The severe economic impacts of COVID-19 on low-income households and small businesses have underscored the need for innovative solutions that can build greater financial resilience. Findings from <a href="https://centerforfinancialinclusion.org/covid-19-and-msmes-data-and-analysis-to-understand-impact/" target="_blank" rel="noopener noreferrer">surveys of MSMEs</a> conducted by the Center for Financial Inclusion (CFI) show that since COVID-19 struck, many small businesses in Indonesia, Colombia, and Nigeria have either had to close or found their profits significantly decreased. At the same time, the pandemic has provided opportunities for inclusive fintechs to <a href="https://centerforfinancialinclusion.org/rapid-innovation-how-fintechs-are-adapting-under-covid-19/" target="_blank" rel="noopener noreferrer">leverage their agility and adaptability</a> to strengthen and support the financial resilience of low-income, financially underserved customers.

Financial resilience is the ability to mitigate, adapt to, and recover from shocks and stresses in a manner that reduces chronic vulnerability and facilitates inclusive growth. Individuals must deftly navigate a delicate balancing act to stay afloat and may be thrown off course by a whole host of shocks, ranging from unexpected health crises to weather-related disasters that can disrupt otherwise appropriate financial plans. The nuances associated with financial resilience can complicate the financial service industry’s ability to develop and design comprehensive solutions for low-income customers.
<blockquote class="pullquote--right">PesaKit and reach52, two winners of the 2020 Inclusive Fintech 50, have responded to the extraordinary challenges posed by the COVID-19 pandemic by continuing to innovate to meet their customers’ needs.</blockquote>
PesaKit and reach52, two winners of the 2020 <a href="https://www.inclusivefintech50.com/" target="_blank" rel="noopener noreferrer">Inclusive Fintech 50</a> -- a competition founded by MetLife Foundation and Visa, with support from Accion and IFC, and additional funding from BlackRock and Jersey Overseas Aid &amp; Comic Relief -- have responded to the extraordinary challenges posed by the COVID-19 pandemic by continuing to innovate to meet their customers’ needs. In this paper, we share insights on how these two fintechs have adapted to a challenging economic landscape to serve as early examples of how fintechs have leveraged their agility and innovation during crisis. These findings build on the 2020 Inclusive Fintech 50 <a href="https://www.inclusivefintech50.com/white-paper-2020" target="_blank" rel="noopener noreferrer">white paper</a> that draws on the data submitted by the 2020 cohort of applicants and highlights how fintechs are continuing to advance financial inclusion and resilience for the estimated 3 billion financially underserved people worldwide.

Agility Breeds Resilience: A Tale of Two Fintechs Innovating in the Face of a Pandemic

Cambodia

East Asia and Pacific

India

South Asia

Kenya

Sub-Saharan Africa

Philippines

Tanzania

Inclusive Fintech 50

Agent Banking

Delivery Channels

Alternative Data

Financial Technology

Challenges and Crises

Enabling Environment

Financial Service Providers

Fintechs

Health Insurance

Insurance

Inclusive insurance

Brief

The coronavirus pandemic has continued to ravage Western countries and is encroaching in a much more aggressive way into developing economies in Latin America, Africa, the Middle East and Asia. In developing countries where the vast majority of the labor force is in the informal economy (estimated at <a href="https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_627189/lang--en/index.htm">over 60 percent</a> worldwide), COVID-19 is revealing the limits of individual financial behaviors for coping with the pandemic. This raises questions: Which public policy measures should be prioritized to support resilience? What are the economic policies that are creating the underlying vulnerability and marginalization in the first place?
<blockquote>Which public policy measures should be prioritized to support resilience? What economic policies are creating underlying vulnerability and marginalization?</blockquote>
COVID-19 is revealing that no matter the degree of someone’s financial cushion in the form of savings or remittance networks, it is simply not sufficient to cover a loss of income. From a research perspective, no matter how much information we obtain on someone’s behaviors, attitudes and circumstances, we will not be able to have visibility into their vulnerability to shocks, as these issues only marginally contribute to someone’s resilience. To be better equipped to understand the impact of shocks such as COVID-19 on the lives of the BOP, we need to understand critical variables such as income, wealth and safety nets available to them. This means we need to adapt the financial health measurement tools that were previously developed to serve the narrower purpose of helping providers understand the financial health of their customers. These frameworks were tailored to the information that providers needed to know and the tools available to them to improve the resilience of their customers. Broader contextual variables, like safety nets, let alone income variables, were not part of the equation as FSPs do not have the mandate to address these larger policy issues.
<h2>Need to Ask Bigger Questions</h2>
But for many of us working in the inclusive finance space, our toolbox is bigger. Advocacy on public policy is squarely within our mandate and having the right information to inform this advocacy work should be integral to the types of research work we undertake. Demand-side research such as the <a href="https://globalfindex.worldbank.org/" target="_blank" rel="noopener noreferrer">Findex</a>, <a href="http://finmark.org.za/programmes/finscope/" target="_blank" rel="noopener noreferrer">Finscope</a>, financial diaries, and the new crop of financial health surveys, all reveal a similar story. They tell us that being poor is bad and poverty <a href="https://cenfri.org/news-and-events/webinar-the-impact-of-covid-19-on-financial-health" target="_blank" rel="noopener noreferrer">limits people’s resilience to shocks</a>. These demand-side tools don’t tell us much about the underlying causes of this lack of resilience. So, narrowing our research efforts only to demand-side data can be misleading. Too often actors draw the wrong inference from it: that people’s behaviors and attitudes are the reason for their poverty or vulnerability, even though this has long been <a href="https://www.dandc.eu/en/article/development-jargon-helping-people-help-themselves" target="_blank" rel="noopener noreferrer">discredited</a>. Focusing only on what providers can do is also too narrow in scope: the ideology that markets can solve all problems has also been pronounced dead by many economists, including the Nobel Laureate <a href="https://www.theguardian.com/business/2019/may/30/neoliberalism-must-be-pronouced-dead-and-buried-where-next" target="_blank" rel="noopener noreferrer">Joseph Stiglitz</a>.
<blockquote>The economic fallout of this pandemic can’t be solved through any individual choices or actions or a ready-made market solution.</blockquote>
The economic fallout of this pandemic can’t be solved through any individual choices or actions or a ready-made market solution. We need to ask bigger questions around why people are vulnerable to economic shocks in the first place and the role of the financial system in addressing this vulnerability. How are public policy, social safety nets, systemic discrimination or other underlying issues influencing people’s financial health circumstances? What would make people resilient and how should the financial system be set up to improve resilience and well-being for the BOP? There is really no amount of planning and sound financial management that would be sufficient under these circumstances. For systemic shocks like COVID-19, we need other research tools and a different body of evidence.
<h2>Creating Financial Protections for the BOP</h2>
We should be thinking about the systems that undergird the financial system and how to use it to create financial protections for the BOP. There are at least three priorities that COVID-19 has revealed for the inclusive finance field. I argue that these should be elevated in our collective research and evidence-gathering agendas.
<h3>1. Strengthening the ability to distribute payments</h3>
If nothing else, this pandemic has made it clear that countries with robust digital payment infrastructures can quickly get money out to people who are most in need. It is heartening that countries like <a href="https://www.ft.com/content/adc604f6-7999-11ea-bd25-7fd923850377?accessToken=zwAAAXF1NqZAkdOtxgT2eZkR6tO9JX_ZI4UDdw.MEYCIQCq8LPiLCFzDU973kkOf7P9UFkYEYGATGjkdNeE4ORSaAIhAMR64HuZniONRGR2qjVaFlZm78iaJRht2C1EKlVruFsQ&amp;sharetype=gift?token=5f6d3c51-58ac-46c1-a629-fc74a677c3b2" target="_blank" rel="noopener noreferrer">Togo</a> are taking action to get money into people’s hands using digital payments. Pakistan’s <a href="https://nation.com.pk/09-Apr-2020/payments-under-ehsaas-emergency-cash-programme-started" target="_blank" rel="noopener noreferrer">Ehsaas Emergency Cash Transfer Program</a> is able to disburse to over 12 million families hardest hit by COVID-19. <a href="https://centerforfinancialinclusion.org/mobile-money-in-times-of-crisis-an-unlikely-hero/" target="_blank" rel="noopener noreferrer">Jordan has taken impressive steps </a>to expedite reforming electronic customer due diligence, expanding the cash in cash out (CICO) networks and other reforms to use a digital channel to disburse aid. These cash transfers are not only a critical lifeline for those most impacted by COVID-19, they also serve as a demonstration of the importance of the financial system for crisis response and for economic recovery. The challenge will be for those countries that do not yet have robust digital infrastructures or where there are still many limitations to getting certain groups -- like women or the elderly -- to engage with these digital channels. The inclusive finance community should focus its problem-solving skills on answering:
<ul>
 	<li>What will it take to extend digital infrastructure quickly? How can donors and investors partner with policymakers to make this a priority?</li>
 	<li>What are quickly scalable, second-best solutions for cash distribution in markets without digital infrastructure? Can MFIs, postal networks, and other community groups serve this last mile distribution?</li>
</ul>
<h3>2. Improving financial protection through “safety net-like” insurance</h3>
Prior to COVID-19, the role of insurance in the inclusive finance field was perceived as good to have or a problem of the health sector, but not the primary focus of our field. The challenge of commercializing micro-insurance was the main obstacle limiting progress. COVID-19 reveals the clear inadequacy of our solution set to date. The concept of employer-backed private insurance in situations where millions of employees are losing their jobs (an estimated <a href="https://www.epi.org/blog/3-5-million-workers-likely-lost-their-employer-provided-health-insurance-in-the-past-two-weeks/" target="_blank" rel="noopener noreferrer">3.5 million in the US alone</a>) is fundamentally flawed; and this has always been the case in developing countries where the vast majority of the BOP has never had a formal employer in the first place, let alone employee-backed private insurance. We must start to see universal health insurance as part of the solution set for inclusive finance. And beyond health insurance, we should be looking for public-private solutions for other types of protections like unemployment insurance or disaster insurance. The inclusive finance community should be focusing on answering:
<ul>
 	<li>What are the private-public models that can be deployed to scale micro-insurance?</li>
 	<li>What are other ways we can reimagine safety nets to leverage private-sector insurers and balance the costs for policymakers and employers?</li>
</ul>
<h3>3. Linking food producers to the financial system</h3>
In <a href="https://larepublica-pe.cdn.ampproject.org/c/s/larepublica.pe/economia/2020/04/09/atender-la-emergencia-en-lo-rural-por-carolina-trivelli/?outputType=amp" target="_blank" rel="noopener noreferrer">La Republica</a> (in Spanish), Carolina Trivelli sounds the alarm bells on food security in Peru. Immediate demand reductions on one side of the value chain are having longer term effects on small producers who are at risk of not getting the seeds, fertilizer and other inputs they need to plant for the next season. A different but also compelling call to action comes from Maha Agriculture Public Co., Ltd., in Myanmar. In an effort to limit the spread of the virus, government policy is <a href="https://centerforfinancialinclusion.org/diary-of-a-myanmar-based-agri-focused-fsp-responding-to-the-covid-19-crisis/" target="_blank" rel="noopener noreferrer">inadvertently shutting down the financial services providers</a> who are financing critical food production cycles. Maintaining the flow of capital to farmers, regardless of the pandemic, is paramount for all of us if we want to see food at the grocery store in six months and not allow the effects of the pandemic to include food shortages and starvation. The questions that are priority for our collective attention include:
<ul>
 	<li>How can we ensure that money is flowing to food producers? How can we expand work on value chain finance in critical food commodity value chains? Is there specific data that can increase investment to value chain finance? Are there important actors, like buyers or distributors, with whom our community needs to engage?</li>
 	<li>What would it take to support the FSPs that serve agricultural producers? How can we ensure the business continuity of agricultural cooperatives or other financial service providers that serve the agricultural sector?</li>
</ul>
The complexity and gravity of the impact of COVID-19 are demanding that we not only respond immediately, but also reflect deeply on what we prioritize as a community in the future. Do you agree with the ideas put forward here? Let us know what you think.

COVID-19 Reveals the Limits of Individual Action and Market-Based Solutions

Test of a Lifetime: COVID-19 and Financial Inclusion

Agricultural and Rural Finance

Credit

Financial Health

Policy, Regulation and Government Initiatives

Resilience

Blog Post

Dr. Kirengo, co-founder and CEO of <a href="https://imaramed.org/">Imara Mediplus Hospital</a>, wasn’t your typical <a href="https://centerforfinancialinclusion.org/board-leadership-for-impact-program-overview/" target="_blank" rel="noopener noreferrer">Board Leadership for Impact Program</a> (BLI) participant. Rather than a financial inclusion organization, the social enterprise he leads is a multi-specialty healthcare facility focused on providing quality medical services to low- and middle-income earners living in smaller cities and towns in Kenya. Last fall, a time that feels so long ago now, Dr. Kirengo was interested in strengthening board leadership at Imara, so he and two colleagues attended BLI. In this Q and A, Dr. Kirengo discusses the state of health insurance in Kenya, the economic impact of the virus, and even homemade hand sanitizer production and locally sourced masks. He also provides invaluable advice to the financial inclusion community and general public on how to make workplaces safer.
<h3>Q: What are you seeing on the frontlines of the COVID-19 response in Kenya?</h3>
<strong>Dr. K:</strong> Over the past two weeks, we have seen an increase of 10 to 20 patients per day because people are scared. Patients come in with a sore throat or with symptoms the news is telling them is coronavirus. This has been difficult because we are trying to tell people to maintain social distancing. We’ve had to increase security to prevent people from coming in with visitors. We want people to come so we can treat them, but we need to limit our risk especially since we have limited protective equipment.

Because of the lack of supplies in Kenya, we’ve also had to experiment and build our own face shields and masks. Just recently, one of our suppliers increased prices by 5 times, so we are looking for alternative ways to buy or make our protective equipment. We’re also making hand sanitizer for the public and organizations to use. Another concern is with delays to insurance payments as the insurance companies see an insurgence in demand for payouts.
<h3>Q: What’s been the response to making and distributing hand sanitizer? Who have you distributed it to?</h3>
<strong>Dr. K:</strong> We experienced a price hike for sanitizers immediately when the first case of COVID-19 hit Nairobi. For example, one of our suppliers tried to sell us, for $100, a quantity we normally buy for $20. We realized quickly that this would be an unsustainable cost, so we talked to our pharmacist and nurses, ordered supplies and started making our own. Businesses around Embu, where we operate, told us they were facing similar challenges and risked receiving and using substandard hand cleaning material or none. So, we started making in surplus and selling to them. We have provided sanitizer to banks, hotels, restaurants and even individuals.

[caption id="attachment_38108" align="alignleft" width="500"]<a href="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2020/04/Sanitizer-and-Mask-e1587576109170.png"><img class="wp-image-38108 size-full" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2020/04/Sanitizer-and-Mask-e1587576109170.png" alt="hand sanitizer and homemade masks" width="500" height="324" /></a> <em>Hand sanitizer and a face mask created by Imara Mediplus Hospital in Kenya.</em>[/caption]
<h3>Q: Economically, how will the pandemic affect your patients and their communities? What might be the repercussions of this on Kenyan society?</h3>
<strong>Dr. K:</strong> There is less cash flowing through the economy. Everyone is saving money. Businesses are shut down due to lock down and curfew, as well as reduced footfall and increased cost of running businesses. We have seen a change in the spending habits of most of our patients. Currently, patient numbers for regular clinics have declined. We are largely attending only to urgent and emergent care cases.

A lot of companies and SMEs have either enforced salary pay cuts or laid off people. The changes will not be reversible in the near term. It will take a while for businesses and the economy to bounce back to where it was. Tourism, one of the major economic activities in the country, is nearly at a standstill. Things may get worse as we haven’t had a full shutdown, and this may still happen.
<h3>Q: Can you speak to insurance coverage? Do your patients have insurance? Is it public or private? And does this insurance adequately cover COVID-19 testing or treatment? How might this affect livelihoods?</h3>
<strong>Dr. K:</strong> Less than <a href="https://www.nation.co.ke/newsplex/Worldhealthday/2718262-4375778-dhdk0ez/index.html">25 percent of the population of Kenya is covered</a> by health insurance. More than 90 percent of this insurance is the government run social insurance (National Health Insurance Fund, or NHIF). NHIF, however, provides very limited coverage and has low reimbursement rates, while private insurance that pays better has limited coverage and number of subscribers. With COVID-19, private health insurances had declined to cover their clients against the condition. This received a lot of negative publicity, so they reverted and accepted covering the condition, but only in government hospitals, where care is cheaper but generally considered to be of lower quality due to poor patient to staff ratios. Therefore, currently, COVID-19 is “exclusively" under government management. Some private hospitals are offering care, but I’m not sure how that is financed.
<blockquote>The challenge I foresee is the inability of the majority of the population to pay for COVID-19 healthcare needs.</blockquote>
The challenge I foresee is the inability of the majority of the population to pay for their healthcare needs when it comes to COVID-19, considering most businesses are shut down, experiencing tough financial times or have to cut salaries. For example, the cost of a single COVID-19 test in a private lab is $130. If positive, two more tests are needed that come out negative before a patient is released. On top of this, patients are placed in quarantine for two or three weeks. How does a common Kenyan afford this?
<h3>Q: What advice would you give leaders of financial service providers who are feeling the impact of the coronavirus on their employees, business operations, and clients?</h3>
<strong>Dr. K:</strong> For businesses that are lucky enough to work online or remote, just do it.  For any organization, it is important to reiterate the basics:
<ul>
 	<li><strong>Wash your hands</strong> for at least 20 seconds or use hand sanitizer.</li>
 	<li><strong>Avoid touching your face</strong>, especially if you haven’t washed or sanitized your hands.</li>
 	<li><strong>Wear masks</strong> as appropriate. First and foremost, what people often forget about masks is that they are disposable. I’ve seen a lot of companies buy just one mask per staff member; however, staff should not be wearing the same masks day in and day out.
<ul>
 	<li>If it is an N95 mask, and you are using it day to day, you should dispose of it after two days and get a different one.</li>
 	<li>Surgical masks should be disposed after a few hours of use, maybe a day maximum.</li>
 	<li>Wash your hands before and after touching the mask.</li>
</ul>
</li>
 	<li><strong>Eye protection</strong> is key. Do your employees have glasses or something to protect the eyes from droplets? This could be an eye shield as well.</li>
 	<li><strong>Social distancing</strong> must be enforced. How are you ensuring distancing? If it is a bank, how are you training your employees to ensure a safe distance is kept? You can put stickers on the floor to highlight the appropriate distance and where people should stand. Remember a safe distance is 1 to 1.5 meters. This goes for security guards and staff as well.</li>
 	<li>Anyone with <strong>symptoms</strong> may cause anxiety for fellow employees and clients, so you need to have a way to subtly and respectfully separate them from everybody else. You should know where to refer them to if they feel sick, so they can get the necessary attention. Send people home who are symptomatic.</li>
 	<li>If there are people who can <strong>take leave</strong> now, have them take leave because most places are locked down and a curfew is in place, at least in Kenya.</li>
 	<li>If you have <strong>SMS and message capability</strong>, you should be sharing information and highlighting the importance of social distancing and sanitation through your client channels.</li>
</ul>
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"We're Also Making Hand Sanitizer": Kenyan Doctor on COVID-19 Impacts

Michael Schlein

Elizabeth Winters

Kathleen Yaworsky

Latin America and The Caribbean

United States

Zambia

Crop Insurance

Data Analytics

Digital Financial Services

Impact Investing

Insurtech

Payments

Saving

Underserved Groups

Insurance Companies

Advisory Services

Underwriting

Article

Podcast

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.

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>

<iframe title="YouTube video player" src="https://www.youtube.com/embed/_Ig-GvdU5HY" width="560" height="315" frameborder="0" allowfullscreen="allowfullscreen"></iframe>

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.

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<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