued in the process. Feeling valued can come from meaningful incentives, space to provide feedback, and room to experiment and grow.
<h3><strong>Innovative organizational culture is key to empowering both employees and customers. </strong></h3>
Successfully moving employees and clients to digital products requires transformational change. For this to occur, an organization must have strong values and culture, active leadership, a focus on talent, and an environment that empowers its people. With digital tools, customer-facing employees like Olamide can move away from administrative tasks and step up as advisors and champions in the digital space — focusing on supporting current clients on their digital journey and increasing outreach to ensure every person has access to financial services.
<h3><strong>Successful digitization requires human touch.</strong></h3>
A digital transformation touches every level of an organization: from the vision of the Board, the active leadership of the C-Suite, the middle management who drive change, to the field teams who make the financial opportunities a reality for the customer. While digital tools enable an organization to create a culture of innovation, requirements for a digital transformation to be successful have expanded from purely “digital” to include the propensity to learn and evolve with the digital world. For an organization to reap the benefits of a digital transformation, it must first invest in its human capital, creating development opportunities in the areas of digital, agile work methods, and knowledge sharing. Organizations must give careful thought at each level to move the needle in values and culture, organizational design, talent, and leadership to facilitate a successful transformation. Doing this will enable employees to evolve with the organization and gain the capacity to provide a meaningful and effective digital journey to their customers.

To accelerate the use of digital products by customers, financial service providers should first focus on the trusted employees who will guide their customers through the transition to digital services. As organizations think about expanding financial opportunities to customers or developing employees like Olamide Akinlamilo, they must continue to focus on the people for a true digital transformation to occur.

If you are interested in helping your employees and customers to make a smooth transition to using digital tools, <a href="https://www.accion.org/advisory-contact" target="_blank" rel="noopener noreferrer">reach out to us.</a>

Bridging the gap between in-person and digital services

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

In Mexico, <a href="http://www.inegi.org.mx/" target="_blank" rel="noopener noreferrer">99 percent of all businesses are micro, small, and medium enterprises (MSMEs)</a>. These small businesses contribute 52 percent of GDP and generate 72 percent of jobs. Although these businesses play a crucial role in Mexico, <a href="https://read.oecd-ilibrary.org/industry-and-services/financing-smes-and-entrepreneurs-2016_fin_sme_ent-2016-en#page334" target="_blank" rel="noopener noreferrer">fewer than 10 percent of them have received a bank loan</a> and can’t get what they need to stay open long-term. “MSMEs in Mexico are short-lived. They last about two to five years, and then they fade,” says José Eduardo Ruiz, Commercial Director Caja Bienestar, a financial provider in central Mexico.

Since 2019, Accion has partnered with five financial service providers in Latin America, with support from <a href="https://www.metlife.com/about/corporate-responsibility/metlife-foundation/index.html" target="_blank" rel="noopener noreferrer">MetLife Foundation</a>, to develop financial health-focused products that solve the problems that small businesses face and help people to improve their lives. In Mexico, we worked with Caja Bienestar and Caja Popular Cerano to build innovative products that meet their customers’ needs. Our approach focused on the people using these products: their needs, circumstances, abilities, and aspirations.

<a href="https://www.accion.org/how-providers-can-build-products-that-improve-financial-health-examples-from-mexico-and-chile#case-study:-caja-bienestar" target="_blank" rel="noopener noreferrer">Our partnership with Caja Bienestar in Querétaro, Mexico</a>, started with a deep-dive qualitative research effort with small and medium business owners. The findings from that research informed every aspect of the product design, from acquisition and marketing to user experience to payment terms.

Often, small shops will offer to sell products to their customers on credit in an effort to make sales. Fairly soon, they are spending more time and effort managing debt than they are managing their business. When their capital is tied up in credit, they lack the liquidity needed to pay their own debtors, or replenish inventory to stock their shelves. José Eduardo doesn’t fault them though, noting that the customers of these businesses can’t find anyone else who will lend to them; they depend on these businesses to provide the credit they need.

“Zapatero a tus zapatos” is the saying that José Eduardo comes back to, an idiom about competitive advantage that captures what José Eduardo and his team realized was going wrong for small businesses. Rather than focus on selling concrete and construction materials, <a href="https://www.accion.org/entrepreneurs-get-one-step-closer-to-their-dreams-in-mexico" target="_blank" rel="noopener noreferrer">small business owners like Francisco were operating as lenders</a> for their customers and taking on all the risk that implies. The Accion and Bienestar team recognized a win-win opportunity: for the coop to bring its financial lending expertise to the table and serve as the financing partner for small businesses looking to offer credit to their customers. As José Eduardo says, “We are the financial experts, so we take that on, and the business owner can focus on his work.” Now, Bienestar partners with small businesses to provide credit to their portfolio of customers. The business owners can focus on their operations and reserve the capital that was previously used for lending to invest in their business, pay off debt, or save.

Not only is the product structured around the real-life relationships and rhythms of small business life, Bienestar has ensured the user experience is comfortable and natural for customers. With Accion, the team realized that many microentrepreneurs utilize WhatsApp as a critical tool for conducting business. They place orders, confirm receipt, and even register complaints via the application. To fit within these habits, the team designed a bot that mimics the WhatsApp experience so that users can release payments with just a few messages. The digital experience is quick and easy for users and saves time and effort for the cooperative.

With another partner in Mexico, a financial cooperative called <a href="https://cpcerano.com.mx/" target="_blank" rel="noopener noreferrer">Caja Popular Cerano</a>, we worked to expand their reach to more customers that would benefit from financial services but haven’t used them before. We found that young people within their market wanted to build their lives and careers but were wary of banks and taking on debt. In fact, only <a href="https://databank.worldbank.org/reports.aspx?source=1228" target="_blank" rel="noopener noreferrer">33 percent of the youth population</a> (ages 15-24) in Mexico are clients of a banking institution. We knew we needed to do things differently to reach youth, so <a href="https://www.accion.org/how-providers-can-build-products-that-improve-financial-health-examples-from-mexico-and-chile#case-study:-caja-popular-cerano" target="_blank" rel="noopener noreferrer">the team created a gamified app that makes saving money accessible for people of all ages</a>. By encouraging financially healthy behaviors like saving in younger clients, Caja Popular Cerano will help customers thrive throughout their financial lives, starting with the app, which may be their first interaction with a financial institution.

These products show how customer insights, research, and innovation can combine to meet the needs of underserved small businesses and people who haven’t been able to get the financial support they need in the past. As José Eduardo says, “If my work can generate an impact — especially if that impact is for the community where I live — well, that is my greatest source of inspiration.”

Behind the innovation in MSME lending in Mexico

The past two years have been extremely challenging — and transformational — for the field of inclusive finance. As vulnerable small businesses, microentrepreneurs, and families continue to face extreme difficulties caused by the pandemic, frontline financial service providers have rapidly evolved to meet their shifting needs.

Leaders in the inclusive finance field have:
<ul>
 	<li>Embraced new digital tools and helped <a href="https://www.accion.org/how-the-pandemic-is-spurring-microentrepreneurs-to-go-digital">their clients do the same</a>,</li>
 	<li>Adapted <a href="https://www.accion.org/with-support-from-fintech-farmers-can-grow-an-inclusive-global-recovery">innovative fintech solutions</a> to support struggling small businesses,</li>
 	<li>Navigated <a href="https://www.accion.org/the-financial-engine-for-half-the-worlds-jobs-is-about-to-seize-up">liquidity crunches</a> jeopardizing millions of jobs,</li>
 	<li>Shifted to remote work and supported staff coping with stress, and</li>
 	<li>Worked to build financial resilience amid a global recovery that <a href="https://www.accion.org/growing-disparities-threaten-an-inclusive-recovery">is increasingly unequal</a>.</li>
</ul>
<h2><strong>Gain valuable insights at a critical time</strong></h2>
In this extraordinary environment, and after a two-year hiatus, we are very excited to resume <a href="https://www.accion.org/how-we-work/influence/hbs-accion-program-on-strategic-leadership-in-inclusive-finance">the Harvard Business School (HBS)-Accion Program on Strategic Leadership in Inclusive Finance</a> this April, at the HBS campus in Boston. As of January 19, 2022, <a href="https://forms.office.com/r/x76TQa10xE">applications</a> to join the 2022 cohort are now open.

The program is led by faculty cochairs Kash Rangan and Michael Chu, and involves guest lectures by renowned HBS faculty experts on international business, strategy, and management. Kash Rangan is a co-founder and faculty co-chair of the <a href="https://www.hbs.edu/socialenterprise/Pages/default.aspx">HBS Social Enterprise Initiative</a>, and teaches extensively in HBS’s MBA and executive education programs. Michael Chu is a senior lecturer in the HBS Social Enterprise Initiative and is also a co-founder and partner of <a href="http://www.ignia.mx/">IGNIA Fund</a>. Both lead the HBS MBA course, “Business at the Base of the Pyramid.”

This intensive, six-day experience is an invaluable opportunity for leaders from e-commerce and consumer goods firms, fintechs, banks, regulators and policymakers, microfinance institutions and nonprofit organizations, to engage with respected experts on business management and strategy during a pivotal moment for our sector — and learn from experiences on the front lines of digital transformation during the pandemic.

The HBS-Accion program will take place on Harvard Business School’s campus in Boston, Massachusetts. The program applies the famed HBS case study methodology to immerse participants in real world scenarios that combine strategic thinking with advancements in financial inclusion and impact investing, including the latest developments seen during the pandemic. Participants come away with lifelong connections, friendships, and new perspectives.

As our sector continues to rapidly evolve, now is an excellent time to gain skills and insights that empower providers and their vulnerable clients to build a stronger, more resilient future.

<a href="https://www.accion.org/how-we-work/influence/hbs-accion-program-on-strategic-leadership-in-inclusive-finance/hbs-accion-program-frequently-asked-questions">Learn more about the program and how to apply here.</a>

A unique opportunity to expand your network and knowledge

<em>This article is the last in a six-part series on scaling financial inclusion to accompany our <a href="/the-digital-transformation-guide-six-strategies-to-scale-financial-inclusion" target="_blank" rel="noopener noreferrer">digital transformation guide</a>. </em>

Partnerships are crucial to a successful digital transformation — enabling new ways to leverage data, evaluate risk, reach new customers, develop innovative products and services, and strengthen customer touchpoints. But financial service providers (FSPs) need to carefully consider when, how, and with whom to partner. As FSPs grow and evolve digitally, the right partners will help accelerate the transformation agenda, bringing in agility and expertise beyond the FSP’s core competencies.

Partnerships are also critical to expanding the reach and uptake of financial products among underserved people by supporting the development of a 360-degree digital financial ecosystem. Of course, providing customers with digital financial products is only useful insofar as the financial ecosystem in which the customer operates has digital capabilities across the value chain, including merchants and suppliers accepting digital payments. Failing to digitize the broader ecosystem creates bottlenecks within digital financial transactions that will slow the adoption of digital financial services. To drive the ecosystem’s transformation, FSP partnerships with enabling actors are emerging, such as those with mobile network operators focused on enhancing mobile payments and increasing the usability of payment-related technologies. As the density of digital services available within an ecosystem grows, so too will the digital comfort of end customers.

<img class="aligncenter wp-image-24083 size-large" src="https://content.accion.org/wp-content/uploads/2021/04/Accion-MAP-report-graphics-WEB_14-Digitizing-the-ecosystem-1024x512.png" alt="" width="1024" height="512" />

However, some FSPs tend to view partnerships through the narrow lens of a vendor relationship, rather than seeking to create something that is greater than the sum of its parts. While the sticking point for many partnerships is a question of who owns the customer relationship and their data and a lack of a clear business case that aligns the goals of all parties, there are many ways to address these issues to build effective partnerships.
<h3>Establish win-win partnerships</h3>
Partnerships are successful when both entities collaborate on how to reach shared goals, moving beyond a mere vendor-bank relationship. BancoSol, Bolivia’s largest microfinance institution, was able to develop their latest customer mobile banking app completely in-house with their first-class IT team. But when they planned to upgrade to a 3.0 version, they partnered with fintech startup <a href="https://flourishsavings.com/" target="_blank" rel="noopener noreferrer">Flourish</a> to get to market within 100 days. As a tactic to increase savings deposits to drive engagement within the revamped customer app, BancoSol layered Flourish’s gamification functionality on top of the bank’s digital assets. In this case, Flourish was able to combine its knowledge of behavioral science together with BancoSol’s strong understanding of their customer to develop a captivating engagement strategy. This partnership was a win-win for both entities: Flourish was able to enter the Bolivian market and BancoSol was able to get to market faster.

Partnerships can serve as a mutually beneficial go-to-market accelerator, benefitting both an FSP looking to scale their digital offerings and an e-commerce platform looking to grow their customer base, for example. That’s why Accion Microfinance Bank (Accion MfB) in Nigeria teamed up with African e-commerce giant <a href="https://www.jumia.com.ng/" target="_blank" rel="noopener noreferrer">Jumia</a> to help onboard their MSME customers onto the Jumia platform to boost sales and increase MSMEs’ comfort and trust in using digitally enabled tools to run their businesses. Through this partnership, Jumia will be able to grow its customer base and provide them with access to Accion MfB’s credit offering, while Accion MfB will be able to leverage e-commerce sales data to underwrite digital working capital loans.
<h3>Expand your definition of partner</h3>
Having invented a crowdsourcing model for Colombian citizens to map their own cities by posting missions and offering point-based rewards to those who complete tasks, CÍVICO was accustomed to thinking outside the box. With this methodology, they were able to build out the most comprehensive picture of local small businesses and gain a better understanding of what financial services those merchants might need.

But for CÍVICO’s new digital lending product to be viable, the company needed to find a cost-effective way to mitigate risk by verifying the business location of their online applications. Rather than deploying CÍVICO staff to visit every potential customer, which would be expensive and time-consuming, CÍVICO turned again to their crowd-sourcing platform. Reimagining the traditional concept of a partnership as an alliance between two independent entities, CÍVICO created new missions where individual citizens were asked to collect information related to perceived sales activity and verify the location of the business by taking a picture.

In the few cases where the business could not be verified in this way, CÍVICO would then deploy other more resource-intensive channels to verify the customer, either by phone or in-person visits themselves. This crowdsource-by-default design enabled an OPEX light business model by leaning on the existing relationships the company had created through their gamified crowdsourcing platform.

Our <a href="/mastercard-and-accion-partnering-for-inclusive-growth" target="_blank" rel="noopener noreferrer">global partnership with Mastercard</a> has laid a solid foundation toward our goal of helping millions of people and small businesses participate in and benefit from the digital economy. While digital transformation is a continual and never-ending process, strategic partnerships across the value chain can help drive the uptake and usage of digital products so that low-income individuals and merchants reap the benefits of digital financial services.

If you’re interested in partnering with us, please <a href="https://www.accion.org/advisory-contact">reach out</a> to see how we can work together.

<em>Malavika Krishnan contributed to this article.</em>

Scale financial inclusion through strategic partnerships

For some, the word <em>fintech</em> may bring images of flashy apps and difficult-to-understand APIs to mind. Such examples of fintech are rarely a good fit for underserved customers who tend to have old devices, poor internet connectivity, and low digital literacy. These users are often more comfortable with in-person conversations, and many struggle with using smartphones and tech-based interfaces to manage their money and businesses.

Although fintech may feel less relevant for low-income users at first consideration, it’s an extremely valuable tool to reach underserved populations when providers focus on building products that put the user first. When designed and deployed effectively, fintech offers personalized experiences, automates burdensome tasks, and provides tools that work for those with limited experience with digital financial services.

In Mexico, <a href="https://cpcerano.com.mx/" target="_blank" rel="noopener noreferrer">Caja Popular Cerano</a> decided to use fintech to reach an underserved customer segment: the urban youth market in Mexico. The financial institution chose to <a href="https://www.accion.org/how-providers-can-build-products-that-improve-financial-health-examples-from-mexico-and-chile#case-study:-caja-popular-cerano" target="_blank" rel="noopener noreferrer">develop an app to attract more young people</a>. Rather than incorporate complex menus, visualizations, and analyses into their product, the team worked together with Accion to build an application that creates a tailored, personalized experience, including fun avatars and motivational messages. The app provides users with helpful tips about saving and paying back loans and has built-in motivational markers that show users whether they’re on a ‘streak’, and how close they are to finishing a goal. In this case, the technology helps the cooperative provide a warmer, more personal experience within an app-based financial service that’s better suited to a young audience.

Elsewhere in Mexico, Accion partnered with <a href="https://www.ahorrosbienestar.com/" target="_blank" rel="noopener noreferrer">Caja Bienestar</a> to develop a <a href="https://www.accion.org/how-providers-can-build-products-that-improve-financial-health-examples-from-mexico-and-chile#case-study:-caja-bienestar" target="_blank" rel="noopener noreferrer">digital simulator to help shopkeepers understand how credit</a> might affect their shops’ bottom line. The team realized that small business owners often struggle to understand their own margins and costs of capital, so they designed a simulator to automate those analyses and indicate whether a particular loan would be profitable for a shop or not. Instead of asking the shopkeeper to calculate revenues and repayment schedules, the tool simply asks for a loan amount and then displays whether expected profits will be enough to cover its cost. It then guides the user to consider different terms or amounts based on their profitability levels. The simulator is another innovative, user-friendly fintech application that improves the user’s experience rather than adds a layer of complexity.

In Chile, <a href="https://redcapital.cl/" target="_blank" rel="noopener noreferrer">RedCapital</a> is also uses fintech in similar ways; the team <a href="https://www.accion.org/how-providers-can-build-products-that-improve-financial-health-examples-from-mexico-and-chile#case-study:-redcapital" target="_blank" rel="noopener noreferrer">developed a simple simulator to model loan usage and benefits</a>. This simple, mobile-first application helps owners understand how a loan is broken down into repayment amounts and can be used to improve business functions. They also developed a chatbot to provide additional customer support and walk users through the loan application process. For users unfamiliar with fintech, the chatbot and the simulator offer greater confidence and help them improve their understanding of the product details.

In each of these cases, Accion and our partners were able to use fintech to create a user experience that benefits underserved people without disregarding the importance of human touch and outreach. For example, <a href="https://www.accion.org/a-family-hardware-store-stays-in-business-with-the-right-financial-tools" target="_blank" rel="noopener noreferrer">María Olga in Querétaro, Mexico</a> notes that her loan officer personally visits to collect her deposits since there isn’t a location for her to visit nearby, saying, “It is a problem for me to get away from the shop, so [my officer] comes to me to collect my deposit.” Similarly, Jose Medina highlights that his representative calls him to remind him about payments and ask how things are going. These personal touches and high levels of customer services cannot be replaced by technology but rather complement the technology by providing more direct support throughout the user experience.

<em>To develop financial services that improve financial health for low-income people, Accion Global Advisory Solutions, with support from </em><a href="https://www.metlife.com/about/corporate-responsibility/metlife-foundation/index.html" target="_blank" rel="noopener noreferrer"><em>MetLife Foundation</em></a><em>, partnered with financial service providers like Caja Bienestar. Read more about the insights we learned from this project in our new paper, </em><a href="https://www.accion.org/how-providers-can-build-products-that-improve-financial-health-examples-from-mexico-and-chile/" target="_blank" rel="noopener noreferrer"><em>How providers can build products that improve financial health: Examples from Mexico and Chile</em></a><em>. </em>

User-friendly fintech creates comfort over complexity

Jose Medina owns a construction shop in Querétaro, Mexico where he sells materials and tools, as well as employs skilled workers who help execute repairs and other household jobs. He started the business over 12 years ago and, thankfully, it has served as a steady source of income for him and his employees over the years. On running his business, he says, “It has sometimes been a struggle, but we have pushed forward.”

Like many other small business owners in Mexico, Jose says that the COVID-19 pandemic has been difficult for his business. “It has been a battle,” he sighs. Fortunately, his business has weathered the challenges, and Jose is now looking forward to rebuilding and thinking about future growth.

Access to liquidity was key to keeping Jose’s business alive during the pandemic. At a critical low last year, he wasn’t sure that the business would survive. At precisely that time when he needed help the most, Jose was approached by Caja Bienestar. He needed credit to bolster his business, so the timing of the outreach was fortuitous. “We needed the credit because of the pandemic, and the support from [Caja Bienestar] has been significant,” he says.

He says that he used the credit to stock inventory, increasing the amount of items and diversity of supplies in his store. Not only did the investment in inventory increase revenue for the business, it also gave the workers he employs the opportunity to complete jobs and earn more income, multiplying the benefits of the credit to those around him who depend on the store.

“I would recommend the cooperative to others,” he says about Bienestar, noting that the process to apply for and repay credit is straightforward. He says the bulk of the process took place over the phone and the transfer was made directly into his bank account.

While Jose Medina’s business is now stable, he says that he would approach Bienestar for additional credit if he needed it in the future. In fact, he hopes to take out another loan soon — this time, a loan to grow his business. While he currently owns one shop, he hopes to expand and open several more locations, and he knows he can count on the Bienestar’s support when the time comes.

<em>To develop financial services that improve financial health for low-income people, Accion Global Advisory Solutions, with support from </em><a href="https://www.metlife.com/about/corporate-responsibility/metlife-foundation/index.html" target="_blank" rel="noopener noreferrer"><em>MetLife Foundation</em></a><em>, partnered with financial service providers like Caja Bienestar. Read more about the insights we learned from this project in our new paper, </em><a href="https://www.accion.org/how-providers-can-build-products-that-improve-financial-health-examples-from-mexico-and-chile/" target="_blank" rel="noopener noreferrer"><em>How providers can build products that improve financial health: Examples from Mexico and Chile</em></a><em>. </em>

“It has been a battle”: A small business rebuilds in Mexico

<em>This article is the fifth of a six-part series on scaling financial inclusion to accompany our </em><a href="https://www.accion.org/the-digital-transformation-guide-six-strategies-to-scale-financial-inclusion" target="_blank" rel="noopener noreferrer"><em>digital transformation guide</em></a><em>. </em>

In the wake of the pandemic, technology maturity is more crucial than ever. However, financial service providers (FSPs) have traditionally struggled to build flexible, agile, and adaptable core IT and data management systems. The need to improve in this area is a challenge, but a necessary one to overcome when the ability to evolve and refine business models is increasingly a <a href="https://www.cgap.org/blog/after-storm-how-microfinance-can-adapt-and-thrive" target="_blank" rel="noopener noreferrer">defining factor in the digital age</a>.

What makes digital transformation so challenging is balancing the necessary planning required to transform with the agility needed to innovate quickly — often conflicting concepts. Technology decisions made today will impact what’s possible tomorrow, so organizations need to design for the future while understanding the constraints they face today, including legacy systems and budget limitations. Through a <a href="https://www.accion.org/mastercard-and-accions-partnership-to-unlock-millions-of-underserved-microbusinesses" target="_blank" rel="noopener noreferrer">first-of-its-kind partnership</a> with the Mastercard Center for Inclusive Growth, we uncovered three key design principles for building future state architecture.
<h3><strong>1. Balance vision and improvisation</strong></h3>
Balancing infrastructure planning (vision) with agility (flexibility to improvise) often requires a phased approach that enables an organization to make long-term strategic investments in technology infrastructure while maintaining the ability to get products to market quickly. At the onset of BancoSol’s digital transformation journey, senior leadership articulated ambitious digital adoption targets and an implementation plan to execute the bank’s five-year digital strategy. While daunting, the team recognized the importance of starting somewhere and designed their first digital minimum viable product while planning to roll out additional functionality in line with the broader technology roadmap.

The decision to build in-house or outsource is also an important consideration when balancing vision and improvision.  Sub-K, a banking correspondent in India, initially planned to develop their digital marketplace, <a href="https://www.accion.org/banking-goes-digital-to-reach-rural-entrepreneurs" target="_blank" rel="noopener noreferrer">SARTHI</a>, in-house. However, after realizing that it would not be worthwhile to develop all of the capabilities needed internally, especially for solutions that were already commoditized in India, Sub-K decided to partner with several vendors to build a flexible platform that showcased their core value-add — a unique methodology and agility to add new products and partners to the platform.

Finally, a strong and coherent technology team is critical to delivering on the vision and maintaining focus. Here, Sub-K established a “change control board” tasked with prioritizing change requests and governing approvals. This approach helps IT manage their workload by prioritizing requests based on feasibility and strategic importance and continually reevaluating the current backlog.

<img class="alignnone size-large wp-image-24082" src="https://content.accion.org/wp-content/uploads/2021/04/Accion-MAP-report-graphics-WEB_12-Prioritization-process-1024x563.png" alt="Digital transformation: Prioritization process" width="1024" height="563" />
<h3><strong>2. Think strategically about APIs to modernize legacy systems</strong></h3>
Open banking has created opportunities for FSPs to benefit from partnering with third parties and using APIs. APIs allow FSPs to access, interact, and engage with third-party data and functions, and can also be an effective tool to modernize legacy systems in a low-cost and efficient way.

After finding the right partner to help develop their new digital loan product, Nigeria’s Accion Microfinance Bank (Accion MfB) conducted an API inventory to determine the feasibility of building the APIs needed to connect with their partner’s systems. They examined each party’s data management capabilities, handoffs between the technology and operations teams, and whether the required integration points between the two systems existed. This process allowed the team to identify next steps and build new APIs to upgrade their existing systems.
<h3><strong>3. As you go digital, ensure you are resilient</strong></h3>
Digital transformation requires great reliance on the external and internal technological environment. As an FSP begins to digitize, the more vulnerable their systems are to failure or cyberattacks, and the more resilient internal architecture needs to be.

To build resiliency, it is important to have thorough and structured disaster recovery plans with remote sites, such as physical server rooms and on-cloud architecture, set up with appropriate failover, and switch back parameters in place. Cloud technologies can improve technology resilience through greater regional autonomy, data backups, and automated insights for decision-making. Though financial regulators often perceive using cloud architecture to safeguard customers’ personal and financial information as risky, FSPs can and should explore using the cloud given the low cost and benefits it offers.

With cyber threats and attacks more prevalent than ever, effective mitigation against cyber risks is critical. This requires layers of governance, accountability, policies, and procedures, all while creating and adhering to new data protection norms and guidelines. With this in mind, we worked with Accion MfB, Sub-K, and BancoSol to recommend the necessary systems for greater resilience.

Strengthening an organization’s underlying technology platforms — through planning, prioritizing, and partnerships — can help teams achieve their digital aspirations while staying at the forefront of cutting-edge innovation.

Please <a href="https://www.accion.org/advisory-contact" target="_blank" rel="noopener noreferrer">reach out</a> if you’d like to partner with us to future-proof your organization.

<em><a href="https://www.linkedin.com/in/malavika-krishnan/" target="_blank" rel="noopener noreferrer">Malavika Krishnan</a> contributed to this article.</em>

3 steps to design a technology platform built for the future

The pandemic hit Jorge Luis with two major setbacks: not only did construction work come to a halt, directly impacting his construction supplier business, his father was also diagnosed with cancer. Just as his income plummeted, his expenses also shot out of control. To pay for treatment for his father and care for his family, Jorge Luis needed to take money out of his business. His tone of voice indicates just how difficult a time it was as he says, “There wasn’t money coming in, and expenses were also high; as head of household, there are many who depend on you...the business really suffered.” As the pandemic progressed, Jorge Luis shrunk his business from four locations to two, sold four of his five trucks, downsized his team, and sold his excavator, thereby ending that line of business. “There were Saturdays when we earned just 100 pesos. You can imagine trying to cover expenses for the family on just that,” he says.

Jorge Luis’ business sells construction materials in Querétaro, Mexico. Before the pandemic, he sold construction materials in bulk to engineers and architects. He was able to sell in bulk because he had plenty of inventory between his four outlets and sufficient logistical capabilities to get materials when and where clients needed them. He provided many of these supplies on credit, knowing that construction schedules must move ahead even when cash is slow for builders. “The faster I can provide, the more I sell. Having inventory is really about service levels and being able to provide clients with a high level of service,” he says.

However, with slowdowns in sales and bills due, he no longer had liquidity to offer clients. His own suppliers, who used to offer him flexible payment schedules, also faced the same constraints. Liquidity dried up across the sector, and many like Jorge Luis were forced to liquidate assets and downsize. He remembers, “Suppliers that used to give me credit could not anymore.” He found that the few suppliers willing to offer credit were charging such high rates that would eat the bulk of his profit margin; the only way to stay competitive was to purchase in cash and pay for inventory upfront.

He finally caught a break when his supplier, Deposito San Francisco, introduced him to <a href="https://www.ahorrosbienestar.com/" target="_blank" rel="noopener noreferrer">Caja Bienestar</a>. Since Jorge Luis formerly depended on credit from Deposito San Francisco, they knew he would be a good candidate for the financial institution. Caja Bienestar gave him the credit needed to replenish his stockrooms as Jorge Luis noticed business was starting to pick up again. He was able to purchase supplies from San Francisco at advantageous prices, improving his competitiveness in the market. With stock on his shelves, Jorge Luis was again able to meet his customers’ needs and even order more when he didn’t have the relevant materials in stock. He says, “When we could fill the bodega, I first felt we would get out of this. We were finally able to do that with the money from Bienestar. I can get through slow days without feeling anxious. I know that Bienestar supports me and is by my side.”

Times have changed at Jorge Luis’ shop. Now, the shop is bustling with customers again. Between big orders and small orders, he has what he needs to fill them all on the spot. He says things have turned around, and now he is focused on rebuilding, “I want to open more outlets again and provide faster service to customers. The feeling of relief is enormous.”

[embed]https://vimeo.com/657538644[/embed]

<em>To develop financial services that improve financial health for low-income people, Accion Global Advisory Solutions, with support from </em><a href="https://www.metlife.com/about/corporate-responsibility/metlife-foundation/index.html" target="_blank" rel="noopener noreferrer"><em>MetLife Foundation</em></a><em>, partnered with financial service providers like Caja Bienestar. Read more about the insights we learned from this project in our new paper, </em><a href="https://www.accion.org/how-providers-can-build-products-that-improve-financial-health-examples-from-mexico-and-chile/" target="_blank" rel="noopener noreferrer"><em>How providers can build products that improve financial health: Examples from Mexico and Chile</em></a><em>. </em>

Timely credit helps small businesses rebuild in Mexico

<em>This article is the fourth of a six-part series on scaling financial inclusion to accompany our <a href="/the-digital-transformation-guide-six-strategies-to-scale-financial-inclusion" target="_blank" rel="noopener noreferrer">digital transformation guide</a>.  </em>

Data capabilities are essential to an organization’s digital transformation: from informing strategies that increase efficiency and revenue to creating new business models where data assets become products. In today’s world, where financial service providers (FSPs) must make unprecedented and rapid decisions, adjust business strategies, segment customers to understand portfolio risks, rethink credit models, and reach customers and staff remotely, data capabilities go hand-in-hand with digital transformation.

The explosion of available data, data-analytics services, and a growing digital ecosystem <a href="https://www.centerforfinancialinclusion.org/data-for-inclusive-finance-delivering-on-the-promise-for-consumers" target="_blank" rel="noopener noreferrer">creates unprecedented opportunities</a> for underserved communities and FSPs alike. The potential to unlock <a href="https://www.centerforfinancialinclusion.org/data-for-inclusive-finance-delivering-on-the-promise-for-consumers" target="_blank" rel="noopener noreferrer">greater financial health</a> for FSP customers is extraordinary, from prospecting and credit scoring for thin-file consumers to well-timed nudges for saving to intelligent chatbots, personalized recommendations, and remote client onboarding.

<img class="aligncenter wp-image-24081 size-large" src="https://content.accion.org/wp-content/uploads/2021/04/Accion-MAP-report-graphics-WEB_11-Using-data-1024x512.png" alt="Using data to drive financial inclusion (examples)" width="1024" height="512" />

However, many organizations become overwhelmed by all the different ways they can use data and lose alignment when creating a focused data strategy. FSPs can take several steps to integrate data and analytics activities with their digital transformation goals:
<h3>Start with existing data</h3>
In the early stages of developing a digital loan product, Accion Microfinance Bank (Accion MfB) in Nigeria explored potential data-sharing partnerships to build a robust credit scoring model. But they struggled to find the right third-party data provider, so Accion MfB decided to look inwards at the lending data they had already amassed. For example, using what they knew about customers’ willingness and capacity to pay, they designed a pilot digital loan product and created a benchmark profile to compare incoming data against when onboarding new customers. Using their own internal data involved fewer operational and commercial complications, which helped Accion MfB quickly launch a viable pilot.
<h3>Be practical in moving from insights to action</h3>
Similarly, our longtime partner BancoSol, one of Bolivia’s largest banks, realized that leveraging their untapped data could uncover insights to help address four key challenges: driving digital adoption and improve usage, increasing cross-product usage, increasing savings balances, and maintaining customer relationships. A <a href="https://nextbillion.net/covid19-small-businesses-digital-financial-services-data/" target="_blank" rel="noopener noreferrer">36-hour datathon organized in partnership with Accion and Mastercard</a> yielded three key recommendations to tackle these challenges:

<strong>1. Start by understanding your typical digital customer.</strong> Analyzing customer demographic data and banking patterns can help identify, prioritize, and nudge those customers who are most likely to go digital. BancoSol learned that their typical digital app customer is more likely to be female and younger than the average BancoSol client.

<strong>2. Equip loan officers with insights to match customers with products that meet their needs.</strong> The datathon revealed that app users made nearly twice as many deposits as other users, linking digital adoption with increased use. As <a href="https://www.centerforfinancialinclusion.org/data-for-inclusive-finance-delivering-on-the-promise-for-consumers" target="_blank" rel="noopener noreferrer">research has shown</a>, greater use of financial products makes small businesses more resilient to shocks.

With these insights, BancoSol developed clear messaging for loan officers about the benefits of going digital and respecting privacy and security measures and implemented continuous testing and streamlining to improve the app experience so it matched customer expectations.

<strong>3. Retain customers by being proactive, not reactive</strong>. The datathon also showed that when customers stop saving or communicating with the bank, their risk for a loan default rises, while those who used digital channels maintained consistent relationships with the bank. With that in mind, data analysts created a risk propensity score, which BancoSol can use to intervene before a customer begins to disengage.

Having dedicated resources skilled in data analytics embedded within the product innovation team is crucial to jumpstarting a virtuous cycle of data-driven design.
<h3>Prioritize data management and governance</h3>
To derive value from data and ensure customers’ privacy is protected, microfinance institutions need to invest in structuring their data appropriately and maintaining deliberate data governance (policies and procedures) and management (use of data in decision-making).

While many institutions know they possess valuable data, it’s often stored in various places and multiple formats, leaving the organization to only manage the limited data they are required to, or that is easily accessible. To get ahead of the curve before messy data accumulates, Annapurna Finance Limited in India invested heavily in data management solutions that improve data reporting, data migration, and data storage for new digital platforms and products.

Nearly every financial institution struggles to maintain accurate customer contact information, a simple yet critical example of data management. For microfinance institutions with high-touch models whose loan officers regularly visit their customers, having a current phone number on file seemed like a low priority. But when lockdowns brought on by the COVID-19 pandemic began, Annapurna’s loan officers found themselves unable to communicate critical loan information — like payment dates, updates on moratoriums, or even introduce new loan offers via SMS to their group lending customers — without up-to-date contact details.

To address this challenge, Annapurna introduced a standard process to ensure that at every customer touchpoint — from field visits from a loan officer to customer visits to a branch — bank staff would confirm the customers’ phone numbers to ensure a high-quality database. In parallel, they implemented a new communication system that integrates their SMS system with their loan origination system. These two initiatives standardize communications with customers, create greater engagement, and ensure a more transparent flow of information.

A clear data strategy can help inclusive FSPs accelerate their digital transformation, make organizational changes to better leverage their data and become more customer-centric, and ultimately set low-income households and microentrepreneurs on a path toward greater financial health.

To assess your organization’s current data capabilities and gain insights into priority areas, take our <a href="/you-cant-go-digital-without-the-right-data-strategy" target="_blank" rel="noopener noreferrer">Data Maturity Diagnostic</a>. <a href="https://www.accion.org/advisory-contact">Reach out to us</a> to see how we can help plan a roadmap of strategic data initiatives to support your institution’s digital transformation journey and business goals.

<em>Malavika Krishnan contributed to this article.</em>

Devise a clear data strategy to unlock financial inclusion

When you think about how fintech products are created, you might picture a coder sitting behind a desk at a computer. While coders certainly play a critical role, good financial products get their start in the field, shaped by the voices and needs of their users. Unfortunately, most of the digital financial products currently available to people in Latin America are too expensive, difficult to use, or inappropriately designed for the low-income people and small businesses who need them most.

Developing relevant financial services for low-income households and small businesses — services that can have a meaningful impact on people’s financial health — is not straightforward. These customers often lack financial records and have limited experience with formal financial services, making it difficult for providers to pinpoint their needs. Moreover, many of these customers distrust formal financial services and hold negative beliefs around account ownership and credit.

To develop financial services that improve financial health for low-income people, Accion Global Advisory Solutions, with support from <a href="https://www.metlife.com/about/corporate-responsibility/metlife-foundation/index.html" target="_blank" rel="noopener noreferrer">MetLife Foundation</a>, partnered with fintechs, cooperatives, and traditional financial service providers (FSPs) in Chile and Mexico. Accion worked with these partners to design and launch digital products and services to reach underserved people, improve their financial health, help them maintain resilience against adversity, and enable them to seize opportunities.

First, we had to gain a deep understanding of their customer’s financial behaviors, pain points, ambitions, attitudes, and capabilities. In each partnership, the team began with an intensive research process to understand the financial, business, and digital capabilities that customers were missing. This allowed us to comprehend how financial products might improve their lives, understand how their beliefs and past experiences influence their financial decisions, and learn what capability building interventions products were needed to close such gaps and drive product adoption. These findings shaped product design and features, both fundamental and cosmetic user experience, which were all critical to the products’ success.

In Querétaro, Mexico, we partnered with <a href="https://www.ahorrosbienestar.com/" target="_blank" rel="noopener noreferrer">Caja Bienestar</a>, a cooperative seeking to increase lending among microentrepreneurs. However, like many lenders, they found that owners were more comfortable taking out loans from their suppliers and distributors, even if that credit was more expensive than that offered by the cooperative. For example, Jorge Luis Prado, owner of a construction supplies store, was accustomed to buying inventory on credit from his supplier to secure reasonable prices, noting that “my own competitiveness depends on securing good prices from suppliers.” In our research, we found that entrepreneurs dislike credit with interest rates. As Jose Eduardo Ruiz Suarez, Commercial Director of Caja Bienestar, notes, “Many had bad experiences with credit and felt that interest rates could easily get out of hand.” Instead, customers reported they preferred fixed fees which felt safer and less risky. The finding helped Caja Bienestar design a product with a pricing structure that their clients preferred.

<a href="https://www.accion.org/young-people-in-mexico-need-finance-that-fits-their-lives" target="_blank" rel="noopener noreferrer">Caja Popular Cerano</a>, a cooperative in Mexico, struggled to attract youth. Accion held focus groups with young people to understand their habits and expectations from a financial service provider. When the team learned that almost half of them were spending at least four hours a day online, they realized that social media was an entry point for digital banking services. In response, they integrated several aspects from social media experiences into their mobile banking app. For example, the new product allows users to choose an avatar who receives encouraging and congratulatory messages throughout the banking experience. While the avatars do not necessarily impact the underlying financial product, they make the product appealing to the target segment.

In Chile, <a href="https://redcapital.cl/" target="_blank" rel="noopener noreferrer">RedCapital</a> — a crowdfunding platform that <a href="https://www.accion.org/as-agribusinesses-grow-so-does-food-security" target="_blank" rel="noopener noreferrer">provides credit to microentrepreneurs</a> — aimed to improve lending among microbusinesses. Research with small business owners revealed that they were uncomfortable providing sensitive financial information over an app or an online portal. Instead, they wanted to speak to a person and feel confident that their data was secure. In response, the team designed a chatbot to mimic a conversation with a human. The resulting product is digital but still provides a more human experience, so users feel comfortable with the experience.

In each of these examples, careful, qualitative, and behavioral field research allowed the team to uncover simple but effective insights to design digital financial products and services that aim to improve customers’ financial health. This approach to research, design, and implementation process is not easy to undertake as the results are not clear from the outset and it is not simple to integrate them all into a product value proposition. However, the experience of the Accion team and its partners suggests that it is well worth it.

Read more about the insights we learned from this project in our new paper, <a href="https://www.accion.org/how-providers-can-build-products-that-improve-financial-health-examples-from-mexico-and-chile/" target="_blank" rel="noopener noreferrer"><em>How providers can build products that improve financial health: Examples from Mexico and Chile</em></a>. We share five case studies about our work with Chilean and Mexican partners over the past three and a half years. We hope that this paper will help financial service providers develop and optimize financial health-centric products that will lead to meaningful changes in the financial lives of underserved customers.

How to build digital tools that boost financial health

The past year and a half has brought incredible difficulties to the world’s low-income and financially underserved people. Families and small businesses have dealt with — and continue to deal with — shuttered storefronts and restaurants, disrupted supply chains, reduced incomes, and unprecedented social and economic crises that cause fear about the future.

As vulnerable populations continue to struggle, it’s helpful to stop and reflect on the progress we’ve made to support them, despite massive challenges. By giving thanks for our victories, we can focus on what’s working to build a truly inclusive and resilient recovery.

I’ve never been more grateful for the dedication of Accion and our partners to supporting vulnerable people with the financial tools they need to recover, adapt, and build resilience for the future. I’m also incredibly grateful for the global progress we’ve made, together, to leverage the power of technology to respond swiftly to new challenges.
<h2>A once-in-a-lifetime chance</h2>
Thanks to this progress, we have a once-in-a-lifetime chance to create a more equitable economy and a more inclusive world. More people than ever are:
<ul>
 	<li><strong>Receiving cash digitally: </strong>Around the world, 166 countries initiated <a href="https://qz.com/africa/2058395/covid-spurred-digital-cash-transfer-adoption-in-poor-countries/" target="_blank" rel="noopener noreferrer">more than 400 cash transfer programs</a>, reaching 1.1 billion people. Most governments relied on digital channels to send these funds, and now millions of people have access to digital financial tools for the first time.</li>
 	<li><strong>Using mobile money and digital banking:</strong> Active mobile money accounts <a href="https://www.gsma.com/sotir/" target="_blank" rel="noopener noreferrer">increased 13 percent</a> in 2020, surpassing 1.2 billion, and the monthly value of international remittances sent via mobile money exceeded $1 billion for the first time. Some researchers predict that <a href="https://www.techrepublic.com/article/report-more-than-half-the-worlds-population-will-use-digital-banking-by-2026/" target="_blank" rel="noopener noreferrer">more than half the world’s population</a> — 4.2 billion people — will have access to digital banking by 2026, which is double the current number.</li>
 	<li><strong>Participating in the digital economy:</strong> Small businesses are accessing the security and opportunities of the digital economy at an encouraging rate. According to an international survey, <a href="https://news.yahoo.com/survey-small-biz-goes-digital-web-seen-integral-to-surviving-covid-19-124646151.html" target="_blank" rel="noopener noreferrer">71 percent of small and medium size businesses</a> said they survived the pandemic by going digital.</li>
</ul>
This progress would be impossible without the commitment and hard work of inclusive financial service providers, investors, funders, policymakers, and beyond to support the world’s most vulnerable people in a time of immense need. At Accion, we created or accelerated exciting partnerships, products, and other initiatives that are helping people get back on their feet:
<ul>
 	<li>Accion responded to a White House call-to-action <a href="https://www.accion.org/accion-joins-white-house-call-to-action-to-support-economic-opportunity-in-the-northern-triangle" target="_blank" rel="noopener noreferrer">to help create the Partnership for Central America</a>, which seeks to create economic security, stability, and opportunity in Guatemala, Honduras, and El Salvador. We committed to bring 400,000 new financial services to the region and, with support from Mastercard, we’ve started <a href="https://www.accion.org/pathway-to-a-resilient-future-for-guatemalan-farmers-and-entrepreneurs" target="_blank" rel="noopener noreferrer">new work with our partner Fundación Génesis Empresarial</a> in Guatemala to reach that goal.</li>
 	<li>We invested in and supported innovative fintech companies that are advancing the latest trends <a href="https://www.accion.org/embedded-finance-more-than-a-trend" target="_blank" rel="noopener noreferrer">like embedded and contextualized finance</a>, allowing businesses of every kind to integrate financial services into their offerings — and making it easier than ever for small businesses to access the tools they need to grow.</li>
 	<li>We <a href="https://www.accion.org/the-digital-transformation-guide-six-strategies-to-scale-financial-inclusion" target="_blank" rel="noopener noreferrer">accelerated the digital transformation</a> of frontline financial service providers who are creating <a href="https://www.accion.org/gamification-motivates-microentrepreneurs-to-save-in-bolivia" target="_blank" rel="noopener noreferrer">innovative new products</a> and services that struggling small businesses desperately needed to recover from major disruptions caused by the pandemic and build better futures.</li>
 	<li>With support from MetLife Foundation, we shared insights from years of work with providers in Mexico and Chile on how to develop financial products that empower clients to improve their financial health and resilience.</li>
 	<li>We enabled our partners to leverage data and technology to <a href="https://www.accion.org/leveraging-data-to-close-the-digital-gender-divide" target="_blank" rel="noopener noreferrer">close the gender divide</a>, and empower women to grow businesses, manage their finances, and take control of their financial futures.</li>
</ul>
<h2>Great challenges remain</h2>
While we’ve made promising strides in equipping vulnerable people with the financial tools of resilience, there’s so much more work to do on our path toward a more equitable and inclusive economy.

As advanced economies focus on administering COVID-19 booster shots, vaccination rates in emerging markets remain horribly low, hovering around four percent or lower. That’s partly why <a href="https://www.imf.org/en/Publications/WEO/Issues/2021/10/12/world-economic-outlook-october-2021" target="_blank" rel="noopener noreferrer">the IMF</a> has dubbed the global recovery from the pandemic “the Great Divergence.” Other research shows world economy could lose $2.3 trillion because of global disparities in vaccination rates, with emerging markets accounting for two-thirds of these losses.

The pandemic has <a href="https://www.accion.org/5-ways-to-help-women-entrepreneurs-adapt-during-covid-19" target="_blank" rel="noopener noreferrer">also had especially damaging effects on women</a>, who have experienced higher rates of job loss and are less likely to have the cash reserves needed to withstand an economic shock. The ever-rising <a href="https://www.accion.org/with-support-from-fintech-farmers-can-grow-an-inclusive-global-recovery" target="_blank" rel="noopener noreferrer">threats of climate change</a> also pose challenges for smallholder farmers, agricultural retailers, and many other businesses vulnerable to droughts, floods, and storms.

Together, we can find innovative solutions to these challenges and create a more resilient and inclusive world for future generations. We should be thankful for all the progress we’ve made, but we can’t lose sight of the crisis that continues to face the world’s most vulnerable people, who desperately need support to recover, adapt, and grow.

Toward a more resilient, inclusive world

María Olga Calixto and her family run a hardware shop outside of Queretaro, Mexico. Though her husband and children also help out at the store, Maria Olga manages the finances and, more often than not, is the face of the business as she works behind the counter.

“We sell a little of everything: spray paint, tools, bicycle parts — even cement and plaster,” she says. Among María Olga’s many challenges is stocking her shop with enough inventory to meet the needs of her walk-in customers while still maintaining sufficient cash reserves to buy materials when she receives larger special orders.

[caption id="attachment_25183" align="aligncenter" width="1200"]<img class="size-full wp-image-25183" src="https://content.accion.org/wp-content/uploads/2021/11/maria-olga-bienestar-2.jpg" alt="Maria Olga outside her construction store in Mexico" width="1200" height="800" /> <em>“We all participate in this business. My children, my husband, and myself,” says María Olga about her family-owned hardware store called Ferremateriales El Vegil.</em>[/caption]

Before the pandemic, María Olga could depend on short-term credit from her suppliers to cover the costs of unexpected purchases requested by her customers. A quick call to a trusted supplier would mean she could receive products at her door within hours, with the understanding that she would pay for the inventory once she received the payment from her customer. The liquidity within the value chain kept her store afloat while also generating business for her suppliers.

But these arrangements presented complexity for her suppliers, like Materiales San Francisco. In order to extend credit to its small business customers, Materiales San Francisco needs to keep track of outstanding credit, shoulder the risk of default, and manage the complex cost of capital. As the COVID-19 lockdowns extended in Mexico, Materiales San Francisco found that cost of capital skyrocketed, and they could no longer extend credit to their customers.

<img class="alignright wp-image-25181" src="https://content.accion.org/wp-content/uploads/2021/11/maria-olga-bienestar-3.jpg" alt="Maria Olga in her store in Mexico" width="450" height="676" />This change had implications for María Olga and for her customers, many of whom are individual contractors. She says, “I wasn’t solvent then; something was always due. Customers would come, and I didn’t have the cash to buy the materials, even when they were ready to buy.” Furthermore, she wasn’t able to offer her customers delayed payment terms, although many of them only receive payments once their own jobs are complete. “It was complicated before; I would run out of money for inventory. I was losing clients because of lack of materials and because I couldn’t offer [them] credit.”

Then, a year ago, a new partnership between Materiales San Francisco and <a href="https://www.ahorrosbienestar.com/" target="_blank" rel="noopener noreferrer">Caja Bienestar</a> — the largest socially focused financial institution in Mexico — offered a solution. Working with Accion, <a href="/accion-and-metlife-foundation-announce-expanded-partnership-to-advance-financial-inclusion" target="_blank" rel="noopener noreferrer">with support from MetLife Foundation</a>, Caja Bienestar created a revolving credit line for microentrepreneurs, purposefully designed to help their clients stay resilient in times of hardship and improve their financial well-being. Caja Bienestar partners with trusted local distributors like Materiales San Francisco and <a href="/this-tool-puts-financial-health-first-for-microentrepreneurs-in-mexico" target="_blank" rel="noopener noreferrer">extend credit to the distributors’ small merchant customers so that they can get the inventory they need</a> for their stores and repay once they sell the products. María Olga learned about Caja Bienestar at exactly the right time, and the rotating credit line they provide has helped her out of a hole. “Now, I can tell Bienestar when I need capital to make purchases. I can help others in the community that need credit.”

She notes that the Bienestar team goes above and beyond to help her. Her shop is located far from an Oxxo, a popular convenience store chain where other customers deposit their credit repayments. Instead of forcing her to make the onerous trip, her Bienestar agent Mauricio comes to her shop to pick up her payments, so she doesn’t have to close her shop and lose sales. “I don’t feel a lot of pressure with Bienestar. I can schedule my repayment date when I have the money. They understand the ins and outs of running a small business.”

María Olga is relieved to have found a trusted partner that can help her maintain her financial health and that of her business, saying, “These days, there isn’t anyone to trust or who trusts you. I thank God that Bienestar came along and that they had confidence in me.”

Watch Maria’s story here:

[embed]https://vimeo.com/648737573[/embed]

A family hardware store stays in business with the right financial tools

<em>This article is the third of a six-part series on scaling financial inclusion to accompany our </em><a href="https://www.accion.org/the-digital-transformation-guide-six-strategies-to-scale-financial-inclusion" target="_blank" rel="noopener noreferrer"><em>digital transformation guide</em></a><em>. </em>

In emerging markets, many banks and financial providers rely on a network of field agents that interact with customers in person. Through in-person visits, these field agents build strong personal connections with customers while helping them to manage their money and determine which financial products best meet their needs. Many financial service providers (FSPs) who work with low-income segments struggle to build up their digital capabilities internally because their field employees fear that digital tools may diminish their deep relationships with customers and negatively impact the customer experience. Changing this mindset is key to a successful digital transformation.  When FSPs can create a culture of experimentation, they can drive digital innovation and reimagine how to address challenges and opportunities that arise for their organization and their customers.

To build this culture of experimentation, financial providers should:
<h3><strong>Focus on alignment before getting started</strong></h3>
Many FSPs feel they need to get new products out the door quickly to demonstrate progress on digital transformation initiatives. However, providers shouldn’t shortchange the time and effort required to build alignment across the organization before taking on a new digital strategy. Successful digital transformations should start with a shared understanding of the roles and responsibilities expected of each team member — from the board of directors all the way down each level of the organization.

Sasidhar Thumuluri, CEO of <a href="https://www.accion.org/clients/sub-k" target="_blank" rel="noopener noreferrer">Sub-K IMPACT Solutions</a> — a partner of Accion that reaches underserved populations in India, approached the challenge of launching a new digital strategy by first aligning with all teams on organizational goals and priorities. By holding several strategy-setting workshops to identify gaps within the organizational design and process flows before developing new products, Sub-K saw an opportunity to streamline their operations. Sasidhar also appointed subcommittees to determine which activities best supported the organization’s priorities, making Sub-K much more open to running experiments that ultimately lead them to build solutions that help low-income customers in rural India.
<h3><strong>Take a test-and-learn approach — and create a safe space to fail</strong></h3>
When working with our partner <a href="https://www.accion.org/clients/accion-microfinance-bank" target="_blank" rel="noopener noreferrer">Accion Microfinance Bank</a> (Accion MfB) in Nigeria, we knew the organization was just starting their digital transformation journey. While the leadership team was excited and motivated to digitize, we quickly learned that other departments essential to the digital team’s effectiveness, like HR, IT, marketing, and risk, weren’t fully sold on the idea. Their KPIs remained aligned with business as usual, so they weren’t incentivized to take risks and work toward the bank’s new digital ambitions. This trickle-down approach was insufficient to cultivate a culture where all teams embrace large-scale digital changes, and operational departments support the digital team’s needs using a test-and-learn approach. To address these challenges, Accion MfB embedded organization-wide changes, including:

<img class="alignnone wp-image-24077" src="https://content.accion.org/wp-content/uploads/2021/04/Accion-MAP-report-graphics-WEB_10-Culture-of-experimentation-300x150.png" alt="Culture of experimentation in digital transformation" width="738" height="369" />
<ul>
 	<li><strong>Encouraging management to take risks</strong>. Since management worried about the impact of failed projects on the bank’s profitability, the board approved an innovation budget, noting that they would not count any losses against profitability metrics or performance-related pay. This change made management increasingly comfortable with learning by doing.</li>
 	<li><strong>Prioritizing a Chief Digital Officer with the necessary people skills to drive digital adoption</strong>. The bank’s new Chief Digital Officer set a vision and evangelized digital transformation, encouraging his team to take risks and learn from failure.</li>
 	<li><strong>Developing and embedding digital KPIs into the organization’s DNA</strong>. Helping all teams understand their role in supporting digital initiatives is key. For example, HR took on KPIs like the speed of recruiting talent with digital skills, while the commercial team and branch managers contributed 15 to 20 percent of their time to digital support.</li>
</ul>
<blockquote class="blockquote pullquote--right">“In order to ensure that the digital unit is not just a brand within a brand, we had to create a connection between departments like audit, risk, and HR. We created a digital KPI for everybody across the bank so there is ownership and an embracing of our digital strategy.”

— Taiwo Joda, Managing Director and CEO, Accion Microfinance Bank in Nigeria</blockquote>
<ul>
 	<li><strong>Implementing interdepartmental service level agreements</strong>. Accion MfB ensured that audit and compliance departments would conduct timely assessments of digitally enabled products, marketing would respond to new products’ needs, and risk teams would support new product innovation, all of whom created budgets and plans that support experimentation requirements.</li>
 	<li><strong>Creating a safe space to fail and encouraging experimentation in a sandbox-like environment</strong>. Taking a flexible approach, Accion MfB ringfenced potential risks by limiting the number of customers and the total amount to lend during the digital loan pilot so they could identify the upfront costs needed for the experiment to achieve its objectives. Providing the digital unit with autonomy and decision-making power allowed them to frame their new digital loan as a low-risk experiment rather than a fully-fledged product launch.</li>
</ul>
<h3><strong>Combine comfort with radical experimentation</strong></h3>
To succeed in a digital world, FSPs need the flexibility to experiment safely and effectively. Leadership teams can cultivate a safe space and offer teams the freedom to fail by mastering six skills: be approachable, show compassion, stay composed, manage conflict, direct others, and listen proactively. When leaders embody these characteristics, their teams are more empowered to develop innovative solutions to serve financially excluded populations.

Accion worked with <a href="https://www.accion.org/clients/civico" target="_blank" rel="noopener noreferrer">CÍVICO</a>, a digital ecosystem that geolocates small merchants and corner stores across Latin America to make it easier for people to find what they need in their neighborhoods. While CÍVICO is not a traditional financial provider, they saw the opportunity to serve their customers better and grow their business by providing financial services. Though they initially sought to form partnerships with external vendors to develop a digital lending platform, their users’ urgent financing needs during the COVID-19 pandemic led CÍVICO to make the bold decision to start lending directly. They launched a low-fidelity product, lending very small amounts while conducting tests, learning quickly, and making adjustments to the process. Using surveys, they were able to better understand entrepreneurs’ behaviors, biggest pain points, and state of financial health, ultimately helping to identify the merchants most in need of just-in-time credit.

Realizing the transformative power of experimentation is a commitment. Over time, these experiments can yield thousands of small and not-so-small changes that can lead to huge benefits for customers. While many experiments may fail, prioritizing innovation leads to a successful digital transformation.

<em><a href="https://www.linkedin.com/in/malavika-krishnan/" target="_blank" rel="noopener noreferrer">Malavika Krishnan</a> contributed to this article.</em>

Invest in innovation to reach low-income customers

Karolayn started her business five years ago when she and her husband visited his grandfather. They noticed that local avocado producers were struggling to get their produce to market. She started by helping one neighbor harvest his fields and sent his avocados to buyers, and soon others approached her. She remembers another neighbor saying, “I have this land and these trees, but I need help harvesting and selling.” Karolayn used her savings and support from her family and friends to launch Don Beño, a wholesale avocado distribution business named after her husband’s grandfather.

Don Beño sources avocados from small producers in Chile, sorts and packages them, and then delivers them to various consumers across the country. The business is responsible for getting food from farmers to consumers safely, quickly, and efficiently. Latin America is one of the <a href="http://www.fao.org/americas/noticias/ver/en/c/1200912/" target="_blank" rel="noopener noreferrer">world’s leading food producers and exporters</a>, and agribusinesses like Don Beño play a critical role in Chile’s food supply chains, from food production to distribution to sales. The COVID-19 pandemic exposed the fragility of global supply chains and reinforced their importance in moving food from producers to tables. Many distributors are also micro, small, and medium enterprises (MSMEs), which make up more than <a href="https://www.worldbank.org/en/topic/smefinance" target="_blank" rel="noopener noreferrer">90 percent</a> of businesses worldwide and are the engine for ensuring that food and agricultural products reach consumers where and when needed. Despite the prevalence and importance of MSMEs, many businesses in Chile face difficulty getting the funding they need to grow.

In the beginning, Karolayn and her husband worked from their home and their workspace spilled out into the hallway of their patio. Now they have a flourishing business on their hands with a sizable office and warehouse. While their business is now stable and established, they started slow and faced challenges along the way. For example, when she needed investment for a bigger office and warehouse space two years ago, she found that capital was scarce. “It was a moment in which no one would support you,” she remembers. “We were only two years old, but the banks were asking for revenues and statements for businesses at least four years old.”

Until recently, Karolayn still faced the same funding problems. Things changed when she learned about <a href="https://redcapital.cl/">RedCapital</a>, a crowdfunding platform with a sole focus on MSMEs in Chile, and filled out their credit application. She remembers she didn’t have records or sales receipts but, under the company’s new credit scoring model adapted for the MSME segment, her application was approved. RedCapital disbursed the loan electronically, leveraging the digital infrastructure of its platform. She says, “They believed in our business, but, more than that, they believed in us as people.” RedCapital issued Karolayn her first loan, and now she is in her third round of credit. She states proudly, “they trusted us, and we have delivered.”

Though Don Beño is an established business now, Karolayn isn’t done growing. In fact, she says they are only halfway there. She wants to acquire another warehouse and invest in materials for temperature-controlled packaging. Since Don Beño is committed to getting its customers fresh avocados at the exact ripeness required, seasons can present a challenge. The fruit ripens too fast in the summer and not fast enough in winter. Adding cool packs to the boxes during the summer would alleviate stress during the warmer months and ensure that local consumers get the food they need when they need it. But such materials require capital.

Karolayn also wants to invest in a machine to sort the avocados. Currently, the team separates the fruit into five different grades by hand, weighing each avocado individually and placing them in separate corners of the warehouse. A machine could automate this sorting and cut two days of work down to just an hour. She notes that this investment would allow her business to grow dramatically, but it can only be acquired via credit. It isn’t feasible to save for such a purchase because her capital is tied up in inventory and smaller investments like boxes, trucks, and other assets. Any spare capital goes to these incremental growth opportunities, so she must look for financing for large investments like this machine and materials for temperature-controlled packaging.

RedCapital has helped Karolayn make the investment Don Beño needs, and she is hopeful the next phase of her business is within reach. RedCapital supports many businesses like Don Beño, which are critical to enabling players across the food chain — farmers, restaurants, retailers, and consumers. These businesses are essential, but they cannot succeed without adequate support and services. Financial institutions like RedCapital assured small business success, and in so doing, shore up the food production and distribution value chain, contributing to overall food security.

Accion worked with RedCapital, <a href="https://www.accion.org/accion-and-metlife-foundation-announce-expanded-partnership-to-advance-financial-inclusion">with support from MetLife Foundation</a>, to develop a digital credit product distributed through their crowdfunding platform. Specifically designed for MSMEs like Don Beño, their product helps entrepreneurs grow their business while giving them the ability to understand and improve their financial health. Watch Karolayn’s story here:

[embed]https://vimeo.com/641199249[/embed]

As agribusinesses grow, so does food security

Miguel Tzoy Pu owns a small farm in Totonicapán, Guatemala, where he grows tomatoes, chilis, potatoes, and corn. His wife and three children depend on the income from his harvest to pay for school, food, and other household necessities. Like many of the 5.7 million smallholder farmers in Guatemala, Miguel has struggled to manage the impacts of a changing climate, enduring periods of severe drought and destructive hurricanes that wreak havoc on his crop yields. With little financial experience, he has also had limited access to financial products that might help him to reduce farm losses, invest in new technologies, and protect his farm against agricultural shocks.

Across Guatemala, <a href="https://globalfindex.worldbank.org/sites/globalfindex/files/countrybook/Guatemala.pdf" target="_blank" rel="noopener noreferrer">7.5 million people do not have a basic bank account and just 12 percent of the population saved or borrowed from a financial institution as of 2017</a>. Micro, small, and medium enterprises (MSMEs), which account for 85 percent of employment and contribute 40 percent of GDP, consistently face challenges in accessing the formal financial system dominated by large commercial banks, with an estimated <a href="https://www.smefinanceforum.org/data-sites/msme-finance-gap" target="_blank" rel="noopener noreferrer">$14.2 billion formal finance gap</a>. With half the population living in poverty and <a href="https://www.iadb.org/en/improvinglives/neediest-and-hardest-reach-informal-workers-face-pandemic" target="_blank" rel="noopener noreferrer">70 percent of workers employed in the informal sector</a>, traditional financial institutions have shied away from serving low-income households and microentrepreneurs due to a lack of documented transactions and collateral which has fueled credit and risk aversion among banks. As the country continues to struggle during the COVID-19 pandemic and the risk of extreme weather events grows, inclusive financial services are more critical than ever.

<a href="https://genesisempresarial.org/" target="_blank" rel="noopener noreferrer">Fundación Génesis Empresarial</a> is Guatemala’s largest nonprofit microfinance institution, offering a comprehensive portfolio of products and services that includes working capital, housing, and education loan products, agricultural financing and advisory, insurance, and remittances to MSMEs and rural communities across the country. Founded in 1988, Génesis has provided financial and non-financial products and services, financial education and business management training, and advisory support to more than 720,000 clients, <a href="/two-women-entrepreneurs-carve-out-economic-opportunity-in-guatemala" target="_blank" rel="noopener noreferrer">helping them grow their businesses, send children to school, and move out of poverty</a>. Of their current 138,000 clients – many of whom are excluded from the traditional financial system – 42 percent live in poverty or extreme poverty, 85 percent live in rural areas, and 64 percent are women. Their national coverage extends across more than 100 branches, 3,000 agents, and 12,000 payment points, many in rural areas with limited access.

Fundación Génesis provided Miguel Tzoy Pu with a loan to expand his tomato and chili cultivation and support to help him better manage his credit. The loan has allowed Miguel to further expand his tomato plots, produce higher quality crops, and earn more every month.

Accion is excited to continue our 30-year relationship with Fundación Génesis Empresarial as part of the <a href="/mastercard-and-accions-partnership-to-unlock-millions-of-underserved-microbusinesses" target="_blank" rel="noopener noreferrer">Mastercard and Accion partnership</a> to help small businesses like Miguel Tzoy Pu’s operate in and benefit from the digital economy. A cornerstone of <a href="/accion-joins-white-house-call-to-action-to-support-economic-opportunity-in-the-northern-triangle" target="_blank" rel="noopener noreferrer">our commitment to support economic opportunity in the Northern Triangle</a>, Accion will help Génesis strengthen and accelerate their digital transformation to spur continued innovation and drive scale.

In recent years, Génesis has invested heavily in digital transformation – of their own institution, and of their clients. They now offer a digital wallet, called akisí, an online banking application, and recently launched a digital revolving credit product called Génesis Efectivo. Through this partnership, Accion will help Génesis:
<ul>
 	<li>Drive adoption and usage of the akisí wallet, particularly among women and rural users.</li>
 	<li>Develop and launch a holistic product and go-to-market strategy to scale Génesis Efectivo, their revolving digital credit line.</li>
 	<li>Expand and optimize Génesis’ agricultural products and program for smallholder farmers, including the integration of best practices to adapt to climate change.</li>
 	<li>Reimagine a customer-centric digitized group lending methodology to better support clients at the base of the pyramid.</li>
</ul>
This work will ultimately help increase access to high-quality digital financial services, improve economic opportunity for MSMEs and smallholder farmers, and build all Guatemalans’ resilience to economic and environmental shocks. Génesis is uniquely positioned to address complex challenges to financial inclusion in Guatemala. With the support of the <a href="https://bit.ly/39XuCMa" target="_blank" rel="noopener noreferrer">Mastercard Center for Inclusive Growth</a> and Accion, Fundación Génesis Empresarial can continue to deliver on its mission to promote the social and economic development of its clients.

<em><a href="https://www.linkedin.com/in/malavika-krishnan/" target="_blank" rel="noopener noreferrer">Malavika Krishnan</a> contributed to this article.</em>

Pathway to a resilient future for Guatemalan farmers and entrepreneurs

<span data-contrast="none">As the world continues to change, innovation and reinvention are critical to adapting financial services to meet the evolving needs of low-income people and small businesses. To support financial providers on their innovation journeys to serve their customers better, we have collated the lessons we have learned in supporting our FSP partners globally in developing innovation centers, into a comprehensive toolkit. Our experience has shown us that successful innovation hinges on three core components: </span><span data-ccp-props="{}"> </span>
<ol>
 	<li><span data-contrast="none">Organizing for innovation</span><span data-ccp-props="{}"> </span></li>
 	<li><span data-contrast="none">The innovation process</span><span data-ccp-props="{}"> </span></li>
 	<li><span data-contrast="none">Sustaining a culture of innovation</span><span data-ccp-props="{}"> </span></li>
</ol>
<span data-contrast="none">Are you an innovation leader seeking to create a safe space for experimentation? <a href="https://content.accion.org/wp-content/uploads/2021/09/accion-innovation-methodology-guidance.pdf" rel="noopener noreferrer">Download our toolkit</a> to access practical guidance and resources to guide you on launching an innovation hub at your organization.</span><span data-ccp-props="{}"> </span>

<hr />

<h3>Un modelo para la innovación en los servicios financieros</h3>
<em>Presentamos las herramientas del Centro de innovación, una guía para crear un espacio para la innovación para proveedores de servicios financieros</em>

A medida que el mundo sigue cambiando, la innovación y la reinvención son fundamentales para adaptar los servicios financieros a las necesidades cambiantes de las personas de bajos ingresos y las pequeñas empresas. Para apoyar a los proveedores financieros en sus procesos de innovación para atender mejor a sus clientes, hemos recopilado las lecciones que hemos aprendido al apoyar a nuestros socios PSF a nivel mundial en el desarrollo de centros de innovación, y las convertimos en un conjunto de herramientas integral. Nuestra experiencia nos ha demostrado que la innovación exitosa depende de tres elementos centrales:
<ol>
 	<li>Organizarse para la innovación</li>
 	<li>El proceso de innovación</li>
 	<li>Sostener una cultura de innovación</li>
</ol>
¿Es usted un líder en innovación que busca crear un espacio seguro para la experimentación? <a href="https://content.accion.org/wp-content/uploads/2021/09/accion-innovation-methodology-guidance-spanish.pdf">Descargue nuestro kit</a> de herramientas para acceder a guías prácticas y recursos que lo guiarán en el lanzamiento de un centro de innovación en su organización.

A blueprint for innovation in financial services