Prateek Shrivastava

Priya Punatar

Kathleen Yaworsky

India

South Asia

Bolivia

Colombia

East Asia and Pacific

Ecuador

Indonesia

Latin America and The Caribbean

Nigeria

Sub-Saharan Africa

Advisory Services

Appropriate Product Design and Delivery

Challenges and Crises

Consumer Protection

Customer Centricity

Delivery Channels

Digital Financial Services

Digital Transformation

Enabling Environment

Entrepreneurs of MSMEs

Financial Health

Financial Inclusion Strategy

Financial Service Providers

Financial Technology

Fintechs

Governance

Human Centered Design

Resilience

Underserved Groups

Women

Access Usage Gap

Banks

Data Analytics

Microfinance Institutions

Trends

Article

Report

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.

As the spread of COVID-19 first escalated to frightening levels, nations around the world took drastic action. Lockdowns and travel restrictions caught millions of small businesses off guard. Many shuttered their doors, while others were able to adapt to the circumstances.

Chakrapani, a client of Accion’s partner Sub-K IMPACT Solutions Ltd., owns a small kirana (general goods) store with his wife, catering to the daily needs of neighborhood residents in Hyderabad, India. The store remained open during India’s lockdown because it provides essential goods. Given travel restrictions, more families started depending on Chakrapani’s store to meet daily needs, and traffic in his store doubled. To cater to growing demand, Chakrapani started accepting digital payments through his previously unused mobile wallet account. He also offered home deliveries, stocked up on a variety of in-demand items, and increased his distributor network, all through his mobile device.

Digital tools can help more micro, small, and medium enterprises (MSMEs) like Chakrapani’s build resilience in unpredictable times by expanding access to tools like credit, payments, insurance, and business management advice. This can lay the foundation for an inclusive economic recovery from the ravages of the pandemic.

In November 2018, the Mastercard Center for Inclusive Growth and Accion launched a partnership to transform millions of underserved MSMEs around the world and help them participate in, and benefit from, the digital economy. Among other efforts, the partnership is reaching this goal by driving the digital transformation of financial service providers (FSPs) to help them serve more small businesses and families more effectively.

This work coincides with broad changes in customer behavior that have accelerated as a result of COVID-19. Significant portions of the economy have moved online, and as more interactions become remote, they expose gaps in the operational resilience of traditional financial institutions. In turn, these providers have put more energy into digital transformation efforts to reach and support customers in need.

We are now two years into our four-year partnership, and our teams and the institutions we are working with around the world have learned (and continue to learn) so much. Accion’s advisory team has worked hand in hand with the institutions to create and shape digital strategies, implement and upgrade digital channels, design new digital products, and form strategic partnerships, navigating unprecedented challenges with creativity and vigor. <a href="https://www.accion.org/the-digital-transformation-guide-six-strategies-to-scale-financial-inclusion" target="_blank" rel="noopener noreferrer">Accion shares the insights gained from this work here</a>, as a part of our effort to ensure our endeavors and accomplishments serve as demonstration models for the industry. Given the urgency of digital transformation to build an inclusive recovery, this paper provides timely insights to help FSPs and their partners navigate the digital transformation journey and addresses key questions surrounding digital transformation, including <a href="https://www.accion.org/the-digital-transformation-guide-six-strategies-to-scale-financial-inclusion" target="_blank" rel="noopener noreferrer">where to start and where to focus</a>.

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<a href="https://bit.ly/3adofG3" target="_blank" rel="noopener noreferrer"><img class="wp-image-24105 alignleft" src="https://content.accion.org/wp-content/uploads/2021/04/Mastercard-e1619578679836.png" alt="Mastercard Center for Inclusive Growth logo" width="274" height="92" /></a>

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<a href="https://www.accion.org/mastercard-and-accion-partnering-for-inclusive-growth" target="_blank" rel="noopener noreferrer">This paper is supported by the Mastercard Center for Inclusive Growth.</a>

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Written in collaboration with: Payal Dalal, Senior Vice President, Social Impact, International Markets, Mastercard Center for Inclusive Growth

How to empower small businesses to go digital and rebuild

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.

<a href="https://www.accion.org/how-to-empower-small-businesses-to-go-digital-and-rebuild/" target="_blank" rel="noopener noreferrer">Read the foreword for this report, co-authored by Accion and the Mastercard Center for Inclusive Growth, here.</a>
<h1>Executive summary</h1>
As the recovery from COVID-19 begins, financial inclusion has never been more urgent. Low-income people around the world have lost their jobs or businesses, and the World Bank projects that the pandemic will push <a href="https://www.worldbank.org/en/publication/global-economic-prospects" target="_blank" rel="noopener noreferrer">100 million people into extreme poverty</a>. Vulnerable populations direly need financial tools like savings, credit, and insurance to rebuild their livelihoods and build resilience to the challenges of today and those to come. Financial institutions have a critical role to play in supporting the most vulnerable and equipping them with the tools they need to enter the digital economy.

The pandemic and social distancing have dramatically increased the urgency for innovative and relevant digital solutions to meet the new and evolving needs of vulnerable populations. For many people visiting their local bank branch was unsafe or not feasible during lockdowns, and as economies begin to open, many people have begun to expect the convenience, speed, and affordability digital transactions can bring. To effectively support their clients and reach new populations in an increasingly digital environment, financial service providers (FSPs) need to digitally transform. Many microfinance institutions are built on low-tech, high-touch models designed decades ago to reach millions of low-income clients. Now, these FSPs must find digital ways to reach and interact with their customers efficiently and at scale, use their client data for more efficient credit management and product design, and build more flexible core systems that support adaptability. This requires FSPs to coordinate across every aspect of their business to achieve a fully digitally enabled business model.
<blockquote class="blockquote">FSPs must find digital ways to reach and interact with their customers efficiently and at scale, use their client data for more efficient credit management and product design, and build more flexible core systems that support adaptability.</blockquote>
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Through our work with FSPs and their clients, we uncovered six key strategies that financial inclusion-focused institutions need to keep in mind as they progress down the path of digital transformation:

The digital transformation guide: Six strategies to scale financial inclusion

Digital Transformation

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How to empower small businesses to go digital and rebuild

The digital transformation guide: Six strategies to scale financial inclusion