We are living through a time of extreme difficulty — and that’s especially true for the world’s 3 billion people who are left out, or poorly served by, the global financial system. Without tools like savings, credit, or insurance, they are at risk of being left behind as we recover from COVID-19.

We are also living in a time of extraordinary innovation that is changing all our lives. This innovation has the power to solve complex problems at a critical time, and finally bring basic financial tools to those who need them most.

Innovation is chipping away old obstacles that surrounded the world’s poor. Today, no distance is too far, no transaction size is too small, and with data and data analytics, we can understand clients’ needs wherever they may live.

Early-stage fintechs are nimble, flexible, and digitally native — making them uniquely positioned to leverage technology and innovation for the benefit of vulnerable people and small businesses. Here’s how fintech startups in Accion Venture Lab’s portfolio are doing that:
<ul>
 	<li><a href="https://terramagna.com.br/" target="_blank" rel="noopener noreferrer">TerraMagna</a> is using satellite imaging in Brazil to <a href="/how-one-company-uses-tech-to-support-brazilian-farmers" target="_blank" rel="noopener noreferrer">see small farms who are ignored</a> by large banks. They use those images to assess collateral and figure out what a farmer needs to grow and thrive.</li>
 	<li><a href="https://toffeeinsurance.com/" target="_blank" rel="noopener noreferrer">Toffee Insurance</a> has successfully <a href="/a-start-up-innovates-to-give-the-uninsured-a-safety-net" target="_blank" rel="noopener noreferrer">reached India’s uninsured</a> by offering “bite-sized” policies covering risks that are most relevant to consumers, like unexpected illness, bicycle damage, and theft.</li>
 	<li><a href="https://www.fieldintell.com/" target="_blank" rel="noopener noreferrer">Field Intelligence</a> uses AI and data analytics to <a href="/how-tech-is-helping-to-meet-health-care-needs-during-the-pandemic" target="_blank" rel="noopener noreferrer">help community pharmacies</a> in Nigeria and Kenya optimize their inventories and ensure their customers have the medications they need, when they need them.</li>
 	<li><a href="https://www.self.inc/" target="_blank" rel="noopener noreferrer">Self</a> is helping Americans with thin or damaged credit files <a href="/win-from-within-how-fintech-startups-can-grow-by-building-value-for-existing-users#case-study-3.1-self" target="_blank" rel="noopener noreferrer">build their credit scores</a> through innovative credit-builder loans.</li>
 	<li><a href="https://www.creditmantri.com/" target="_blank" rel="noopener noreferrer">CreditMantri</a> is using alternative data sources to <a href="/a-small-business-owner-gets-a-second-chance" target="_blank" rel="noopener noreferrer">help consumers in India</a> who have been invisible to the financial system access credit for the first time. (I recently had the honor of awarding Gowri Mukherjee, CEO of CreditMantri, with <a href="/honoring-two-women-leading-through-crisis-with-the-2020-claugus-award" target="_blank" rel="noopener noreferrer">the 2020 Edward W. Claugus Award</a> for leadership and innovation in financial inclusion.)</li>
</ul>
<h2>Fintechs are meeting customer needs during the pandemic</h2>
New data confirms how fintechs are answering new needs. In the initial months of the pandemic, consumer demand surged for financial products that build resilience, including savings accounts, personal financial management tools, and payment platforms. Fintechs offering these products saw their compounding monthly growth rate go from 7.4 percent to 15.4 percent from December 2019 to May 2020.

<img class="alignnone wp-image-23052 size-full" src="https://content.accion.org/wp-content/uploads/2020/12/if50whitepaper.jpg" alt="fintechs offering payment and saving products are more likely to increase CMGR" width="1112" height="699" />

This insight comes from a recent <a href="https://www.inclusivefintech50.com/white-paper-2020" target="_blank" rel="noopener noreferrer">whitepaper</a> that looks at data submitted by the <a href="https://www.inclusivefintech50.com/2020-cohort">2020 cohort</a> of applicants for Inclusive Fintech 50, an initiative that elevates promising early-stage fintechs driving financial inclusion and resilience around the globe. The initiative provides valuable visibility, resources, and connections that startups need to grow and thrive, especially as they contend with the added problems raised by a global pandemic.
<h2>Fintechs must grow to continue supporting vulnerable people</h2>
Indeed, inclusive fintechs must overcome major challenges to grow, scale, and continue supporting underserved populations. In the midst of a global recession and limited funding, fintechs have had to extend their financial runways while simultaneously finding ways to grow their businesses.

To achieve growth quickly, historically, some fintechs have pursued a “grow at all costs” mentality that prioritizes customer acquisition. But customer acquisition can be costly: bringing on a new customer is anywhere from 5 to 25 times more expensive than retaining an existing one. Fintech startups should consider more sustainable pathways to growth, namely via increased usage, uptake, and earnings among existing clients.

We explore this concept in <a href="/win-from-within-how-fintech-startups-can-grow-by-building-value-for-existing-users" target="_blank" rel="noopener noreferrer">our latest publication from Accion Venture Lab</a> that highlights how fintechs are doing just that. And building value for current users is very relevant in the era of COVID-19. Vulnerable people need more and new financial service innovations to rebuild their safety nets and livelihoods as their savings and inventories have been depleted.

I was also very glad to join two partners featured in the report, Jaime de los Angeles, CEO of <a href="https://advance.ph/" target="_blank" rel="noopener noreferrer">Advance</a>, and Tommy Yuwono, co-founder and director of <a href="https://pintek.id/" target="_blank" rel="noopener noreferrer">Pintek</a> at the Singaore Fintech Festival in early December. Pintek provides credit to students and schools to improve access to education in Indonesia—and has helped <a href="/schools-go-virtual-with-fintech-support-in-indonesia" target="_blank" rel="noopener noreferrer">schools go online during the pandemic</a>. Advance is a salary-on-demand platform that’s been adopted by large companies in the Philippines to provide employees with early access to their wages and <a href="/a-digital-solution-for-people-living-paycheck-to-paycheck-in-the-philippines" target="_blank" rel="noopener noreferrer">promote financial wellbeing.</a>

https://www.youtube.com/watch?v=oOwRSMbk8uI

Inclusive fintech startups are offering inspiring examples of how innovation is answering today’s most urgent challenges. As we look toward building an inclusive recovery from COVID-19, we must ensure they have the tools and resources to grow sustainably and answer their clients’ most pressing needs.

Fintech startups are small yet mighty partners in building resilience—but they need to grow to succeed

[embed]https://soundcloud.com/accioninternational/everyone-is-out-there-reassessing-how-much-liquidity-they-have-toffee-insurances-rohan-kumar[/embed]

“Everyone is out there reassessing how much liquidity they have. Do they have enough safety nets for their kids — do they have enough savings if they were to go to the hospital?,” says Rohan Kumar, Co-Founder and CEO of <a href="https://toffeeinsurance.com/" target="_blank" rel="noopener noreferrer">Toffee Insurance</a> in India. Health concerns and other risks from COVID-19 are causing consumers to reassess whether their current safety nets are adequate. Insurance has switched from being a “push product to a pull product,” and people across income levels are “going out and proactively looking for products.” In episode six of <a href="https://www.accion.org/series/venturekast-rebuild" target="_blank" rel="noopener noreferrer">VentureKast: Rebuild</a>, Rohan talks about how the pandemic is changing consumer perceptions of insurance and why fintechs are uniquely positioned to meet the increased demand with truly affordable, flexible, and high-quality offerings. Toffee leverages a digital infrastructure, including payments and claims management, to offer simple health, home, and income insurance to the 500 million Indians who have historically been overlooked by traditional insurers. This agile and enterprising fintech is expanding insurance access in India. “Something that has taken 10 years for people to solve, has been solved in three months,” says Rohan.

Toffee’s new monthly subscription model expands access to affordable insurance with a payment schedule that complements the income cycles of low-income customers, providing the security that “if [consumers] were to contract COVID-19 they would have some sort of coverage which doesn’t empty their banks.” While the vast majority of traditional insurers who rely on outdated products and legacy delivery methods are ill-equipped to adapt to the needs of consumers in a COVID-19 world, Toffee — which “started all digital from day one” — can bring products to market at a rapid pace. Rohan adds that the “mass behavioral change” in perception of insurance in India “has a huge impact which continues to stay.” With empathy, Rohan reminds us that despite the strain caused by the pandemic, COVID-19 has encouraged insurers to serve previously ignored populations.

Please join our host and co-Managing Director of <a href="https://www.accion.org/how-we-work/invest/accion-venture-lab" target="_blank" rel="noopener noreferrer"><strong>Venture Lab</strong></a> <a href="https://www.accion.org/bio/vikas-raj" target="_blank" rel="noopener noreferrer"><strong>Vikas Raj</strong></a> as he interviews industry leaders every Thursday about how COVID-19 is impacting their work.

“Everyone is out there reassessing how much liquidity they have” – Toffee Insurance’s Rohan Kumar

Many workers in India earn a daily wage for their labor and rely on that income to survive. But what happens when a person can’t work due to illness or injury? Or loses their job in a global pandemic? Without a safety net for protection, a financial shock like job loss, illness, or theft is devastating, especially to lower-income families.

<a href="https://toffeeinsurance.com/" target="_blank" rel="noopener noreferrer">Toffee Insurance</a>, part of Accion Venture Lab’s portfolio, is a startup that connects uninsured people in India to accessible, affordable insurance products for the specific risks that threaten their health and livelihoods. Instead of expensive and complicated policies that cover a broad range of needs, Toffee offers very specific, simple policies that cover the risks that are most relevant to their consumers, like dengue, malaria, hospital cash, bicycle damage, and theft. Now, they are introducing new products to help underinsured people build financial resilience to the impact of COVID-19.
<h2>Putting safety nets within reach for the uninsured</h2>
Toffee Insurance is changing the way that people buy and sell insurance in order to reach the huge population of at-risk, uninsured people in India. Toffee acts as the bridge between these consumers and large, traditional insurance companies. “We were frustrated with the complexity of insurance for the longest time, we figured there was an easier way to make insurance a safety net for most people, easier to consume. Making insurance a lot more accessible, affordable, and relevant to the masses,” Rohan Kumar, CEO and co-founder, explains Toffee Insurance’s origins.

Customers can purchase policies on Toffee’s website or mobile app in under two minutes and submit claims just as quickly. Toffee handles the claims process with major insurance companies, making the process simpler and faster for the end consumers. In addition to direct online sales, Toffee Insurance works with a network of retailers who offer inexpensive insurance policies for their customers. For example, cycling shops offer Toffee’s commuter accident policies to their bicycle customers who rely on their bicycles to commute to work.

Because these microinsurance policies cover very specific needs, Toffee is able to offer low monthly premiums to their customers. For middle and lower-income people in India who are not familiar with insurance, the affordability and simplicity of these products are key. “This is a model which can actually help bring more people into the net of insurance and can address very, very specific needs of the people,” explains Gourav Agarwal, Chief Distribution Officer.
<h2>Product innovation for those impacted by COVID-19</h2>
Lower-income families and individuals have always been especially vulnerable to unexpected financial shocks from job loss, injury, and illness. Now, the COVID-19 pandemic has created new, unprecedented threats to lives and livelihoods. Across India, Rohan believes, “the biggest risk outside of personal health and wellbeing is the financial uncertainty for most individuals and families.” That’s where Toffee Insurance hopes to provide some relief. “Our mission has always been to curate affordable, accessible, and relevant products for the large, uninsured masses. This pandemic helps, in some ways, create more awareness for having safety nets in place,” notes Rohan.

As people become more interested in health and life insurance categories in reaction to the pandemic, Toffee is introducing new products that cover for COVID-19-specific losses at a low monthly premium, covering essential needs like telemedicine, mental health services, and job loss. Toffee Insurance is relying on their existing tech capabilities to continue issuing policies remotely during India’s lockdown in order to help the uninsured to build financial resilience to the pandemic. In addition to new product offerings, Toffee and the start-up community in India are helping the severely impacted in other ways, like contributing to charities on the frontlines, leveraging call centers to assist hospital information networks, and reassuring customers and businesses that they will be flexible on payments.

While Toffee focuses on taking care of their team and their community, they are staying committed to their mission to extend insurance to those who are most susceptible to financial shocks and least likely to have a safety net in place. “Inclusion of more people under the net of insurance is what is making us proud,” says Gourav.

A start-up innovates to give the uninsured a safety net

When a family member falls ill, especially a breadwinner, the unexpected costs can tip the family finances from coping to crisis. Insurance can help families manage and recover from shocks — a key indicator of <a href="https://www.centerforfinancialinclusion.org/beyond-financial-inclusion-financial-health-as-a-global-framework">financial health</a>. However, according to the <a href="https://www.fsdzambia.org/publication/finscope-2015/">2015 Finscope</a>, only 2.8 percent of adults in Zambia are insured.

To combat this problem, we’re supporting a Zambian insurtech startup to develop and pilot a new digitally delivered microinsurance product. This work is part of a multi-year project focused on <a href="https://www.opml.co.uk/projects/deepening-financial-inclusion-in-sub-saharan-africa">Data Management and Analytical Capability</a> (DMAC). One of the primary goals of the DMAC project is to develop financial service providers’ capacity to leverage data strategically so they can develop innovative and inclusive products that respond to the needs of unserved and underserved adults. One such product is a mobile-based hospital cash plan in Zambia.

When this product launches, mobile money subscribers will be able to pick a plan and pay the premiums straight from their mobile money account. If they or a family member falls ill and is admitted to the hospital, they can initiate a claim. They’ll receive a mobile money payout directly to their wallet for each day spent in the hospital. This fast, flexible cash benefit can be used to pay for whatever the family needs to make ends meet. It also saves the family from falling prey to exorbitant rates for small short-term loans from moneylenders or others.

To develop this product, the insurtech startup partnered with a national Mobile Network Operator (MNO) as part of their data strategy to use alternative data — such as mobile KYC and mobile money transaction data — for customer acquisition and underwriting. Following a <a href="https://www.accion.org/are-you-unleashing-the-full-potential-of-your-data">data-driven product development methodology</a>, we helped the insurtech map out the data inflows and outflows that the new hospital cash plan will generate. This exercise informed the operational processes and technical requirements needed to support product delivery. For example, the insurtech pinpointed the minimum set of data fields required in the mobile phone menu that the MNO database would need sent to their backend system through their Application Programming Interface (API) for underwriting. They also identified the critical success metrics to measure and track customer usage and satisfaction with the product experience through <a href="https://www.accion.org/preparing-financial-service-providers-for-digital-transformation-2">customized analytics dashboards</a>. This evaluation process will enable a data-driven feedback loop for continuous product improvements.

This experience has underscored that an organization’s ability to <a href="https://www.accion.org/implementing-big-data-10-tips-fsps">strategically leverage big data</a> and build data-driven products depends on identifying and implementing the appropriate mix of staff skills, tech, and operational systems. Strategic partnerships make it possible to meet these business objectives. In Zambia, for example, the insurtech would not be able to digitally acquire and underwrite new customers without the backend insurance administration and reporting systems they’ve developed, an in-house data analyst supported by a local firm specializing in data collection and management, and a strong partnership with the MNO.

Today, there are very few microinsurance plans available to low-income segments in Zambia.  As we prepare for the pilot launch of this new product, we’re hopeful that it can help make insurance more inclusive. Once the tool is live, the dashboards built will be used to track customer usage and experience and enable refinements. This data-driven product has the potential to insure people in Zambia who’ve never had quality insurance, helping them find new resilience in the face of a health crisis. As the <a href="https://www.economist.com/international/2019/08/22/the-poor-who-most-need-insurance-are-least-likely-to-have-it">Economist</a> recently reported, the poor, who most need insurance, are least likely to have it. But mobile phones and innovative fintech, like the projects we’re working on with DMAC, can make a difference.

___________________________________

<em>Data Management and Analytics Capabilities (DMAC) is a two-year program that uses data-driven evidence to help Financial Service Providers (FSPs) in sub-Saharan Africa to designing inclusive and affordable financial products and services that respond to the needs of unserved and underserved adults, with a particular focus on women and youth. </em>

<em>Initiated by </em><a href="https://www.fsdafrica.org/"><em>Financial Sector Deepening Africa</em></a><em> (FSD Africa) and </em><a href="https://www.idrc.ca/"><em>International Development Research Centre</em></a><em> (IDRC) in partnership with </em><a href="http://www.fsdt.or.tz/"><em>FSDT</em></a><em> and </em><a href="https://www.fsdzambia.org/"><em>FSDZ</em></a><em>, it’s being implemented by </em><a href="https://www.opml.co.uk/"><em>Oxford Policy Management</em></a><em> (OPM), in collaboration with Accion’s </em><a href="https://www.accion.org/how-we-work/advise/accion-global-advisory-solutions"><em>Global Advisory Solutions</em></a><em> and </em><a href="https://www.masterdata.co.za/"><em>Master Data Management</em></a><em> (MDM).</em>

<em>The program is operating across three different markets of varying digital maturity — Sierra Leone, Zambia, and Tanzania — and with three different types of FSPs: insurers, fintechs, and commercial banks.</em>

Helping families in Zambia cope with a health crisis

Michael Schlein

Elizabeth Winters

Kathleen Yaworsky

India

Latin America and The Caribbean

Sub-Saharan Africa

United States

South Asia

Zambia

Crop Insurance

Data Analytics

Digital Financial Services

Financial Service Providers

Financial Technology

Fintechs