Powering Digital Transformation to Help Small Businesses Thrive

The Mastercard-Accion partnership leverages digital-first financial services to unlock economic opportunities for entrepreneurs and communities.

Powering Digital Transformation to Help Small Businesses Thrive

May 03, 2019

Angela came to Bogota as a refugee from Venezuela in 2016 and started selling freshly sourced fruits and vegetables. She’s an employee at Merqueya, a shop in the Paloquemao market in Bogota, and when we met with her last month, she discussed how this income has helped her find stability and build a life in a new country.

At Accion, we work with institutions around the world that help people like Angela achieve greater financial security and fulfill their ambitions by supporting the growth of micro and small businesses where they work. It is easier than ever before to serve more people, effectively, through the use of technology. For small businesses, digital financial tools can help them process more transactions and manage their operations, which makes it easier for them to grow and create jobs for people in their community.

We see digital technology as a means to achieving greater financial inclusion because when everyone has the tools they need to support their businesses and their families, they’re able to cover their day-to-day needs and plan for a better future. While digitization is effective for bringing useful financial tools to more businesses and individuals, it’s crucial that these tools are designed responsibly to protect customers.

The Smart Campaign, which promotes customer protection in financial services, recently released for public comment The Consumer Protection Standards for Digital Credit to establish benchmarks and standards for digital lending. The standards address appropriate product design and delivery, prevention of over-indebtedness, transparency, responsible pricing, fair and respectful treatment of clients, data privacy and security and mechanisms for complaint resolution. Maintaining these principles is a core part of our work with partners.  

On November 1, 2018, Mastercard Center for Inclusive Growth and Accion launched a global program that will make it easier for 10 million clients, including 4 million merchants, to fully benefit from the digital economy. Stuck in the cash economy, people around the world rely on what’s in their pocket after a day of work or stashed under a mattress for emergencies. They have little access to tools to manage their daily expenses, grow their businesses, and plan for the future — and being invisible to the formal financial sector can make them vulnerable to predatory lenders. 

To make sure more individuals and businesses have useful financial tools that enable them to run better, buy better, and sell better, this project will digitally transform financial service providers and operationally strengthen fintechs.  By the end of 2020, we aim to be supporting up to 12 institutions across countries such as Bolivia, Ecuador, Colombia, Peru, Mexico, Nigeria, Egypt, South Africa, Pakistan, India, Myanmar and Indonesia.

It is with great excitement that we announce the first three participating institutions: Accion Microfinance Bank in Nigeria, BASIX Sub-K iTransactions in India and CÍVICO in Colombia and Mexico.    

CÍVICO: Connecting cities and businesses in Colombia and Mexico 

CÍVICO is a digital platform with operations in Colombia, Mexico, and Chile. It enables access to information and services to improve the quality of life of individuals in Latin America. CÍVICO has geo-located many hundreds of thousands of micro businesses —including Merqueya, where Angela works — to make it easier for customers to find what they need in their local environment. 

These interactions bring more business to the merchants, helping them sell better. CÍVICO’s clients expressed the desire to access financial services to help them run better and buy better. In response to this, through the Mastercard-Accion Partnership, CÍVICO plans to work with financial service providers to offer digital-first financial services, such as credit and insurance, to underserved micro businesses in its networks.

“We´re excited to bring on Accion as our newest business partner to boost financial innovation and inclusion in the region. Latin America has great potential to become a relevant player in the financial and technology sectors, and with Accion we will strengthen our future vision and accelerate access to financial services for the communities we serve,” said Ricardo Pombo, CEO, CÍVICO.

Accion Microfinance Bank: Bringing banking to microentrepreneurs in Nigeria

Accion Microfinance Bank (AMfB) in Nigeria provides loans and savings products to low-income customers, many of whom are microentrepreneurs. AMfB hopes to triple the number of clients it reaches through a “digital-first” model to both acquire new clients and to make internal processes even more efficient. These changes aim to have a substantial positive impact on AMfB’s clients — both new and existing. Clients should have greater access to various financial products and services, and they’ll benefit from an enhanced customer experience and the convenience of being able to complete transactions without having to visit a branch.

“The Mastercard-Accion partnership came to us like a light at the end of a long tunnel. Given the large population of underserved [individuals] in Nigeria, a different model of driving financial inclusion is required. We hope this project will become a demonstration model for other financial service providers in Nigeria, as the need in the market is immense,” said Taiwo Joda, CEO, AMfB

BASIX Sub-K iTransactions: Reaching the last mile in India

Currently operating in 26 states across India, BASIX Sub-K’s mission is to provide a technology-enabled financial platform for India’s unbanked and underbanked populations. The company offers affordable and accessible digital finance solutions (e.g., credit, savings, and payments) by partnering with 12 banks, nationwide, through an agent-assisted model. Embracing digital transformation will enable Sub-K to reach even more clients by offering meaningful, customer segment-specific, value-added services such as business management tools in addition to a variety of financial products.

“Sub-K is in a transformative phase. We began working on an ambitious digital strategy that is centered around leveraging our widespread merchant network, deep understanding of [the underserved], and in-house technological capabilities. We are fortunate to be selected as a candidate for the first wave of the project because this initiative aligns very well with our vision and can’t be better timed in terms of building a future-ready, client-centric organization,” said Sasidhar Thumuluri, CEO, Sub-K.

Our work with CÍVICO, Accion Microfinance Bank, and Sub-K will help these institutions increase efficiencies in the delivery of financial services, improve customer engagement through digital channels, and upskill staff to support a digital transformation. By supporting these partners and selecting more promising institutions, we hope to reach 10 million clients, including 4 million merchants over the next four years. These institutions will help businesses digitize and formalize so they can increase sales through digital payments and save time on bookkeeping through management tools. From Angela in Bogota to Osholabi in Lagos to countless others around the world, this will ensure that small businesses, their employees, and their customers can benefit from the security and opportunities that formal financial services provide.

About the Authors:
Prateek Shrivastava is vice president, digital, for global advisory solutions at Accion and Emma Morse is manager, strategic projects for global advisory solutions at Accion.

This post was originally published on the Accion blog.