For some, the word fintech may bring images of flashy apps and difficult-to-understand APIs to mind. Such examples of fintech are rarely a good fit for underserved customers who tend to have old devices, poor internet connectivity, and low digital literacy. These users are often more comfortable with in-person conversations, and many struggle with using smartphones and tech-based interfaces to manage their money and businesses.
Although fintech may feel less relevant for low-income users at first consideration, it’s an extremely valuable tool to reach underserved populations when providers focus on building products that put the user first. When designed and deployed effectively, fintech offers personalized experiences, automates burdensome tasks, and provides tools that work for those with limited experience with digital financial services.
In Mexico, Caja Popular Cerano decided to use fintech to reach an underserved customer segment: the urban youth market in Mexico. The financial institution chose to develop an app to attract more young people. Rather than incorporate complex menus, visualizations, and analyses into their product, the team worked together with Accion to build an application that creates a tailored, personalized experience, including fun avatars and motivational messages. The app provides users with helpful tips about saving and paying back loans and has built-in motivational markers that show users whether they’re on a ‘streak’, and how close they are to finishing a goal. In this case, the technology helps the cooperative provide a warmer, more personal experience within an app-based financial service that’s better suited to a young audience.
Elsewhere in Mexico, Accion partnered with Caja Bienestar to develop a digital simulator to help shopkeepers understand how credit might affect their shops’ bottom line. The team realized that small business owners often struggle to understand their own margins and costs of capital, so they designed a simulator to automate those analyses and indicate whether a particular loan would be profitable for a shop or not. Instead of asking the shopkeeper to calculate revenues and repayment schedules, the tool simply asks for a loan amount and then displays whether expected profits will be enough to cover its cost. It then guides the user to consider different terms or amounts based on their profitability levels. The simulator is another innovative, user-friendly fintech application that improves the user’s experience rather than adds a layer of complexity.
In Chile, RedCapital is also uses fintech in similar ways; the team developed a simple simulator to model loan usage and benefits. This simple, mobile-first application helps owners understand how a loan is broken down into repayment amounts and can be used to improve business functions. They also developed a chatbot to provide additional customer support and walk users through the loan application process. For users unfamiliar with fintech, the chatbot and the simulator offer greater confidence and help them improve their understanding of the product details.
In each of these cases, Accion and our partners were able to use fintech to create a user experience that benefits underserved people without disregarding the importance of human touch and outreach. For example, María Olga in Querétaro, Mexico notes that her loan officer personally visits to collect her deposits since there isn’t a location for her to visit nearby, saying, “It is a problem for me to get away from the shop, so [my officer] comes to me to collect my deposit.” Similarly, Jose Medina highlights that his representative calls him to remind him about payments and ask how things are going. These personal touches and high levels of customer services cannot be replaced by technology but rather complement the technology by providing more direct support throughout the user experience.
To develop financial services that improve financial health for low-income people, Accion Global Advisory Solutions, with support from MetLife Foundation, partnered with financial service providers like Caja Bienestar. Read more about the insights we learned from this project in our new paper, How providers can build products that improve financial health: Examples from Mexico and Chile.