Michael Schlein

Kathleen Yaworsky

Prateek Shrivastava

Gayatri Mehta

Jose  Wolff

Priya Punatar

Maria Camila Gomez Silva

Debdoot Banerjee

Elizabeth Winters

Raliat Sunmonu

Federico  Gomez Romero

Emma Morse

Vishal  Ajmera

Mona Kapoor

Yanina Seltzer

El Salvador

Guatemala

Honduras

Latin America and The Caribbean

East Asia and Pacific

North America

Sub-Saharan Africa

Bolivia

India

South Asia

Colombia

Ecuador

Indonesia

Nigeria

Mexico

Peru

Brazil

Chile

Challenges and Crises

Credit

Delivery Channels

Digital Financial Services

Digital Transformation

Enabling Environment

Entrepreneurs of MSMEs

Financial Health

Financial Inclusion Strategy

Financial Service Providers

Fintechs

Governance

Microfinance

Microfinance Institutions

Refugees and Migrants

Resilience

Risk Management

Underserved Groups

Advisory Services

Banks

Consumer Protection

Financial Capability

Human Centered Design

Insurance

Policy, Regulation and Government Initiatives

Access Usage Gap

Agent Banking

Alternative Data

Behavioral Insights

Customer Centricity

Data Analytics

Digital Credit

Financial Technology

MSME/SME Finance

Risk and Credit Analysis

Appropriate Product Design and Delivery

Women

Personal Financial Management

Responsible Digital Finance

Saving

Trends

Human Touch

Privacy

Transparency

Agricultural and Rural Finance

Partnerships

Rural Populations

Mobile Banking

Payments

Supply Chain Finance

Impact Investing

Smallholder Farmers

Event

Article

Report

Case Study

Webinar

Brief

[embed]https://vimeo.com/559131863[/embed]

In the Northern Triangle — Guatemala, Honduras,  and El Salvador — a combination of poverty and violence is driving mass migration to the United States. Nearly half of all residents in these countries earn less than US$5.50 per day, and more than 300,000 jobs have been lost due to the pandemic.
<p class="xmsonormal">Digital and financial inclusion is a key focus area in the White House’s strategy to address mass migration. <span style="color: black;">As a founding partner in Vice President Kamala Harris’ recent call to action to support economic development in the Northern Triangle, Accion </span><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">recently announced a new commitment</a> to support families and small businesses in the region and <span style="color: black;">help address some of the root causes of migration.</span></p>
Accion’s microfinance partners have been working in the region for nearly three decades, serving people and small businesses in communities without access to banks. Today, microfinance institutions reach 9 percent of the region’s population. With additional capital, investments in digital transformation, and strategic partnerships, these financial institutions aim to scale their efforts and help even more people expand their farms, build small businesses, and increase their incomes — empowering people to find economic opportunity at home.

During this session, we heard from leading financial institutions working to support micro and small businesses in the region and learn what they are doing today to enable vulnerable people to gain an economic foothold in their home countries. We explored the opportunities for leveraging new partnerships and technologies to expand this impact.

A Spanish recording is available below.
<h2>Speakers</h2>
<ul>
 	<li><b data-stringify-type="bold">Edgardo Perez</b>, General Manager, Fundación Génesis Empresarial, Guatemala
<b data-stringify-type="bold"></b></li>
 	<li><b data-stringify-type="bold">Julio Cesar Herbas</b>, General Manager, Banco Popular, Honduras
<b data-stringify-type="bold"></b></li>
 	<li><b data-stringify-type="bold">Luis Castillo</b>, President, SAC Integral, El Salvador</li>
 	<li><em>Introductory remarks: </em>Fernando Maldonado, Team Lead, Digital Finance, USAID</li>
 	<li><em>Moderator: </em>Esteban Altschul, COO, Accion</li>
 	<li><em>Remarks: </em>Maria Camila Gomez, Vice President, Latin America Program Management, Accion</li>
</ul>

Driving economic opportunities in Guatemala, Honduras, and El Salvador

In New York City, we’re removing our masks. Restaurants and small businesses are filling with customers again. Vaccines are plentiful. The city is returning to a new normal.

Meanwhile, in Mumbai, people are getting sick and the health system is dangerously overloaded. People are literally dying in the streets. New lockdowns are making it even harder for small businesses and families to make ends meet.

And in Bogota, thousands of people are protesting. Inequality is growing and there is widespread anger and worry about what the future looks like.

This is the world we now live in. The disparity between the developed and the developing world has never been greater—and it is growing. This is not good.

Accion is a global nonprofit dedicated to creating a financially inclusive world. We work with partners around the world to help disadvantaged people get the financial tools they need to build better lives. The disparities we are seeing have never been more extreme. I fear that, without significant action, they will get much worse.

We have never lived through a global pandemic of this magnitude. It is human nature that, as we face extreme challenges, we focus on trying to solve the most local of problems. And that’s what we’ve seen. During the pandemic, philanthropy has become locally focused. But, now, we need to change that.

As we take off our masks, we need to open our eyes to devastating disparities around the world. We need to create the world we aspire to live in—and take the steps to get there. We need to help vulnerable people in the developing world get through this crisis—and rebuild their lives.
<h3><strong>Going digital to build an inclusive recovery</strong></h3>
In addition to helping vaccinate the rest of the world, the U.S. and wealthy nations must work to create an inclusive recovery for all. A great way to support that goal is to leverage digital technology to help more people, families, and small businesses start participating in the digital economy and build financial resilience.

One small silver lining of the pandemic has been the widespread adoption of digital financial services. When face-to-face transactions weren’t possible, if you had a digital alternative, you seized it. If you could pay a bill without leaving your home, you did. So we’ve seen a huge uptake in digital tools that offer more security, flexibility, and opportunities than cash. <a href="https://www.gsma.com/newsroom/press-release/mobile-money-accounts-grow-to-1-2-billion-in-2020/">A recent report from GSMA</a> found that mobile money accounts grew by 13 percent in 2020 to more than 1.2 billion—and remittances sent via mobile money exceeded $1 billion per month for the first time ever. These are encouraging signs.

But this is just a first step. We need to build on this and help people use these tools to achieve meaningful financial inclusion. More than just payments, we need to provide the financial tools of resilience: savings, insurance, and appropriate credit. We need to help small mom-and-pop shops digitize and manage themselves better, faster, and safer. And we need to make sure that the most vulnerable people in the world have the digital literacy to use these tools well and to get the most out of them.

<a href="https://www.accion.org/campaign-build-resilience">With your support</a>, we will continue to help those most affected by the pandemic and those most at risk of being left behind. Together, we will expand the reach, quality, and affordability of critical tools that help adapt against today’s challenges, build financial resilience, and lay the foundation for an inclusive recovery. If we can do this, ultimately, we can emerge from the pandemic and build a global economy that can work for everyone. That’s our vision.

Growing disparities threaten an inclusive recovery

<em>This article was originally published on <a href="https://nextbillion.net/covid19-small-businesses-digital-financial-services-data/" target="_blank" rel="noopener noreferrer">NextBillion</a>.</em>

Before COVID-19, small merchants globally were gradually beginning to see the power of digital financial services. Transitioning to digital services helps small businesses transact faster, smarter and safer, and opens up credit options and other benefits. It also increases their financial inclusion, which gives them the tools to achieve financial security and grow their businesses. Yet despite these benefits, many micro and small enterprises have been slow to move past their traditional, cash-based operations.

But then the pandemic struck, bringing a new awareness of the drawbacks and dangers of relying on cash. Suddenly, digital access to financial services was more than a “maybe someday” — it was an urgent priority.

In the early months of COVID-19 shutdowns, <a href="/bolivias-small-businesses-need-innovative-products-to-help-them-grow" target="_blank" rel="noopener noreferrer">BancoSol</a> in Bolivia — the first regulated commercial bank in the world dedicated to micro and small entrepreneurs — saw its digital transaction volumes rising. It soon realized that speeding up its digitization efforts would be key to a lasting recovery for Bolivia’s small merchants, by enabling BancoSol to stay in touch with its customers and continue to support them throughout the pandemic. BancoSol serves 1.5 million microentrepreneurs in Bolivia, where the informal small business sector employs <a href="https://www.smefinanceforum.org/data-sites/msme-country-indicators" target="_blank" rel="noopener noreferrer">more than half the country’s population</a>, the majority of whom still operate in cash. By shifting its many microentrepreneur customers to digital services, the bank could help them weather the pandemic.

BancoSol also realized that these businesses’ long-term resilience would be enhanced if they maintained their usage of digital financial services even after the crisis, so it committed to making this new trend stick. The only question was: How?

An answer to that question came via a <a href="https://www.accion.org/mastercard-and-accion-partner-to-unlock-growth-for-millions-of-underserved-microbusinesses-around-the-world" target="_blank" rel="noopener noreferrer">first-of-its-kind partnership</a> between Accion and Mastercard, which aims to empower microbusinesses to join and benefit from the digital economy, while boosting their financial inclusion. Over the past year, the partners have been supporting BancoSol to integrate responsible data use by the organization in order to better serve their customer base of microentrepreneurs.

Like many microfinance organizations, BancoSol has years of customer data. But it often didn’t know what to do with all that information. To help the bank derive data-driven insights with the objective of expanding financial inclusion for microbusinesses in Bolivia, 40 Mastercard volunteers in Bogota, Colombia and Arlington, Virginia gathered virtually in a 36-hour “datathon.” The goals of the exercise were to understand how to enable digital adoption by more BancoSol customers, better serve them with more products and retain them over the long term. While planning for the datathon had begun prior to the pandemic, its findings proved to support BancoSol’s efforts to help its customers recover from the crisis and build financial resilience. The datathon developed the methodologies and a proof of concept for how BancoSol and other microfinance institutions can take a more data-driven, customer-centric approach. Below are the three steps it identified for tapping into customer insights to better serve the needs of micro and small business customers.
<h2>Using data to improve digital financial services for micro and small businesses</h2>
<strong>Start by understanding your typical digital customer:</strong> Analyzing customer banking patterns can help identify customer segments that are most likely to go digital. In BancoSol’s case, data-driven insights indicated that its typical digital app customer was more likely to be female, and more likely to be younger compared to the average BancoSol client. By better understanding the typical digital customer, BancoSol can prioritize the customer segment that may be most-inclined towards digital adoption.

<strong>Equip loan officers with insights to match customers with products that meet their needs: </strong>The datathon analysis indicated that app users made nearly twice as many deposits as other users — linking digital adoption with increased usage. As <a href="https://www.cgap.org/blog/financial-services-build-resilience-face-crises-covid-19" target="_blank" rel="noopener noreferrer">research has shown</a>, greater use of financial products, whether that’s insurance, savings or credit, makes small businesses more resilient to shocks like COVID-19 and also ensures the bank’s own sustainability. Equipped with these kinds of insights, BancoSol was able to streamline the app experience to better match customer expectations and develop clear messaging for loan officers to better communicate key benefits of going digital.

<strong>Retain customers by being proactive, not reactive: </strong>The datathon also offered insights on customer retention enabling the bank to reduce attrition by proactively engaging customers before they begin to disengage. The data-driven insights also suggested that a digital connection can improve retention in the absence of an in-person connection — a critical benefit in this era of social distancing.
<h2>Helping more financial service providers reap the benefits of data</h2>
Insights like these can help more inclusive financial service providers use their data to become more customer-centric. “The data was always there,” said Carlos Otalora Martínez, national manager of information technology at BancoSol, referring to the bank’s customer data. “But now we see it in a different way, with more value. This fact led us to delve into organizational changes to better leverage the data, as well as ensure that the data is structured, clean and available for consumption — actions that we are already taking with the impetus provided by the datathon exercise.”

As a next step, Accion plans to develop a playbook outlining the processes and methodologies used during the datathon, so other inclusive financial service providers can use their own internal data to drive their digital transformation. The playbook will include customer segmentation concepts, as well as guidance on using statistical modeling to prioritize customers and personalize their experiences.

For BancoSol, the datathon revealed the potential of data to better support the millions of small merchants who are working hard to stay in business — and who power the Bolivian economy. If other financial inclusion-focused institutions in other markets leverage their data to similar effect, they can help to speed a digital transition that can help reduce the economic damage of the pandemic, and set micro and small enterprises on the path toward greater success after the crisis has ended.

<em>Written in collaboration with <strong><a href="https://nextbillion.net/authors/aaron-lewin/" target="_blank" rel="noopener noreferrer">Aaron Lewin</a>,</strong> Associate Managing Consultant at <a href="https://www.mastercard.us/en-us/vision/who-we-are.html" target="_blank" rel="noopener noreferrer">Mastercard</a></em>.

COVID-19 is showing small businesses the benefits of digital financial services

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 <em>kirana </em>(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>.

<hr />

<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>

&nbsp;

<a href="https://www.accion.org/mastercard-and-accion-partnering-for-inclusive-growth" target="_blank" rel="noopener noreferrer"><em>This paper is supported by the Mastercard Center for Inclusive Growth.</em></a>

&nbsp;

<em>Written in collaboration with: </em><em><strong>Payal Dalal</strong>, Senior Vice President, Social Impact, International Markets, Mastercard Center for Inclusive Growth</em>

How to empower small businesses to go digital and rebuild

Lourdes is a hardworking and passionate costume designer based in La Paz, Bolivia. She loves her country’s rich culture and has dedicated her time to designing and sewing traditional folk dance dresses to sell in local markets. She started her business with her father at the age of 21 and took out her first loan with <a href="https://www.bancosol.com.bo/">BancoSol</a> that year. They started with $500, which was just enough to purchase one sewing machine and some fabric. Seven years later, that one sewing machine has multiplied into several sewing machines, and beautiful glittering dresses and fabrics hang from all corners of her shop. Her dream is to expand her business beyond La Paz, weaving in design inspiration from Bolivia’s multitude of diverse cultures. “I would love to travel to indigenous communities, learn their local languages and customs, and adopt their ways of life into the designs of my dresses – I want their voices to be heard too,” says Lourdes.

Despite the moderate growth her business has experienced over the years, Lourdes feels far from pursuing her dreams because of financial constraints that keep her from building her savings. She immediately spends any income she earns on her business or her family. When asked about whether she’d consider opening a savings account, she explained: “It’s hard to part with your hard-earned money and watch it sit idly in an account collecting dust. I want my money to work hard the way I do.”

Lourdes isn’t unique in her mindset. This sentiment – making money “work for me” – is shared by many people who prioritize the value of small investment opportunities where their money grows over time. Savings is usually a harder sell, and according to the <a href="https://globalfindex.worldbank.org/basic-page-overview">Global Findex</a>, only 21 percent of adults in developing countries save with formal financial institutions.
<h2><strong><img class="alignright wp-image-23873" src="https://content.accion.org/wp-content/uploads/2021/04/Picture4.png" alt="GanaSol interface" width="235" height="460" />Saving is integral to building financial resilience </strong></h2>
Successfully encouraging positive savings behavior is an uphill battle for financial service providers around the globe. Many microbusiness owners like Lourdes have a clear vision of what they would like to save for and exactly how much it would cost, but most struggle with the discipline and commitment to deposit regularly into formal savings accounts. Those who do manage to save often prefer to save informally, either by saving cash at home or using informal savings schemes that frequently charge a premium for their services. Not only are these options more costly and less secure, having the funds close by makes it easier to spend the money quickly rather than allow it to grow.

<a href="https://www.accion.org/the-crucial-but-overlooked-factor-for-financial-health-humans" target="_blank" rel="noopener noreferrer">Building the financial health</a> and resilience of MSMEs is at the forefront of Accion and BancoSol’s mission. People need savings and other stable assets to overcome moments of crisis, endure shocks, and support their businesses and families. The COVID-19 pandemic and its social distancing measures have exacerbated the financial hurdles many small businesses face and has forced microfinance organizations to take a digital-first approach to serving their customers.
<h2><strong>Making saving fun through gamification</strong></h2>
BancoSol knew that they needed to find a way to make savings attractive and get people to see the tangible benefits of every deposit they make. But how?

[caption id="attachment_23874" align="alignleft" width="235"]<img class="size-full wp-image-23874" src="https://content.accion.org/wp-content/uploads/2021/04/ganasol-2.png" alt="GanaSol interface" width="235" height="465" /> <em>On the GanaSol platform, users can see how many points they have earned and their progress in reaching their savings goals. This user has saved 100 Bolivianos, unlocking access to the weekly lottery that gives users a chance to win a cash prize.</em>[/caption]

They designed GanaSol, a digital gamification platform that allows customers to earn prizes and rewards whenever they perform key tasks such as using digital channels to manage their bank accounts, depositing cash regularly, and retaining a certain monthly balance. GanaSol, adapted from the Spanish verb ganar or “to win”, utilizes chance-based games like “spin-the-wheel” because these games foster a feeling of productivity as users earn prizes every time they play. Customers can access GanaSol directly from the institution’s mobile banking application, AppSol 3.0, further encouraging the use of BancoSol’s digital channels. This app will bring Bolivia’s microentrepreneurs an attractive solution to invest in their savings.

Customers can access GanaSol directly from the institution’s mobile banking application, AppSol 3.0, further encouraging the use of BancoSol’s digital channels. This app will bring Bolivia’s microentrepreneurs an attractive solution to invest in their savings.

This new platform was launched through BancoSol’s <a href="https://www.accion.org/bolivias-small-businesses-need-innovative-products-to-help-them-grow" target="_blank" rel="noopener noreferrer">innovation hub</a>, a space for the bank to develop innovative digital financial products and services that better serve microentrepreneurs. The conception and design of the product was guided by in-depth customer interviews, rounds of ideation, and prototype testing. To develop the platform, BancoSol partnered with <a href="https://flourishfi.com/" target="_blank" rel="noopener noreferrer">Flourish Savings</a>, a US-based digital gamification vendor that provides engagement solutions to boost savings and loyalty. BancoSol also conducted a virtual “datathon” in conjunction with Accion and Mastercard, to leverage the bank’s wealth of data to gain tremendous insight into encouraging digital behaviors, improving engagement with financial products, and creating long-lasting relationships with their customers.

Over 10 percent of BancoSol’s mobile banking customers have already started using GanaSol since its launch at the end of March. The new app received more than 3,400 active users in the first week alone.
<blockquote class="pullquote--right">“GanaSol not only allows the customer to win cash prizes, but also to build healthy financial habits in their daily transactions and interactions with the bank. The application was designed with the customer in mind, taking into account their preference for digital touchpoints with the bank to be more interactive, convenient, and rewarding.” – Alejandro Camargo, Head of Innovation and Transformation, BancoSol</blockquote>
While the initial iteration of GanaSol focuses solely on developing savings habits, BancoSol can easily adapt the app in the future according to it’s strategic needs. For example, the gamification concept could be used to engage customers in a more cost-effective and convenient way, incentivize the use of new or improved products and services, and optimize portfolio health. For customers, partaking in GanaSol’s activities rewards them prizes while also building positive habits and financial resilience. GanaSol and BancoSol’s innovation hub were developed with advisory services provided by Accion through a <a href="https://www.accion.org/mastercard-and-accions-partnership-to-unlock-millions-of-underserved-microbusinesses" target="_blank" rel="noopener noreferrer">global partnership between Accion and the Mastercard Center for Inclusive Growth.</a>

Micro-merchants are the driving force behind the Bolivian economy, powering its labor force and stimulating the country’s productivity. By continuing to serve merchants through a customer-centric lens, BancoSol’s relationship with its customers transcends beyond financial service provider. BancoSol is their trusted partner and a key contributor to their growth and success. With GanaSol, microentrepreneurs like Lourdes can use digital financial services in a convenient, secure, and rewarding way that enables them to build financial resilience for the future.

Gamification motivates microentrepreneurs to save in Bolivia

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>
&nbsp;

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

Mastercard and Accion share a commitment to building an inclusive digital economy. Accion has long worked to ensure the digital transformation of financial services benefits the world’s three billion financially underserved people, and in 2020, Mastercard pledged to connect 1 billion people—including 50 million micro and small businesses—to the digital economy by 2025.

Mastercard has partnered with Accion since 2011, primarily through the Mastercard Center for Inclusive Growth. Our partnership has sustained Accion’s work across many of our teams and programs, including Accion Global Advisory Solutions, Accion Venture Lab, the Center for Financial Inclusion, and Accion Opportunity Fund, Accion’s primary U.S. presence that supports underfunded small business owners in the U.S.
<h3>Our expanded partnership</h3>
In 2018, Mastercard and Accion announced a dramatic expansion of our work together. Our <a href="https://www.accion.org/mastercard-and-accion-partner-to-unlock-growth-for-millions-of-underserved-microbusinesses-around-the-world">first-of-its-kind partnership</a> unites our worldwide networks and resources to help 8 million people, including 3 million merchants, successfully operate in—and benefit from—the digital economy. We are combining insights, innovations, and investments to get critical tools in the hands of small businesses and the financial service providers who serve them.

Around the world, micro-merchants like grocers and ‘mom and pop’ stores, operate largely in cash exchanged in-person, rather than safe and secure digital transactions. This keeps small businesses out of the formal financial sector, and now the pandemic makes their efforts to go online much more urgent.

Seven financial service providers around the world have joined the partnership to digitally transform their operations to reach more small business more effectively. Sub-K, one of these partners, leverages an expansive agent network to reach clients in rural India and connect them with financial services. Accion provided advisory support for <a href="https://www.accion.org/banking-goes-digital-to-reach-rural-entrepreneurs">the development of SARTHI</a>, Sub-K’s new digital financial services platform that provides a range of offerings for small business, including microcredit and health insurance—all accessible from a mobile phone. SARTHI can take Sub-K’s efforts to reach underserved businesses to the next level while its agent network is limited due to COVID-19.

Mastercard and Accion: Partnering for inclusive growth

In the borough of Suba in Bogotá, Colombia, <a href="https://youtu.be/p_YVRE7I8TQ" target="_blank" rel="noopener noreferrer">Paola runs her family business</a>, Ferretería Figureroa y Centro de Soluciones, or Figueroa Hardware Store and Solutions Center. Paola explains that they call their store a solutions center because, “If we don't have something, we get it.”

When COVID-19 spread in early 2020, the pandemic’s economic and financial crisis hit her business hard. The crisis forced her to cut her expenses, and she took it upon herself to find a way to boost sales during the pandemic. Paola told us, “The reality is that it was not easy.” Paola then found a way to start selling her goods over the internet through CÍVICO’s small business platform. Once she got her business online, more and more people began buying her products. One year later, her hardware store has seen significant growth in sales and is doing better than ever. She says, “We wouldn’t have survived had it not been for [CÍVICO].”

<a href="https://www.accion.org/how-one-platform-connects-cities-and-boosts-small-businesses" target="_blank" rel="noopener noreferrer">CÍVICO is a Colombian startup</a>, which also operates in Mexico City and Santiago de Chile, that is transforming cities through digital and financial inclusion for underserved micro, small, and medium enterprises (MSMEs). The CÍVICO platform offers an app for small business owners, called <em>CÍVICO Negocios App,</em> to create a digital presence for their businesses. Small business owners can use the app to sell their products, connect with local consumers, offer home delivery of products, and accept digital payments. By providing an easy tool to buy and sell online, this app has helped many MSMEs stay in business during the pandemic and contributed to the growing digital ecosystem in the city, improving the quality of life for small business owners and their customers.

As part of the <a href="https://www.accion.org/mastercard-and-accions-partnership-to-unlock-millions-of-underserved-microbusinesses" target="_blank" rel="noopener noreferrer">global partnership between Accion and the Mastercard Center for Inclusive Growth,</a> CÍVICO has expanded its value proposition for microentrepreneurs by offering financial services within their platform to help their small businesses grow. CÍVICO and Accion worked together to develop a loan product using a human-centered design methodology, incorporating customer feedback and data throughout the development process. To date, this product has helped more than 1,000 merchants receive the credit that they need to grow.

Through this partnership, CÍVICO also developed a merchant assessment tool where merchants share data that allows CÍVICO to assess their needs and offer the most suitable credit product. At the same time, CÍVICO cross-references these profiles with its existing data to better understand their clients’ behaviors and the state of their financial health. Using this information, CÍVICO can gather information to identify how to better use alternative data for credit scoring, improve its direct lending product, and find suitable partners to scale their digital loan offering.

[caption id="attachment_23880" align="alignright" width="500"]<img class="wp-image-23880" src="https://content.accion.org/wp-content/uploads/2021/04/civico-1.png" alt="CÍVICO Negocios App interface" width="500" height="422" /> <em>CÍVICO Negocios App offers digital and financial services to help small merchant owners to transform their business.</em>[/caption]

In 2020, CÍVICO partnered with the Bogotá’s Mayor’s Office to launch “Despega Bogotá,” the city’s ambitious digital program created to mitigate the economic effects of the COVID-19 pandemic. This program has dramatically expanded financial inclusion for small businesses in Bogotá and has helped many microentrepreneurs strengthen and grow their businesses. Today, CÍVICO works with more than 30,000 businesses in Bogotá and Mexico City. These businesses offer more than 40,000 products on the platform, generating more than 10,000 transactions totaling more than $250,000 in sales to date.

Small businesses like Paola’s are the engine of the Colombian economy. A platform such as CÍVICO’s can help them build resilience to crises such as this one and continue growing their businesses by connecting them to the digital ecosystem. We are proud to support CÍVICO in their efforts as they advance financial inclusion in Colombia. As CÍVICO’s CEO Ricardo Pombo states, “The constant development of digital tools allows us to address our clients’ needs and is instrumental to fulfilling our purpose of generating digital and financial inclusion, and by doing such, we support our clients’ economic reactivation.” By investing in digital tools that help microentrepreneurs build better businesses and better lives, we can bridge the financial services gap and bring financial inclusion to more people.

How 30,000 small businesses moved online during the pandemic

One year ago, COVID-19 irreparably changed the world. The pandemic has taken — and continues to take — an especially devastating toll on low-income people and small businesses everywhere. People who typically buy food and get paid in-person each day suddenly lost their jobs or businesses. They were hurt more by the pandemic than anyone else. They are still suffering, and their road to recovery is more fraught and longer than anyone else’s.

At Accion, the financial tools we provide are critical to that journey. We responded quickly to support the resilience of our partners and their clients. We knew from <a href="https://www.centerforfinancialinclusion.org/weathering-the-storm-ii-a-case-study-of-partner" target="_blank" rel="noopener noreferrer">previous crises</a> that frontline financial service providers have a vital role in helping vulnerable people access the financial tools they need to weather difficult times and rebuild their livelihoods. Underserved people need savings, credit, and insurance, as well as digital skills and tools, in order to <a href="https://www.accion.org/the-fight-to-keep-going-a-family-business-changes-course" target="_blank" rel="noopener noreferrer">pivot a business</a> or build financial resilience for their families.

But financial service providers also faced their own challenges. In the early days of the pandemic, microfinance banks and fintech lenders faced a liquidity crisis that <a href="https://www.accion.org/the-financial-engine-for-half-the-worlds-jobs-is-about-to-seize-up" target="_blank" rel="noopener noreferrer">threatened their collapse</a>, with potentially devastating consequences for millions of micro, small, and medium-sized enterprises (MSMEs) who depend on them for funding and growth.

Supplementing critical relief from national governments, Accion helped struggling partners around the world from a variety of angles:
<ul>
 	<li>We helped partners provide grace periods and business support to clients with little or no ability to repay their loans.</li>
 	<li>We leveraged digital technologies to help partners stay in touch with clients and support those most in need, like the elderly or those living in rural areas.</li>
 	<li>We worked with partners to understand the impact of the crisis on their balance sheets, build their financial runways, and shift their go-to-market approaches.</li>
 	<li>We assisted in setting up companies for extended periods of remote work and helped maintain staff morale.</li>
 	<li>We gathered CEOs from around the world <a href="https://www.accion.org/moving-beyond-doomsday-inclusive-finance-in-the-time-of-covid-19" target="_blank" rel="noopener noreferrer">to share their latest insights</a> and learn from each others’ failures and successes.</li>
 	<li>We also transformed how we work—learning to collaborate with partners, conduct due diligence, and provide governance support remotely.</li>
</ul>
Ultimately, our work to support our partners helped clients like Grace Ogunleye in Nigeria prevent her nursery and <a href="https://www.accion.org/how-a-microfinance-bank-is-driving-community-resilience-in-nigeria" target="_blank" rel="noopener noreferrer">primary school</a> from closing permanently. Our work helped clients like Rosa Tipula Quispe in Peru gain the <a href="https://www.accion.org/what-it-takes-for-one-family-business-to-stay-open" target="_blank" rel="noopener noreferrer">critical financing</a> she needed to keep her shop open during the lowest point of quarantine. And our work helped clients like Karen Villamizar in Colombia gain the digital skills she needed <a href="https://www.accion.org/how-the-pandemic-is-spurring-microentrepreneurs-to-go-digital" target="_blank" rel="noopener noreferrer">to transform her confectionary business</a> in our increasingly digital world.
<h2><strong>Transitioning from response to recovery – three strategies</strong></h2>
As more vaccines are distributed and the global recovery gets underway, we must keep the lessons of this past year at the forefront of our plans to ensure vulnerable and low-income people aren’t left behind.
<h4>1. Embrace digital technology, but prioritize people</h4>
The digital transformation of financial service providers is key to their survival and effectiveness going forward, but this process must <a href="https://www.accion.org/three-ways-to-ensure-people-arent-left-behind-in-the-rush-to-go-digital" target="_blank" rel="noopener noreferrer">put clients first.</a> Clients need the necessary skills and trust to use digital tools, and their specific needs must be addressed as we design and launch digital products. We must help MSMEs digitally transform as well, and ensure they gain the digital know-how they need to participate in and benefit from the digital economy.
<h4>2. Focus on vulnerable groups</h4>
Groups that have endured the worst effects of the crisis—including <a href="https://www.accion.org/digital-tools-open-opportunities-for-women-to-thrive" target="_blank" rel="noopener noreferrer">women</a>, those <a href="https://www.accion.org/banking-goes-digital-to-reach-rural-entrepreneurs" target="_blank" rel="noopener noreferrer">in rural areas</a>, and <a href="https://www.accion.org/u-s-small-business-owners-need-innovative-support-in-times-of-crisis" target="_blank" rel="noopener noreferrer">business owners of color in the United States</a>—are most vulnerable to the continued economic effects of the pandemic. We must provide them with targeted support to build a truly inclusive and broad-based recovery. This involves seeking out and addressing their unique needs and working to overcome the societal and institutional barriers that disadvantage them.
<h4>3. Stay adaptable and flexible</h4>
Adaptability and flexibility are vital to the future success of small businesses, financial service providers, governments, and entire countries. For instance, Accion and our partners must continue to adapt to remote work, or a hybrid of remote and in-person work, to prevent potential resurgences of the virus and get things done in our socially distant world. And as economic volatility continues, providers must stay flexible in devising repayment plans, launching new products, and continually assessing their clients’ evolving needs.

The past year has been immensely challenging, but it provided us valuable lessons on building resilience. I’m so proud of how much we were able to accomplish through it all, and I look forward to seeing how our team and our partners will build on these lessons in the years to come.

Lessons from one year of pandemic responses can open opportunity to rebuild

The pandemic has severely affected the world’s low-income populations. But by accelerating the pace of digitization, it has opened doors to financial services and the security and opportunities they provide. Digital financial services—and the tools needed to use them—are now vital for low-income families and small businesses to make it through this crisis and build resilience to future challenges.

Digitization is integrating financial services into nearly every aspect of life. <a href="https://www.accion.org/what-does-embedded-inclusive-fintech-look-like">Financial services can be embedded</a> into anything from utility payments to crop fertilizer subscriptions, which can help more people access credit, save money, and build credit histories that are essential for growth.

But digitization also risks worsening inequality, invading clients’ privacy, and taking advantage of people with less digital experience or poor access to the right tools, like mobile phones. Underserved people need new skills and expertise to successfully navigate the digital economy, and they need products that protect their privacy and personal information.

Accion has been working to ensure that innovations driving digital transformation and migration are inclusive, safe, and effective. Based on our experiences, here are three ways to ensure customers aren’t left behind amid accelerating digitization.
<h2>1. Expand digital access, fluency, and trust</h2>
Building customers’ trust in digital financial services, as well as their digital fluency, will be foundational an effective customer experience. It matters less where clients live, while it’s more important that providers can reach and stay in contact with them. Financial services providers need to rethink the purposes of physical interactions versus digital interactions so that the former occur less often and the latter become more frequent and more personal.

EdTech (education technology) can help underserved clients gain digital familiarity and learn how to accomplish a range of tasks, like setting up an online wallet or listing a product for sale. Accion has <a href="https://www.accion.org/how-the-pandemic-is-spurring-microentrepreneurs-to-go-digital">developed and deployed an interactive EdTech platform</a> called Ovante to help underserved entrepreneurs gain the management, financial, and digital expertise they need to succeed in our increasingly digital world. Ovante can help clients expand on their existing knowledge of social media to open new digital channels to selling their products and services.

Digital channels are a key conduit for financial service providers to improve their customer experience, and sometimes this means totally rethinking the customer experience. For example, many of Accion’s partners use group lending models to serve clients without any credit history by allowing people in the same communities to guarantee each other. Eighty percent of group lending participants are women, and 65 percent live in rural areas with few or no banks. Group lending has historically relied on frequent in-person interactions. But as social distancing became a necessity, our partners leveraged digital platforms to <a href="https://www.accion.org/can-group-lending-work-in-a-socially-distant-world">reimagine the group lending process</a> for the digital age.
<h2>2. Answer clients’ needs</h2>
As lockdowns end, low-income families will find their savings exhausted, their businesses stalled or bankrupt, and their future incomes uncertain. People will need new income streams and financial services to build resilience, restart their businesses, and establish new ventures.

Digitization means that more clients will use digital tools to rebuild their livelihoods, but providers must answer their needs by <a href="https://www.accion.org/to-succeed-innovative-financial-products-must-be-desirable-feasible-and-viable">crafting truly meaningful, customer-centric value propositions</a> that help them build resilience today and for the future.

To do that successfully during the pandemic, Accion has helped providers conduct interviews and surveys remotely to ensure that they capture the insights they need. Using client insights, we help institutions develop products and services that are desirable to clients and solve their specific problems. These offerings must also be feasible for the institution, given their capacity and operating models, and viable for the long term. Here, digital channels and platforms make a huge difference, and adopting them has become an urgent priority.

It’s so important to help people build financial resilience, and the customer experience needs to reflect that. If vulnerable clients’ unique needs aren’t sought out, understood, and addressed, their entire livelihoods could collapse and the economic recovery will be more difficult. Financial service providers must <a href="https://www.accion.org/win-from-within-how-fintech-startups-can-grow-by-building-value-for-existing-users">grow along with their clients</a> by understanding their needs, crafting products that meet those needs, and keeping them engaged throughout their journey as customers.
<h2>3. Ensure clients’ data and privacy stay protected</h2>
Digitized data can unlock more personalized and effective financial products that can help low-income people improve their lives and achieve their goals. Yet many emerging markets have weak effective consumer data protection regimes. When rules do exist, people with low levels of digital and financial sophistication may, in their eagerness to receive financial services, sign away their rights without even fully understanding them.

Protecting the privacy and security of customer data includes cultural and technical aspects, and vulnerabilities often lie at the intersection of the two. A provider can install best-in-class privacy and security software, but they must also build in privacy through a culture of protecting customer data. For example, providers can ‘right size’ their data collection methods to focus only on what is needed, implement strong and ethical data governance policies, and have dedicated staff responsible for their consistent application and use.

Accion is also focused on increasing transparency in providers’ data practices. We are analyzing how financial service providers use algorithms, which can be biased against underserved populations, in automated decision-making. We are monitoring emerging frameworks around the world to see what does and doesn’t work to advance financial inclusion while safeguarding data privacy, portability, and other consumer rights.

Cyber threats have also become a growing concern in emerging markets. Digital innovations, new products, and new processes are moving ahead at breakneck speed, but they’re leaving cyber security considerations in the dust, bringing new risks to financial inclusion-focused providers and to low-income and newly-banked customers. This makes it harder for people to trust digital financial services. We are working with our partners to <a href="https://www.accion.org/reimagining-cyber-risk-for-financial-inclusion-in-an-increasingly-digital-world">put in place cyber risk mitigation strategies</a> to ensure that the most underserved are protected.

Accion is engaging the industry to ensure that innovation doesn’t simply expand access to financial services—but also creates financial services that are safe, high quality, and designed to meet customers’ needs. These efforts are essential to ensure that the world’s three billion financially underserved people can build resilience to today’s challenges and threats arising in the future.

Three ways to ensure people aren’t left behind in the rush to go digital

Twenty-six-year-old Rosina Das runs a small grocery shop in her village near Balakati, Odisha, in eastern India. She and her husband own a small lot of land, but their crops don’t bring in enough money for them to provide for their two children and meet their household needs. Because her family hasn’t been able to afford to install pump irrigation, they must rely on rain for their crops and can only grow during India’s <em>kharif</em>, or monsoon, season. Rosina needed another way to support her family, so she converted a small room in her house into a grocery store and became a small business owner.

When Rosina first started her business, she used her savings to buy grocery items to sell in her shop. Her business quickly took off since there weren’t many other stores in her village. Once Rosina opened her doors, she gave families in her community the ability to purchase fresh food and other essentials that weren’t able to buy before. Rosina availed of her first loan with <a href="https://annapurnafinance.in/" target="_blank" rel="noopener noreferrer">Annapurna Finance Ltd.</a>, a microfinance institution and Accion partner in India, two years ago as a group lending client to grow her small business even further. As her household income increased, her family was able to break their pattern of dependence on seasonal agriculture.

Like millions of other micro, small, and medium enterprises (MSMEs) operating in India, Rosina’s business has struggled greatly during the coronavirus pandemic. Not only did her sales plummet, but she also had a hard time getting new inventory to sell in her store as her suppliers were limited by transport restrictions during India’s strict lockdown. Without her regular customer volume or sufficient stock to sell, Rosina suddenly found herself without a stable income and unable to repay her small business loan installments. She learned about India’s loan moratorium from the other borrowers in her lending group and worked with Annapurna to reschedule her repayment dates and extend her loan tenure for two more months — a huge relief for her stalled business and her family.

[caption id="attachment_23303" align="alignright" width="393"]<img class="wp-image-23303" src="https://content.accion.org/wp-content/uploads/2021/02/papina-das-annapurna-finance-214x300.jpg" alt="Papina Das, an entrepreneur in eastern India" width="393" height="550" /> <em>Papina Das owns a small dairy business near Balakati in eastern India.</em>[/caption]

Rosina also learned about Annapurna’s midterm loan offering, a type of emergency loan that could help her restart her business. She received an emergency loan of 15,000 INR (205 USD) within seven days of application and purchased what she needed for her store. As demand has rebounded in her village, Rosina has provided the groceries that her community needs. Just a few months ago, she lost hope and couldn’t imagine her livelihood returning to normal. Now she is grateful to Annapurna for providing the support she needed to reopen her business.

Papina Das, 34, lives in the same village as Rosina, where she runs a small dairy business selling milk in her community and to nearby villages. She employs one other person from the village to help her feed and milk her cows. She started her business two years ago with a group loan from Annapurna. The other members of her lending group are also self-employed and own dairy businesses. Before COVID-19, Papina made a profit of more than 10,000 INR (137 USD) per month from her milk sales.

Papina’s sales dropped dramatically when the pandemic started. Residents of her village and the surrounding villages suffered greatly from the lockdown’s financial impact and many people lost their livelihoods. Even Papina’s regular customers stopped buying their usual volume of milk. Although milk is an essential commodity, her profits plummeted as economic instability decreased demand and people feared infection at markets.

Within one month of lockdown, Papina’s profits were cut in half. She was forced to lay off her employee and unable to pay her loan installments on time. After an Annapurna employee <a href="/how-three-financial-service-leaders-are-adapting-to-covid-19#annapurna" target="_blank" rel="noopener noreferrer">proactively contacted her by phone</a> and informed her about the loan moratorium during the lockdown, Papina opted to take a three-month moratorium on her payments. Like Rosina, Papina decided to take advantage of Annapurna’s midterm loan. Within three days of applying, she received a 20,000 INR (274 USD) loan. With this assistance from Annapurna, she’s rehired her assistant and restarted her dairy business. She’s also purchased another cow to speed up her business’s recovery, and her milk sales have nearly recovered to pre-pandemic levels.

A flexible loan can be the reason that a grocery store stays open in a village with few options for fresh food, or a dairy business continues providing milk to families in a rural community. Through <a href="/mastercard-and-accions-partnership-to-unlock-millions-of-underserved-microbusinesses" target="_blank" rel="noopener noreferrer">Mastercard and Accion’s partnership</a>, Accion is working with Annapurna Finance to develop a new digital emergency loan product for group lending customers like Rosina and Papina. To build products that help entrepreneurs stay in business, we surveyed Annapurna’s small business clients to understand <a href="/critical-lessons-from-a-survey-of-small-businesses-in-india" target="_blank" rel="noopener noreferrer">their experience and confidence using digital tools, how gender gaps affect digital access, the role of misinformation, and more</a>. When financial services providers like Annapurna consider the unique challenges that their clients face, they can play a critical role in helping India’s <a href="/digital-tools-open-opportunities-for-women-to-thrive" target="_blank" rel="noopener noreferrer">women entrepreneurs use well-designed digital tools</a> to overcome the pandemic’s challenges and help rebuild their local economies.

Women entrepreneurs get back to business in India

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.

Small businesses play a vital role in communities around the globe, not only by providing goods and services, but by creating jobs. In fact, <a href="https://www.worldbank.org/en/topic/smefinance" target="_blank" rel="noopener noreferrer">half of the world’s jobs</a> come from micro, small, and medium enterprises (MSMEs). Small businesses alone account for <a href="https://www.worldbank.org/en/topic/smefinance" target="_blank" rel="noopener noreferrer">half of the global GDP</a>. For many of these businesses, accessing finance is a struggle. We’re constantly working to find and invest in financial service providers that empower the world’s MSMEs, especially in the poorest regions. As access to mobile phones and the internet grows, digital financial services have the power to bring much-needed support to the most vulnerable communities and ultimately open opportunities for new jobs.

Digital financial tools that are accessible via mobile phone have been a game-changer for financial inclusion. In sub-Saharan Africa, the percentage of adults with bank accounts increased from <a href="https://globalfindex.worldbank.org/sites/globalfindex/files/referpdf/IFC088%20-%20FINDEX%20Note%201_DRAFT%202.pdf" target="_blank" rel="noopener noreferrer">34 percent to 43 percent between 2014 and 2017</a>, and the majority of these gains can be attributed to mobile money accounts.

<a href="https://www.gsma.com/newsroom/press-release/gsma-5g-moves-from-hype-to-reality-but-4g-still-king/" target="_blank" rel="noopener noreferrer">GSMA estimates</a> that, by 2025, over 70 percent of the world’s population will have mobile phones. This growth will be driven by developing countries with the most underbanked populations, creating vast potential to bolster MSMEs and ultimately boost job creation.
<h2>Helping microentrepreneurs embrace digital tools</h2>
Still, barriers stand in the way of some MSMEs’ ability to embrace technology. Young microentrepreneurs tend to be tech-savvy but older ones tend to be less confident transitioning to new, unfamiliar tools. We’re investing in financial service providers (FSPs) with innovative strategies to train microentrepreneurs to confidently use digital tools that will help their business survive and grow.

Helping microentrepreneurs is especially urgent as COVID-19 has wreaked havoc on traditional, in-person businesses. MSMEs that have at least partially digitized their business and can accept digital payments have proven to be more resilient. Our FSP partners are on the frontline of the pandemic supporting the most underserved essential businesses — including mom-and-pop shops that sell food and medicine. , These institutions are accelerating their own digital transformations and helping their customers to embrace digitalization as well. They are rapidly designing new digital products and training clients to use digital tools so that these vital businesses can stay open and keep providing jobs in their community.

In Nigeria, our partner <a href="https://www.accionmfb.com/" target="_blank" rel="noopener noreferrer">Accion Microfinance Bank</a> has helped ensure that MSMEs can continue to sustain local economies and create jobs. Their digital products and services include a mobile app that allows customers to access financial services remotely, which has seen broader use after a recent marketing boost. Interbank transfers and mobile airtime purchases made through the app have increased far beyond pre-pandemic levels. Accion Microfinance Bank sends agents to support customers who can’t access digital channels or safely visit a branch, and hosted a series of well-attended free webinars to support their customers. They're now working to expand their agent network even further to bring financial services to customers in hard-to-reach locations.
<h2>Leaning on fintech innovation to close credit gaps</h2>
As established financial institutions are driving financial inclusion by creating useful digital financial tools, fintech startups are also helping to close gaps in underserved communities through innovative products and services. In Mexico, there are over 5 million MSMEs, but commercial banks often refuse to serve them because they are small, informal, and not seen as profitable, or because their owners lack credit history. Informal lenders exist but often charge exorbitant interest fees. Our fintech partners in the region, however, have developed innovative digital lending services that can close the credit gap.

<a href="https://konfio.mx/" target="_blank" rel="noopener noreferrer">Konfio</a> is an online lending platform that uses innovative credit algorithms and alternative data analysis to help MSMEs in Mexico obtain affordable working capital loans. Along with investing in them, Accion Venture Lab sent a team to help them define priority geographic areas and customer segments so that they could identify where to focus their marketing efforts and expand their product offering. By creating products that respond to customer needs, Konfio has grown from serving a few hundred businesses in 2014 to being the leading online lending platform for small businesses in Mexico and a global model for how inclusive fintech can be successful.

<a href="https://www.tiendapago.com/" target="_blank" rel="noopener noreferrer">Tienda Pago</a> is another fintech partner that currently operates in Peru and Mexico. They use a digital platform to provide digital supply chain finance services to underserved small businesses. They’re supporting mom-and-pop stores to help finance the upfront purchase of the goods they sell. Tienda Pago’s agents work with existing supply chains and provide one-on-one guidance through onboarding before their algorithm analyzes data collected by the agent to produce a credit score and loan amount. While the management of the loan payouts and the payments for consumer goods deliveries is through their digital app, the Tienda Pago staff is only a call or text away if needed.

When small businesses have access to high-quality and fair financial services, they are better able to survive the shocks of crises like the COVID-19 pandemic, keep the employees they’ve hired, and eventually create more jobs. Digital technology, along with proper training and customer support, has proven to be an indispensable facilitator when it comes to supporting underserved microentrepreneurs in the world’s poorest regions. As mobile phone and internet access spreads, we’ll continue working to open opportunities to underserved small businesses so that they can thrive and help their communities prosper.

Opening opportunities for job creation in developing countries

As an essential service, the Brazilian agricultural market has been sheltered from the devastating economic effects of COVID-19-related shutdowns, but farmers still face enormous challenges. Most of Brazil’s farms are small or medium, and they depend on credit for 80 percent of their working capital each season. But these independent farmers are often ignored by banks because they are difficult to reach geographically and challenging to underwrite. As the government continues to reduce subsidies to farmers and demand for crops increases, the need for responsible financing to support this vital sector of the country’s economy is becoming more critical than ever.

Even before the pandemic started, the <a href="/2020-and-beyond-whats-next-for-fintech-innovation-in-latin-america" target="_blank" rel="noopener noreferrer">Accion Venture Lab team was looking</a> for startups that drive the digital transformation of Latin America’s agricultural landscape with innovative financial products. When we met with <a href="https://terramagna.com.br/" target="_blank" rel="noopener noreferrer">TerraMagna</a>, we immediately realized that the company was in a unique position to help underserved farmers because of their use of satellite imaging to appraise and monitor collateral and their embedded finance model, which allows input suppliers to improve underwriting and reduce costs.

We previously invested in African agri-fintech startups <a href="/for-rose-in-kenya-crop-insurance-is-a-game-changer" target="_blank" rel="noopener noreferrer">Pula</a> and <a href="/apollo-agriculture-raises-6-million-to-help-small-scale-farmers-make-more-money" target="_blank" rel="noopener noreferrer">Apollo</a>, and we are convinced that this is the right time to support the agri-fintech space in Brazil. The current conditions are favorable for a company like TerraMagna to thrive: satellite images are now more accessible, low interest rates make debt funding possible, and new regulations will bring more financing to the sector.

Accion Venture Lab is thrilled to make its first agri-fintech investment in Latin America. We are most excited that TerraMagna is:
<h3>Connecting small and medium farmers with fairly priced credit</h3>
The lack of access to traditional financial institutions forces smallholder farmers to seek credit from expensive retailers where they purchase seeds, fertilizer, and other inputs. TerraMagna addresses this problem by using their proprietary machine learning platform and monitoring technology to generate a more personalized farmer credit score and an accurate estimate of collateral value. This approach reduces the manual cost of the underwriting process, which lowers the retailers’ credit risk and enables them to provide lower-cost loans. Lenders in Brazil have typically used land as collateral and have found it difficult to properly accept crops as collateral, given the high fraud risk. Using satellite images, TerraMagna can track the crop status in real-time and help prevent fraud attempts. This approach aligns with our thesis that technology and <a href="/time-to-shine-for-innovative-fintech-lenders" target="_blank" rel="noopener noreferrer">innovative lending models</a> can work together to create new asset collateral, ultimately granting better access and better credit pricing to smallholder farmers.
<h3>Taking a holistic approach to strengthening the farming sector</h3>
Rather than lending directly to farmers, TerraMagna leverages partnerships with local input retailers to monitor, underwrite, and fund their loans. Since these retailers operate with slim margins and are forced to sell seeds and other agricultural goods primarily on credit, they value TerraMagna’s ability to reduce their loan risk and improve their collateral documentation. TerraMagna’s precise, lower-cost underwriting processes and collateral-monitoring technology allow retailers to provide farmers with loans that cover a larger portion of their working capital and enable them to purchase higher-quality inputs. With broader financing coverage, farmers can ease the pressure on their margins, improve their financial resiliency, and reinvest their profits into their farms.
<h3>Leveraging data to improve the agricultural ecosystem</h3>
As TerraMagna continues to monitor farms across the region and develops relationships with input retailers, they will gather critical data about how agronomic conditions and inputs impact farmer yields. As we’ve seen through our work with Apollo and Pula, this data can generate insights and personalized agronomic advice that helps retailers better support farmers, increasing their crop yields and benefiting the overall health of the agricultural ecosystem.

As QED’s Nigel Morris said in our <a href="/a-great-company-going-into-covid-is-invariably-a-great-company-coming-out" target="_blank" rel="noopener noreferrer">latest podcast series</a>, “a great company going into COVID is invariably a great company coming out.” TerraMagna is a perfect example of this. With their unique technological skills and vast knowledge of the agricultural sector, the team built a product with competitive advantages for the suppliers and turned it into a profitable business. And they went one step further and fully immersed themselves in the fintech world, first by participating in the underwriting process and now by funding some of the suppliers’ loans to provide better pricing and expand their lending capabilities.

We’re continuously impressed by the eagerness of TerraMagna’s team to keep learning and innovating, and we can’t wait to see what comes next for them.

How one company uses tech to support Brazilian farmers

<h2>English:</h2>
[embed]https://vimeo.com/478733222[/embed]
<h2>Spanish:</h2>
[embed]https://vimeo.com/478924914[/embed]

Cyber threats have become a growing concern in emerging markets during the COVID-19 pandemic, as financial institutions and their clients turn to digital financial transactions. This makes it harder for people to trust digital financial services.

In this webinar, we discussed the cyber risk that organizations driving financial inclusion are meeting on the digital transformation journey. Digital innovations, new products, and new processes are moving ahead at breakneck speed, but often leaving cyber security considerations in the dust, bringing new risks to financial inclusion-focused enterprises and to the low-income and newly banked customers that they serve.

Accion Global Advisory Solutions provides strategic and operational support to financial service providers around the world who are innovating to better meet the needs of underserved people and small businesses. During this session, leaders of Accion Microfinance Bank Nigeria, BancoSol in Bolivia, and Ujjivan Bank in India, discussed the ever-growing cyber security risk, threats, and mitigations on their path to success in digital transformation and customer protection.

Reimagining cyber risk for financial inclusion in an increasingly digital world

Small businesses are the backbone of India’s growing economy. There are 50 to 60 million micro, small, and medium enterprises (MSMEs) operating in the country, employing 110 million individuals and contributing nearly a third of the GDP. Despite a diverse lending landscape, access to formal credit remains a challenge for most; prior to COVID-19, it is estimated that 60 to 70 percent of all MSMEs’ credit requirements were unmet, a figure that is likely to increase given the current operational challenges institutions face. In addition, <a href="https://omidyar.com/wp-content/uploads/2020/09/18-11-29_Report_Credit_Disrupted_Digital_FINAL.pdf" target="_blank" rel="noopener noreferrer">up to 40 percent of lending is informal</a>, often with prohibitive interest rates.

In July, <a href="/msme-digital-maturity-assessment" target="_blank" rel="noopener noreferrer">Accion conducted our Digital Maturity Assessment</a> with Annapurna Finance Ltd., a non-bank financial institution based in the Odisha province of India. Through <a href="/mastercard-and-accions-partnership-to-unlock-millions-of-underserved-microbusinesses" target="_blank" rel="noopener noreferrer">Mastercard and Accion’s partnership</a>, Accion is working with Annapurna Finance to develop two new digital products: a low-ticket emergency loan (“just in time finance”) for group lending customers and an end-to-end digital loan for formalized MSMEs. Given the ongoing challenge and restrictions of physical loan disbursements and in-person collections due to COVID-19, these products will bring convenience and safety to both customers and staff.

Before we started this work, Annapurna Finance segmented their 14,000 MSME customers by the financial products they use. In addition to providing a more customer-centric segmentation, our research uncovered key insights, which we’ve outlined below.
<h3>There’s a gender gap in digital access and usage</h3>
Our survey results demonstrated that women haven’t been able to embrace digital tools as much Annapurna’s male customers. We saw the largest differences when evaluating:
<ul>
 	<li><strong>Trust in digital tools:</strong> Women made up over half of the “nascent” segment, a segment with low comfort and trust in digital tools, but only 4 percent of the “enabled” segment: the group that is digitally savvy and willing to try more advanced digital tools.</li>
 	<li><strong>Device ownership:</strong> Looking at device ownership, we found notable differences in gender: only 28 percent of women surveyed owned a smartphone for their own personal use compared to 55 percent of men in the sample.</li>
 	<li><strong>Digital transactions:</strong> In terms of comfort in completing transactions digitally, 78 percent of women stated that interacting with a person is important to them when completing transactions compared to 49 percent of men across all maturity levels.</li>
 	<li><strong>Household dynamics:</strong> Anecdotally, female customers were also more likely to hand the phone to another member of the household — usually a husband or a male family member — when contacted by the enumerator for this study.</li>
</ul>
To bridge the gender gap and promote greater digital usage among women, trainings and confidence-building activities can build the financial capability of female clients, as well as their trust in the products themselves.

<img class="wp-image-22586 alignnone" src="https://content.accion.org/wp-content/uploads/2020/10/digital-maturity-assessment-gender.png" alt="Segment breakdown by gender" width="551" height="663" />
<h3>Habits lead to confidence and self-efficacy</h3>
Our findings showed a notable difference in digital confidence levels in respondents who often use digital technology versus those who use it less frequently. Of the respondents who stated that they use digital technology more than once a day, 94 percent said that they agree with the statement, “I am confident in using digital technology to do the things I need to do online.” For respondents that use digital technology only once a week, only 29 percent felt confident. Given this finding, we determined that products that are intentional about increasing digital engagement, with features like nudges or gamification, would likely have a positive impact on users’ digital confidence. With more digital confidence, clients are better suited to transition to new products and channels, giving FSPs an opportunity to introduce them to additional products.

<img class="alignnone wp-image-22588 " src="https://content.accion.org/wp-content/uploads/2020/10/digital-maturity-assessment-confidence-1.png" alt="confidence in digital tools" width="689" height="359" />
<h3>Widespread misinformation online creates adoption challenges</h3>
Even among digitally mature customers, distrust in information found online is nearly universal. Among respondents that use digital tools several times a day, 80 percent disagreed with the statement, “I feel confident that the information I find online is correct.” FSPs should consider ways to build trust in digital channels through secure messaging and authentication procedures and provide resources to help customers discern which information is truthful.

<img class="alignnone wp-image-22587 " src="https://content.accion.org/wp-content/uploads/2020/10/digital-maturity-assessment-confidence-2.png" alt="confidence in digital tools" width="693" height="332" />
<h3>Digital marketing and business management is uncommon</h3>
We learned that only 3 percent of respondents on average, and only and 6 percent of digitally mature customers, use digital technology for business management purposes. The use of digital tools like WhatsApp and Facebook Marketplace for marketing and promotion was slightly more common, but we still found only a small proportion — 6 percent overall and 11 percent among digitally mature customers — were using digital tools for this purpose. Based on this finding, initiatives that digitize processes that customers are already familiar with, like loan repayment, may lead to greater short-term adoption compared to business management tools.

<img class="alignnone wp-image-22589 " src="https://content.accion.org/wp-content/uploads/2020/10/digital-maturity-assessment.png" alt="Use of digital technology" width="598" height="549" />
<h2>How can providers help MSMES progress in their digital journey?</h2>
<img class="alignnone wp-image-22585" src="https://content.accion.org/wp-content/uploads/2020/10/digital-design-principles.png" alt="Digital Design Principles" width="889" height="503" />

Small merchants like Annapurna’s customers in India continue to face enormous challenges during the pandemic. Having access to digital tools that suit their needs can help. As trusted partners, FSPs can play a significant role in helping MSME customers progress in their digital maturity journey. However, without a clear understanding of where their customers fall on the spectrum, providers risk developing products that don’t resonate with their end users’ specific needs. Given the complexity and time commitment of gathering customer insights, especially at a time when face-to-face conversations aren’t feasible, we designed the <a href="/msme-digital-maturity-assessment" target="_blank" rel="noopener noreferrer">MSME Digital Maturity Assessment</a> to be a simple tool that leverages existing institutional resources to gather insights on customers’ attitudes, beliefs, and practices regarding digital financial services, which would be challenging to glean from transactional data alone.

<a href="/the-first-step-to-help-small-businesses-go-digital-during-covid-19" target="_blank" rel="noopener noreferrer">Learn more about our framework for assessing the digital maturity</a> of MSMEs and <a href="mailto:GLASSupport@accion.org">reach out to our team</a> if you’re interested in conducting an assessment of your own customers.

Critical lessons from a survey of small businesses in India

From buying and selling online to managing bank accounts to communicating digitally, access to digital tools has never been as essential for economic resilience as it is right now. <a href="https://cdn.ymaws.com/ande.site-ym.com/resource/resmgr/publications/covid_and_sgbs_issues_brief-.pdf" target="_blank" rel="noopener noreferrer">An estimated 42 percent</a> of the world’s micro, small, and medium enterprises (MSMEs) are at risk of failure in the next six months due to the global pandemic. However, businesses that have transitioned their sales, delivery, and operations online are less likely to experience economic hardships and are better able to weather the economic and financial strains of the crisis. Despite potential gains, many businesses are not digitizing.

Support from trusted financial providers can help these vulnerable businesses seize digital opportunities so they can stay operational through the pandemic. As financial service providers (FSPs) consider adding new digital offerings for their clients, they must consider <a href="https://www.smartcampaign.org/storage/documents/Digital_Credit_Standards_June_2019.pdf" target="_blank" rel="noopener noreferrer">how to ensure that clients will use them effectively</a>. Leveraging Accion’s global experience and understanding of what influences small business owners to adopt digital products, we developed the <a href="/msme-digital-maturity-assessment" target="_blank" rel="noopener noreferrer">Micro, Small, and Medium Enterprise (MSME) Digital Maturity Assessment</a>.

Institutions can use this diagnostic tool to survey their customers about their ownership of digital tools and comfort using them for their businesses and use that data to segment their customers. Customer-centric segmentation has several benefits beyond ensuring that products meet a customer’s needs:
<ul>
 	<li><strong>Building a business case:</strong> There is a clear advantage to segmentation, as gaining a deeper understanding of customers’ digital maturity can help institutions better estimate the market for a new digital product or service. Once launched, segmentation data can guide direct marketing and sales resources towards the right customers for a product or service.</li>
 	<li><strong>Product innovation and optimization:</strong> With a deeper understanding of customer segmentation, FSPs can better support their customers’ journeys towards new channels like mobile and internet banking. By understanding the differences between their customer segments, institutions can also identify key design principles that will work best for customers based on their digital maturity.</li>
 	<li><strong>Customer experience and impact measurement:</strong> Understanding digital maturity can lead FSPs to improve the overall customer experience by identifying friction points in the customer journey. Institutions and funders can measure improvements in customers’ digital maturity over time to determine the impact of their efforts. A customer-centric approach to segmentation — based on capabilities, beliefs, and behaviors — helps institutions stay focused on their customers instead of products.</li>
</ul>
We hope institutions will consider <a href="/msme-digital-maturity-assessment" target="_blank" rel="noopener noreferrer">embedding this assessment</a> within their own product development process to ensure that resources invested in new products are focused on what is most appropriate for customers so we can support more struggling MSMEs during a difficult time.

If you’re interested in understanding your customers’ digital maturity, <a href="mailto:GLASSupport@accion.org">contact us to learn more</a>.

<em><a href="/critical-lessons-from-a-survey-of-small-businesses-in-india">See how we used the assessment to gain valuable insights for customer segmentation in India</a>.</em>

The first step to help small businesses go digital during COVID-19

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

Banking goes digital to reach rural entrepreneurs

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

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