Adebiyi Fajemisin

Director, Digital Products and Transformation (MEA)

Jose  Wolff

Vice President, Latin America Program Management

Laura Glenny

Gift Mahubo

Balaji Parthasarathi

Diego  Gaviria Martinez

Kathleen Yaworsky

Liza Guzman

Priya Punatar

Michael Schlein

Leonardo Tibaquira

Ishan Mishra

Amy Stewart

Debdoot Banerjee

Victoria White

India

South Asia

Nigeria

Sub-Saharan Africa

Chile

Latin America and The Caribbean

Mexico

Bolivia

Guatemala

Colombia

Access Usage Gap

Advisory Services

Banks

Challenges and Crises

Credit

Customer Centricity

Data Analytics

Delivery Channels

Digital Credit

Digital Financial Services

Digital Transformation

Enabling Environment

Entrepreneurs of MSMEs

Financial Inclusion Strategy

Financial Service Providers

Financial Technology

Microfinance

Microfinance Institutions

Mobile Banking

MSME/SME Finance

Partnerships

Payments

Rural Populations

Underserved Groups

Agricultural and Rural Finance

Financial Capability

Financial Health

Resilience

Smallholder Farmers

Women

Human Touch

Appropriate Product Design and Delivery

Behavioral Insights

Consumer Protection

Crowdfunding

Fintechs

Human Centered Design

Personal Financial Management

Supply Chain Finance

Risk and Credit Analysis

Agent Banking

Alternative Data

Consumer Credit

Credit/Debit Cards

Privacy

Responsible Digital Finance

Impact Investing

Saving

Article

Video

Case Study

Report

Toolkits and Guides

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.

Even though Pallavi and her sister made high-quality products and had loyal customers, they found it difficult to grow their family’s textile business. Once they started working with <a href="https://www.accion.org/clients/sub-k" target="_blank" rel="noopener noreferrer">Sub-K IMPACT Solutions</a>, a digital finance company based in Hyderabad, India, and longtime Accion partner, they got the financial support needed to take their business to the next level. With access to digital financial services, they expanded the small shop started by their mother into three locations and began exporting materials to other countries. As their business thrived, Pallavi and her sister also turned to digital channels for other parts of their business, embracing social media to attract and engage with customers.

There has been a net increase in people, and especially microbusiness owners, using digital channels to conduct business and financial transactions. Evidence from China, Peru, Brazil, India, Mexico, Colombia, and the United States shows that <a href="https://labs.ebanx.com/en/articles/business/delivery-apps-feel-spike-in-demand-and-adopt-measures-to-fight-covid-19-crisis/" target="_blank" rel="noopener noreferrer">demand for delivery services</a> and <a href="https://business.adobe.com/resources/digital-economy-index.html" target="_blank" rel="noopener noreferrer">e-commerce </a>has increased rapidly to 27.6 percent globally. Despite the contraction in economic activity, <a href="https://www.gsma.com/mobileeconomy/wp-content/uploads/2021/07/GSMA_MobileEconomy2021_3.pdf" target="_blank" rel="noopener noreferrer">GSMA</a> reports that mobile money grew 12.7 percent — twice as fast as the forecast for 2020-2021 — reaching 1.2 billion accounts. Through our digital transformation work, part of Accion’s partnership with Mastercard Center for Inclusive Growth, we have seen a three-fold increase in digital services adoption by underserved microbusinesses in just the six months leading up to March 2022 alone.

[caption id="attachment_26376" align="aligncenter" width="1024"]<img class="wp-image-26376 size-large" src="https://content.accion.org/wp-content/uploads/2022/06/MSME-digital-adoption-1024x593.png" alt="MSME digital adoption" width="1024" height="593" /> <em>Progression of the digital services adoption of MSMEs impacted by Accion’s digital transformation work</em>[/caption]

This rapid shift to digital financial services creates a massive opportunity for financial services providers, with the lower costs afforded by digitization allowing them to reach more of the underserved. However, digital transformation requires providers to change how they think, operate, and deliver valuable services to their clients. By finding creative ways to deconstruct existing business models and reinventing themselves for the digital age, financial providers also signal to their employees an openness to more innovation in the future.

When Sub-K reinvented their digital product offerings, their clients’ digital usage increased slowly at first and then rose rapidly over the past year. Between August 2021 and May 2022, the number of clients using digital products grew by 150% and recently jumped from 52,000 unique customers in March 2022 to 72,000 in May 2022. This trend is beyond expectations and is not expected to change.

Sasidhar Thumuluri, Sub-K’s Managing Director and CEO, reflected on the initial days of this initiative, which has been a central part of the company’s digital transformation journey. When Sub-K first released their digital collections tool and other digital services for staff and clients, they were unsure about adoption. Some also worried that the front-line staff, their customer service representatives, may not see the benefits and ignore the new digital tools. With the help of Accion, Sub-K’s leadership drove this change from the top. Customer service representatives were suitably incentivized and digital KPIs were introduced for everybody, from the CEO and throughout the organization. Small successes were celebrated, and good performers were recognized and rewarded. Their initial concern proved wrong, so much so that the results took Sub-K by surprise. Not only did clients realize added flexibility and other benefits they did not expect, but the tool also saved time for the customer service representatives who supported them. Sub-K is now testing a new end-to-end digital product that will challenge the decades-old approach to group loans.

To introduce new digital solutions and experiment with agility as Sub-K did, financial providers must adapt their teams’ responsibilities and decision-making requirements. As processes and job responsibilities shift and new projects begin, teams must be clear on their new roles and deliverables and what is needed from each team to succeed.

One way to mitigate disruptions from internal changes is to <strong>formalize new, collaborative internal service level agreements between teams</strong>. These agreements, like <a href="https://en.wikipedia.org/wiki/Responsibility_assignment_matrix" target="_blank" rel="noopener noreferrer">RACI matrices</a>, specify mutual goals and governance structures that can help align expectations, define roles and responsibilities, and foster lasting trust and collaboration between team members. These agreements should include <a href="https://en.wikipedia.org/wiki/SMART_criteria" target="_blank" rel="noopener noreferrer">SMART metrics</a> to ensure transparent collaboration and enable monitoring for a successful outcome.

For employees to feel safe to be creative, take risks, and learn from their experiences, they also need <a href="https://www.forbes.com/sites/googlecloud/2021/08/27/safe-space-how-psychological-safety-can-make-your-team-more-effective/" target="_blank" rel="noopener noreferrer">psychological safety</a>, which is essential whenever individuals face uncertainty. Any transformation leads to great uncertainty.

An example of creating psychological safety can be found in the <a href="https://sre.google/sre-book/postmortem-culture/?utm_source=forbes&amp;utm_medium=display&amp;utm_campaign=2021-thought-leadership-forbes-brand-voice&amp;utm_content=psychological-safety-sre-book-postmortem-culture" target="_blank" rel="noopener noreferrer">postmortem philosophy</a>, where a report is created after a failed test to identify objective reasons why an experiment failed rather than focus on the individual who led the test. This formal process requires the assumption of good intent, a widespread belief by leaders and their teams in the individual and their collective competency, and the expectation of high performance from everyone.

Psychological safety is the foundation of an environment that fosters creativity and learning, but <strong>diversity and inclusion bring innovation to life</strong>.

Instead of seeking consensus, organizations need to focus on bringing teams together that offer different perspectives and experiences so they can broaden possibilities, identify trends, and ultimately compete with other innovative organizations. To innovate, organizations need to think differently and be open to new ideas and ways of thinking. Meaningful innovation can only happen if there are different voices at the table.

Creating a <strong>culture of innovation is not an end game; it is a state of constant change and evolution</strong>. The digital products that are changing lives today are only the steppingstones to solutions that will shift the ways future generations experience the world. While formal, transactional changes will help employees establish new ways of working, organizations need to focus on their ability to sustain change while continuing to learn and grow.

This way, organizations can creatively destruct, reinvent, and expand the impact they have on their clients’ lives.

Where are you in your journey to create a culture of innovation? Take our <a href="https://dtsurvey.accion.org/people-culture" target="_blank" rel="noopener noreferrer">people and culture assessment</a>, or <a href="mailto:peopleculture@accion.org" target="_blank" rel="noopener noreferrer">reach out</a> if you are interested in learning more.

Accelerate innovation through deconstruction

[embed]https://vimeo.com/685498003[/embed]

In India, three out of four women living in rural areas work on small-scale farms. As farming challenges push rural men to cities in search of better paying jobs, women have become responsible for most of the country’s dairy production and food production. Despite their crucial role in the agriculture sector, social norms make it harder for women to own farmland in India.

<a href="https://www.accion.org/digital-tools-fuel-financial-resilience-in-rural-india" target="_blank" rel="noopener noreferrer">With our partner Dvara KGFS</a>, we’re bringing loans, credit, savings, and insurance to women farmers across India so they can create brighter futures for themselves and their families. Watch how Mahalakshmi and Jansiranni built thriving businesses in Tamil Nadu, India, with support from Dvara KGFS.

Together with partners, Accion is empowering women farmers and their families with the financial support they need for their businesses to thrive.

Women entrepreneurs grow prosperous futures in 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 2018, MetLife Foundation and Accion Global Advisory Services launched a partnership to explore how financial services providers (FSPs) can craft digital products to support financial health. The Accion team partnered with five FSPs in Mexico and Chile to design and launch innovative financial products and monitor their impact on the financial health of underserved customers. This work succeeds our <a href="https://www.accion.org/metlife-foundation-and-accion" target="_blank" rel="noopener noreferrer">joint effort with MetLife Foundation to advance financial inclusion</a> in Latin America, by building the capabilities of the underserved while engaging and motivating the financial inclusion industry and community.

Although the products were launched as pilots during a time when the market and customers were facing challenges from a pandemic, initial results suggest that the products have positive impact on users' financial health. Data suggests that timely credit, tailored advice and training, and enhanced user experiences can improve customers’ overall financial well-being.

<img class="wp-image-25226 aligncenter" src="https://content.accion.org/wp-content/uploads/2021/11/Accion-MetLife-report-graphics-EN-Social-FINAL-08-1024x819.png" alt="Accion-MetLife-report-graphics-client map" width="661" height="529" />
<h3><strong>Leveraging distributor intelligence for small business credit </strong></h3>
Located in central Mexico, cooperative Caja Bienestar partnered with Accion to develop a product to appeal to micro businesses. Initial research with business owners revealed they are more comfortable taking credit from their suppliers, who allow them rotating credit, to repay once they have made sales, and without complex paperwork or collateral. Recognizing the power of the relationships and data that suppliers have with and from small businesses, the Accion and Bienestar teams worked with suppliers and distributors to pre-approve micro-entrepreneurs. The resulting loan is much like the credit shopkeepers receive from distributors, featuring a fee (rather than interest rates), an open line of credit, and flexible repayment schedules.

During the pilot, the product had 14 active users, each of whom received an average of 18 rounds of credit. The percentage of users who said their financial situation caused them stress decreased by nearly 10 percent during the pilot.

MetLife Foundation and Accion: Improving financial health in Mexico and Chile

<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

<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

<h1>Foreword</h1>
<a href="https://www.accion.org/finding-a-path-to-financial-health-in-chile-one-step-at-a-time" target="_blank" rel="noopener noreferrer"><span style="font-weight: 400;">Karen</span></a><span style="font-weight: 400;"> is a single mom who lives in Santiago, Chile, with her young daughter. She went to school to study business administration but had to drop out to care for her daughter. Today, she works at a retail shop where she makes just enough to get by. Karen worries all the time — about paying the bills each month, about providing for her daughter, and about her growing credit card debt. She knows she needs to make a change, but she doesn’t know where to start. She has tried to put together a plan to pay off her debt, but it is difficult to figure out the total amount she owes or identify the right person to call. Thinking about money makes her feel stressed, overwhelmed, and alone.</span>

<span style="font-weight: 400;">To achieve their goals and build financial health, people like Karen need products and services that can help them to better track their finances, manage shocks (like global pandemics) and pursue financial goals. </span>

<span style="font-weight: 400;">Unfortunately, most low-income individuals and small businesses currently lack access to formal financial services; </span><a href="https://databank.worldbank.org/reports.aspx?source=global-financial-inclusion" target="_blank" rel="noopener noreferrer"><span style="font-weight: 400;">nearly half of adults</span></a><span style="font-weight: 400;"> in Latin America do not have a formal bank account, and those with accounts use them </span><a href="https://publications.iadb.org/en/converting-dormant-bank-accounts-dynamic-force-latin-america" target="_blank" rel="noopener noreferrer"><span style="font-weight: 400;">infrequently</span></a><span style="font-weight: 400;">. This suggests that most of the financial products available to users in Latin America may be expensive, inconvenient, inappropriate, or all three. </span>

<span style="font-weight: 400;">This is because developing relevant financial services for low-income households and small businesses — that can have a meaningful impact on their financial health — is not straightforward. Low-income customers often lack formal financial records, operate informally, and have little 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 craft relevant financial products, providers must acquire a deep understanding of their customer’s financial behaviors, pain points, ambitions, attitudes, and capabilities. </span>

<span style="font-weight: 400;">To help them develop financial services that can deliver financial health, Accion Global Advisory Solutions along with </span><a href="https://www.metlife.com/about/corporate-responsibility/metlife-foundation/index.html" target="_blank" rel="noopener noreferrer"><span style="font-weight: 400;">MetLife Foundation</span></a><span style="font-weight: 400;"> partnered with fintechs, cooperatives, and traditional financial service providers (FSPs) in Chile and Mexico to develop products to better serve their low-income customers. Accion worked with these FSP partners to design and launch viable digital products and services to reach underserved clients and improve their financial health, to help them maintain resilience against adversity and take advantage of opportunities. </span>

<span style="font-weight: 400;">This paper shares five case studies about Accion’s work with Chilean and Mexican partners over the past three and a half years. In Chile, we used </span><span style="font-weight: 400;">human-centered design and behavioral economics to launch a business management application for microbusinesses with </span><a href="https://www.accion.org/this-new-app-is-helping-small-business-owners-build-financial-health-and-resilience" target="_blank" rel="noopener noreferrer"><span style="font-weight: 400;">Organizame and Banigualdad</span></a><span style="font-weight: 400;">, revamped a financial health portal with </span><a href="https://www.accion.org/fintech-founders-have-a-formula-for-building-financial-health" target="_blank" rel="noopener noreferrer"><span style="font-weight: 400;">Destácame</span></a><span style="font-weight: 400;">, and deployed a crowd-funding platform for microentrepreneurs with </span><a href="https://redcapital.cl/" target="_blank" rel="noopener noreferrer"><span style="font-weight: 400;">RedCapital</span></a><span style="font-weight: 400;">. In Mexico, we developed a savings product for youth with </span><a href="https://www.accion.org/young-people-in-mexico-need-finance-that-fits-their-lives" target="_blank" rel="noopener noreferrer"><span style="font-weight: 400;">Caja Popular Cerano</span></a><span style="font-weight: 400;"> and launched a supply chain finance product with </span><a href="https://www.ahorrosbienestar.com/" target="_blank" rel="noopener noreferrer"><span style="font-weight: 400;">Caja Bienestar</span></a><span style="font-weight: 400;">. In this paper, w</span><span style="font-weight: 400;">e share our key challenges, learnings, and overall results from this project — uncovering best practices on how to design for and influence financial health along the way.</span><i><span style="font-weight: 400;"> </span></i>

<span style="font-weight: 400;">To date, most financial health efforts have focused on measurement and monitoring, but little guidance has been provided to financial service providers that are at the frontlines of engaging and serving customers on a daily basis. This paper is a first effort in that direction, giving providers actionable lessons for how to support positive financial health outcomes among their users. Moreover, the case studies within demonstrate the positive impact that a financial health-focused approach has on loyalty, customer lifetime value, and in creating new customer acquisition opportunities.</span>

<span style="font-weight: 400;">In the midst of enormous financial uncertainty sparked by COVID-19, our efforts to help underserved families and businesses improve their financial capabilities and develop healthy financial behaviors are critical. Our hope is 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 their customers. This will require a more holistic approach to designing products for underserved individuals that includes consideration of their financial capabilities and historic behaviors. We believe that such an approach will result in better products with greater uptake and engagement. </span>

&nbsp;

<span style="font-weight: 400;">Liza Guzman</span>

<i><span style="font-weight: 400;">Vice President and Program Manager, Customer Strategy</span></i>

How providers can build products that improve financial health: Examples from Mexico and Chile

[embed]https://vimeo.com/651607676[/embed]

Marco Antonio’s farm in Tecpán, Guatemala is more than a way to support himself. It’s how he’s able to send his six children to school. With a business loan and advice from our partner Fundación Génesis Empresarial, he’s been able to invest in his farm, produce more crops, and support his family and community. By helping partners like Génesis serve farmers and small businesses, Accion helps low-income people get the right financial tools to build better futures.

Marco Antonio's farm supports his family and community in Guatemala

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

Small businesses in India create a staggering number of jobs, employing over 100 million people across the country. The micro, small and medium enterprise (MSME) sector also forms the backbone of India’s economy, accounting for 29 percent of the country’s gross domestic product (GDP) and 49 percent of its exports. Despite their crucial economic and societal role, these small businesses are held back from reaching their potential by the lack of access to timely and reasonably priced credit products they need to succeed. Without adequate credit, Indian MSMEs aren’t prepared to weather challenging times, supply chain shocks, or get what they need to grow in the future. The ongoing pandemic has disrupted supply chains, increased procurement costs, and has made it even more challenging for MSMEs to access credit.

At Accion Venture Lab, we believe in the potential of supply chain financing to bridge the working capital gap for MSMEs. That’s why we’re excited to <a href="/cashinvoice-sets-a-new-msme-financing-disbursal-target-of-rs-10000-cr-after-raising-funds-from-accion-venture-lab" target="_blank" rel="noopener noreferrer">invest in Cashinvoice</a>, a digital invoicing and payments solution for large and mid-sized companies and their small business vendors and customers. <a href="https://cashinvoice.in/" target="_blank" rel="noopener noreferrer">Cashinvoice</a> leverages technology to bring financial institutions, large corporations, and their MSME suppliers and customers onto a single platform that streamlines payments for their services, unlocks working capital for small businesses when they need it, and offers them embedded lending products to expand their businesses.

We are excited to partner with Cashinvoice as they:
<h2>Close the financing gap for small businesses in India</h2>
Traditional lending institutions only fulfill an estimated five percent of the need for short-term working capital financing in India. That leaves an overwhelmingly large proportion of the country’s 65 million MSMEs without access to appropriately priced, short-term working capital and creates a massive credit gap among MSMEs who cannot provide adequate collateral or documentation needed to secure loans from traditional lenders. Even if these businesses had the collateral or documentation needed, traditional lending institutions and non-banking finance companies (NBFCs) predominantly offer expensive term loan products that aren’t optimal to meet the working capital needs of small businesses.

Cashinvoice aims to close this huge financing gap for small businesses by partnering with large and mid-sized corporations to build customized channel financing programs for the MSMEs within their value chain. Cashinvoice’s tech platform seamlessly brings together validated invoices, historical business transactions with these corporate anchor partners, and other data points to assess the credit risk of anchor partners’ small business vendors and customers. For example, a small business operating as a vendor for a corporation can choose to be paid upfront in lieu of a discount against an invoice that is expected to be settled by the corporation in the next 30 to 60 days, the typical credit period. The discount is calculated dynamically through algorithms that use diverse data sources and the credit profile of the business. Access to proprietary data helps reduce the credit risk and thus lowers the credit cost for the MSMEs.
<h2>Leverage data to make financial services more accessible</h2>
Supply chains across many industries in India have traditionally operated offline, relying on paper invoices and cash to complete transactions. The lack of digital records creates a challenge for MSMEs when they need to validate invoices and access data to prove past trade relationships with their corporate partners. Cashinvoice’s platform brings ecosystem players of offline supply chains onto a digital platform and thus creates a rich data source on trades between them. Cashinvoice leverages this data source to enable invoice financing for MSMEs, which brings down the interest cost for them compared to other credit products.

As the company scales, Cashinvoice’s platform will collect pools of MSME data on business performance, cashflows, and loan repayment history. With this information, the company plans to provide a range of financial services to its small business customers, such as corporate credit cards, insurance, working capital loans, current accounts, and more. With access to rich data on the MSMEs, the financial services products can be customized to their needs and offered in a timely manner.
<h2>Digitize supply chains and create digital footprints for MSMEs</h2>
Traditionally, most payments and collections between retailers and distributors happen in cash. Cashinvoice’s platform creates a digital collection of receivables within the supply chain to replace offline transactions. Digital collections are more efficient and enable small retailers to build a credit history and generate a digital trail of data. With this digital footprint, MSMSEs can gain access to services provided by formal financial institutions at a lower cost.

The Accion Venture Lab team is excited about the journey that lies ahead for Cashinvoice. We look forward to supporting Cashinvoice’s stellar team as they work to digitize offline value chains and open access to supply chain financing solutions for MSME customers. We believe that access to supply chain finance is key to the growth and sustainability of small businesses in India and worldwide.

A digital solution unlocks supply chain finance for small businesses in India

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

<em>This article is the second of a six-part series on scaling financial inclusion as part of our <a href="/the-digital-transformation-guide-six-strategies-to-scale-financial-inclusion" target="_blank" rel="noopener noreferrer">digital transformation guide</a>.</em>

Most microfinance institutions originated as high-touch businesses, focused on meeting the needs of their customers through face-to-face interactions and cash-based transactions. While this model worked well to provide underserved populations with access to the responsible financial products they need, the heavy reliance on loan officers and physical branches results in higher costs and limits scalability. And during the pandemic, in-person contact has been off-limits in many communities.

The solution? Technology.

A purely digital financial services model — which relies on remote applications, processing, approval, and digital transactions — is very different from the high-touch, low-tech model of traditional microfinance institutions in ethos, culture, and style. But many financial service providers (FSPs) catering to the underserved face the reality that they cannot adopt a purely digital financial service model as some customers will continue to require high-touch service, while others may be comfortable transacting digitally. Therefore, the transformation of FSPs requires careful thought about how two very different operating models, one current and one future state, should be integrated under the same roof.
<h3>Putting digital transformation into practice</h3>
Choosing an appropriate operating model depends on institutions’ digital maturity and their desired end-state. While there is no right way to organize for digital transformation, there are three different approaches that companies can consider:
<ol>
 	<li>Fully integrating digital processes across all departments</li>
 	<li>Establishing a digital center of excellence within the organization to deliver new products</li>
 	<li>Creating a separate digital entity, or wholly owned subsidiary, that operates independently</li>
</ol>
<img class="aligncenter size-full wp-image-24065" src="https://content.accion.org/wp-content/uploads/2021/04/Accion-MAP-report-graphics-WEB_6-Org-design-overview.png" alt="Companies should carefully select an organizational design that will enable them to digitally transform." width="2000" height="1180" />

Keep in mind that organizational design can and should change over time. While some companies may like the dedicated focus of a separate or semi-integrated digital unit at the start, others may want to ensure digital capabilities become embedded across business lines over the longer term. To learn more, read Accion’s recently published <a href="/the-digital-transformation-guide-six-strategies-to-scale-financial-inclusion" target="_blank" rel="noopener noreferrer">digital transformation guide</a>, developed in partnership with the <a href="/institutional_partnerships/mastercard-center-for-inclusive-growth" target="_blank" rel="noopener noreferrer">Mastercard Center for Inclusive Growth.</a>

Through our partnership with Mastercard, Accion is helping several financial service providers digitally transform so that they can serve small businesses and families more effectively. To accomplish this, we’ve implemented variations of these organizational design approaches:
<h3>1. Fully integrated digital transformation model</h3>
In a fully integrated digital transformation model, digital capabilities and processes are interwoven across business lines, with all departments responsible for driving business agility, growth, and innovation.
<blockquote class="pullquote--right">“Unless we create the overall organizational environment around the digital culture, just releasing a digital product [won’t] solve the problem because the whole support system has to come along.” — Sasidhar Thumuluri, Managing Director and CEO, Sub-K IMPACT Solutions Ltd. in India</blockquote>
<a href="https://www.accion.org/clients/sub-k" target="_blank" rel="noopener noreferrer">Sub-K IMPACT Solutions</a>, a banking correspondent company in India, socialized digital transformation across their entire organization by utilizing town hall meetings at headquarters and in the field to educate employees on the value of digital. They trained nearly all staff to adopt a digital-first approach to customer acquisition, application processing, account servicing, and collections and put in place KPIs to drive forward a digital operating model. They also created several working groups with members from product, data strategy, training, compliance, marketing, call center, and agent networks to leverage the institution’s existing assets and infrastructure to offer a distribution model for digital products. These cross-functional teams work together to develop and implement digitally enabled, customer-centric products and services, ensuring Sub-K’s successful digital transformation and enabling the launch of their <a href="/banking-goes-digital-to-reach-rural-entrepreneurs" target="_blank" rel="noopener noreferrer">SARTHI fintech platform</a>.
<h3>2. A digital center of excellence</h3>
When establishing a digital center of excellence, <a href="https://neoventures.global/en/innovation-hubs-what-they-are-and-how-they-can-generate-results-for-large-companies/" target="_blank" rel="noopener noreferrer">or innovation hub</a>, FSPs must consider which existing assets within the business to leverage in new digital initiatives. Since this model requires departments like IT, marketing, audit, and compliance to significantly shift how they operate, plan, and resource themselves to support the new venture, it is crucial to make clear agreements on shared resources to achieve the organization’s priorities.

<a href="https://www.accion.org/clients/bancosol">BancoSol</a> serves more than one million low-income clients in Bolivia. They opted to develop an innovation hub responsible for leading the bank’s digital transformation to serve current customers better and shape BancoSol’s future. To encourage experimentation, they did not configure the innovation hub to have profit and loss (P&amp;L) responsibility immediately. Instead, the hub received freedom to develop a digitally native identity and culture, working closely with other business lines to deliver new products and services and leveraging the bank’s existing capabilities, including the tech stack, marketing, and operational staff. Additionally, the innovation hub focuses on building cutting-edge capabilities in human-centered design, data analytics, and open innovation, which will be embedded within the FSP as the skills mature. As the center of excellence progresses, the vision is to transition to a standalone digital unit with its own P&amp;L responsibility and acts as a service provider for the bank, charging for its services. This model has demonstrated success with <a href="https://www.dbs.com/innovation/dbs-innovates/spaces.html" target="_blank" rel="noopener noreferrer">DBS Asia</a> X and the <a href="http://innovation.brac.net/" target="_blank" rel="noopener noreferrer">BRAC</a> Social Innovation Lab.
<h3>3. Separate digital entity</h3>
A standalone digital unit is a powerful idea for many innovators in the industry. The allure of being able to build, test, learn, and launch products without having to worry about the FSP’s existing business operations is strong, but it is crucial that the strategy, focus, investment requirement, and management structure of the new unit is absolutely clear. One notable example is ALAT, Nigeria’s first fully digital bank. ALAT is a child company of the country’s oldest bank, Wema Bank. ALAT was built from the ground up to provide a branchless customer experience. Today, <a href="https://www.wemabank.com/alat-is-to-nigerian-banking-what-technology-is-to-humanity/" target="_blank" rel="noopener noreferrer">ALAT has over 200,000 active clients</a>, is Wema Bank’s primary banking platform, and brings significant transformation to the Nigerian banking industry.

For an organization to determine the best model to start with, they should consider several factors: whether their existing operations already reach their target customers, macro-level factors such as access to talent and the potential for partnerships, the digital maturity levels of the country and institution, and finally, whether the company has a culture of openness to change.

If you are interested in optimizing the organizational design at your institution as you look to transform digitally, we are happy to help. <a href="https://www.accion.org/advisory-contact" target="_blank" rel="noopener noreferrer">Reach out to us</a>.

<em><a href="https://www.linkedin.com/in/malavika-krishnan/" target="_blank" rel="noopener noreferrer">Malavika Krishnan</a> contributed to this article.</em>

How to choose the right approach to digital transformation

In India, over 80 percent of the population has a bank account — an impressive feat given the country’s huge size and geographic diversity. Driven by <a href="https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/digital-india-technology-to-transform-a-connected-nation" target="_blank" rel="noopener noreferrer">high rates of digital adoption</a> and near-universal coverage of Aadhaar, India’s national biometric digital identity program, India is rapidly extending financial services to the previously underserved. As of August 2020, around <a href="https://www.theweek.in/news/biz-tech/2020/08/28/jan-dhan-scheme-completes-6-years-over-40-crore-bank-accounts-opened.html" target="_blank" rel="noopener noreferrer">400 million bank accounts</a> were opened through the government’s flagship financial inclusion program — 64 percent of which were held by rural Indians.

While that is great progress, access to financial services for low-income individuals is largely restricted to basic bank accounts and remittance services. With over 65 percent of India’s 1.37 billion people living in rural areas, wealth creation and management tools, unfortunately, haven’t reached the masses at the outskirts. Relevant and appropriate wealth management solutions ensure that rural households have access to a full suite of financial services normally reserved for affluent clients and benefit from tailored guidance that empowers consumers to manage their finances better. Given that only <a href="https://economictimes.indiatimes.com/news/india/net-hesitancy-hiccups-for-rural-india-vax-drive/articleshow/82671780.cms" target="_blank" rel="noopener noreferrer">28 percent of rural India</a> has access to internet-enabled smartphones and many people have low levels of digital literacy, providing appropriate financial services through both in-person and digital channels is key to reaching the underserved in rural India.

<img class="size-full wp-image-24638 alignleft" src="https://content.accion.org/wp-content/uploads/2021/08/kasthuri-dvara-kgfs-client.jpeg" alt="Kasthuri, a client of Dvara in India" width="300" height="300" />In a small village in Tamil Nadu, Kasthuri looks after her two-year-old daughter and runs her own tailoring business. Her husband works overseas as a salesperson so he can earn more money to provide for their family. The pandemic caused severe financial difficulties for the family — her husband was unable to send money home, and her tailoring unit’s business suffered during India’s strict lockdown restrictions. Kasthuri started working with Dvara KGFS, a financial provider serving rural communities in India, to build her business and turned to their team for support during this difficult period. A Dvara KGFS wealth manager recommended the <a href="https://www.dvarasmartgold.com/" target="_blank" rel="noopener noreferrer">Dvara's "Digital Gold" micro-savings plan</a> to Kasthuri, which allows her to save in small, flexible installments based on her cash availability. This product enables Kasthuri to deposit and redeem her savings in either cash or gold. Kasthuri realized the importance of saving to create a financial safety net and now saves regularly to secure a safe future for her and her family.

<a href="https://www.dvarakgfs.com/" target="_blank" rel="noopener noreferrer">Dvara KGFS</a> helps to build the financial health of low-income populations by providing complete access to financial services for individuals and small businesses in remote rural India. Founded in 2008 as a non-banking financial institution, Dvara aims to support their rural customers’ wealth creation and financial wellbeing by using a combination of traditional physical branches and digital banking to bring credit, savings, and insurance to rural communities in India. With 294 branches across 51 districts in six Indian states, Dvara reaches over 1.16 million customers.

Accion has a long-standing relationship with Dvara KGFS as an investor. Now, 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 operate in and benefit from the digital economy, Accion is supporting Dvara in its efforts to leverage technology to unlock efficiency and create optimal customer experiences. Because over 45 percent of Dvara’s customer base has access to a smartphone, Dvara is pursuing a hybrid approach that combines both tech and touch components to reach more financially excluded rural customers on both sides of the digital divide.

Digital tools fuel financial resilience in rural India

Over 1.7 billion individuals around the world are unbanked, with more than 3 billion people either poorly served or left out entirely by the financial sector. At Accion, we believe technology has the power to change that. Nearly 70 percent of unbanked adults own a mobile phone, giving rise to a new generation of digital financial services and an immense opportunity to drive financial inclusion forward.

Financial service providers (FSPs), marketplace platforms, fast-moving consumer goods companies (FMCGs), and other actors in the ecosystem that serve micro, small, and medium enterprises (MSMEs), face numerous strategic and operational challenges today. While digital technology continues to disrupt the financial sector and the world more broadly, as most interactions between MSMEs and their ecosystem partners are still manual, paper-based, and inefficient. With deep technical expertise and innovative approaches, <a href="/how-we-work/advise/accion-global-advisory-solutions" target="_blank" rel="noopener noreferrer">Accion Global Advisory Solutions</a> helps these players overcome the issues they face in driving change and accelerating the creation of enabling digital ecosystems.

With decades of on-the-ground experience combined with insights into new technologies, our global team delivers strategic and technical advisory support through integrated products and offerings, all toward a north star — creating economic opportunities and a financially inclusive world for MSMEs and low-income households. By addressing the most pressing issues facing financial inclusion, we help mission-driven organizations achieve scale, impact, and returns.

Strengthened by our key partnerships with <a href="/institutional_partnerships/mastercard" target="_blank" rel="noopener noreferrer">Mastercard Center for Inclusive Growth</a>, <a href="/institutional_partnerships/metlife-foundation" target="_blank" rel="noopener noreferrer">MetLife Foundation</a>, and <a href="/institutional_partnerships/fedex" target="_blank" rel="noopener noreferrer">FedEx</a>, to name a few, our work enables families and microbusinesses around the globe to reach their economic potential by expanding access to appropriate financial service options. This approach includes digital tools to manage their financial goals better and digitize business transactions. We firmly believe in giving people the financial tools they need to improve their lives and build resilience at a time when many are facing larger challenges than ever before.
<h3>So how do we make a difference?</h3>
Accion’s <a href="/how-we-work/advise/accion-global-advisory-solutions" target="_blank" rel="noopener noreferrer">advisory team</a> works closely with FSPs, marketplace platforms, FMCGs, and other ecosystem partners that are uniquely positioned to provide appropriate financial products to low-income individuals and underserved microbusinesses at scale, helping them improve their financial health and resilience.

<img class="aligncenter wp-image-24623 size-full" src="https://content.accion.org/wp-content/uploads/2021/07/accion-global-advisory-solutions-products-copy.png" alt="Accion's advisory services" width="800" height="281" />

Our advisory team applies customer-centric, data-driven, and tech-enabled solutions that help these institutions expand their engagement with MSMEs around the world and maximize their impact. We offer an evolving set of core products that integrate our broad expertise, including:
<ul>
 	<li><strong>Digital lending</strong>: We leverage our capabilities in payments, digital transformation, human-centered design, customer engagement, and data and analytics to deliver <a href="/series/demystifying-digital-lending-series" target="_blank" rel="noopener noreferrer">digital lending</a> solutions to more underserved clients in faster, more cost-efficient, and engaging ways.</li>
 	<li><strong>Digital payments</strong>: When small business owners can send and receive digital payments, they can run their businesses more efficiently. We connect MSMEs and FSPs to digital payments, decreasing both parties’ operational costs and offering greater convenience and flexibility for underserved customers. We facilitate win-win partnerships to integrate ecosystems, provide strategy and implementation support, and use customer insights to inform <a href="/topics/payments" target="_blank" rel="noopener noreferrer">digital payment</a> product design.</li>
 	<li><strong>Digital transformation</strong>: For merchants to easily access financial and other value-add services digitally, Accion recognizes that the entire ecosystem requires digital capabilities, third-party integrations, and customer-facing apps. Accion takes a holistic view of <a href="/topics/digital-transformation" target="_blank" rel="noopener noreferrer">digital transformation.</a> We design and implement digital strategies that help institutions realize their long-term ambitions while also connecting microentrepreneurs to the digital economy so that they can become more resilient. We have developed diagnostics to evaluate the digital skills of small merchants, and tools that help both FSPs and MSMEs build their digital capabilities.</li>
 	<li><strong>Supply chain finance</strong>: We offer a comprehensive <a href="/series/supply-chain-finance" target="_blank" rel="noopener noreferrer">supply chain finance</a> solution that optimizes working capital, reduces risk, and increases revenues. This solution enables FSPs and other supply chain actors to extend more services to existing and new merchants and achieve greater scale through close collaboration.</li>
 	<li><strong>Risk strategy and scorecards</strong>: Accion has developed in-house expertise in collecting, structuring, and analyzing data to realize the benefits of digitization. To help FSPs <a href="/topics/risk-and-credit-analysis" target="_blank" rel="noopener noreferrer">manage risk and leverage data efficiently</a>, we work to reduce credit risk through risk management frameworks, credit decision tools, propensity modeling, and underwriting techniques.</li>
 	<li><strong>Accion Design</strong>: Accion works with financial sector partners to create customer-centric products and services using <a href="/topics/human-centered-design" target="_blank" rel="noopener noreferrer">human-centered design</a>, behavioral science, and data science. This approach helps us build easy and intuitive products for customers to use when accessing services digitally and fuels innovation and transformation across organizations.</li>
 	<li><strong>Ovante</strong>: Created by Accion, <a href="https://ovante.org/" target="_blank" rel="noopener noreferrer">Ovante</a> is a digital learning platform that strengthens microentrepreneurs’ managerial, financial, business, and digital capabilities by incentivizing financially healthy behavior changes. This edtech tool enables MSMEs to build the skills they need to thrive in a competitive and digital world.</li>
</ul>
<a href="/how-we-work/advise/accion-global-advisory-solutions" target="_blank" rel="noopener noreferrer">Accion Global Advisory Solutions</a> helps established institutions serving MSMEs address their strategic and operational challenges head-on through our international expertise in strategy and business model development, ecosystem partnering strategy and implementation, platform and process architecture, and data-driven product design.

Over our 60-year history, Accion has made a tangible impact. We have:
<ul>
 	<li>Partnered with and served over 170 institutions in 55 countries around the world.</li>
 	<li>Empowered more than 10 million people to access credit through our partners, 70 percent of them being women.</li>
 	<li>Helped nearly 9 million people save money through our partner institutions.</li>
 	<li>Enabled over 715,000 micro, small, and medium enterprises to digitize their business operations.</li>
 	<li>Enrolled nearly 500,000 people in our financial education courses to date.</li>
</ul>
Accion Global Advisory Solutions has helped organizations like Destácame, a Chile-based personal financial management platform, <a href="/finding-a-path-to-financial-health-in-chile-one-step-at-a-time" target="_blank" rel="noopener noreferrer">redesign their website to build their users’ financial health</a> by developing simple diagnostics, customized user journeys, and digestible tips. Since January 2020, the platform has attracted over 1 million visitors. In India, Accion Global Advisory Solutions is helping Annapurna Finance Limited develop a digital strategy that will enable the bank to serve its 1.7 million clients more effectively. As part of this strategy, we worked with Annapurna Finance Limited to launch a new <a href="/women-entrepreneurs-get-back-to-business-in-india" target="_blank" rel="noopener noreferrer">digital emergency loan</a> to assist group lending customers as they recover from the pandemic.

Together with our partners, we’re building a digitally integrated ecosystem that delivers high-quality, affordable financial tools and services to MSMEs around the world so we can create an inclusive world with economic opportunity for all.

<em>Please </em><a href="https://www.accion.org/advisory-contact"><em>reach out</em></a><em> to see how we can work together towards a more financially inclusive world.</em>

<em><a href="https://www.linkedin.com/in/malavika-krishnan/" target="_blank" rel="noopener noreferrer">Malavika Krishnan</a> contributed to this article.</em>

How Accion Global Advisory Solutions makes a financially inclusive world a reality