Accion Global Advisory Solutions partnered with financial service providers around the world to better meet the needs of underserved people and small businesses. In response to the challenges brought on by the pandemic, we enabled microfinance banks to quickly leverage new technologies to stay connected with clients, ensure quality services, and lower the cost of financial services at scale. Through our global partnership with the Mastercard Center for Inclusive Growth, our work has impacted the lives of nearly 6 million people and supported the development of new products, better customer experiences, and improved data capabilities.

Our advisory team supported Banco Pichincha, the largest private bank in Ecuador with 3.5 million clients, in building a digital financial inclusion strategy to support microentrepreneurs who’ve long lacked access to the digital economy. As Ecuador became an epicenter of the pandemic in Latin America, Banco Pichincha’s clients needed digital tools to continue serving customers during lockdowns and to build financial resilience. This work included driving uptake of the bank’s newly launched digital wallet among micromerchants and low-income consumers, building a strong merchant value proposition for digital transactions, and exploring opportunities to strengthen and digitize supply chains through financing.

Accion Global Investments supported inclusive, well-managed, and scalable financial service providers around the world as they dealt with many challenges. We assisted local partners with keeping their staff and clients safe by setting up remote work and digital payment channels. We collaborated to anticipate cash flows and restructure payments in accordance with regulations and the needs of clients. We worked with our partners to ease the payment burdens on clients to allow them more time to recover and rebuild. And we helped assess the impact of the crisis on partners’ balance sheets and guided their steps to build resilience.

The Accion Global Investments team supported Financiera FAMA in providing responsible loans to families and microentrepreneurs in Nicaragua, where only one-third of adults have access to a formal bank account, and where a devastating combination of challenges have made life even harder for low-income people. Beginning in 2018, political violence triggered an economic recession from which Nicaragua is still emerging. In 2020, Nicaraguan families and small businesses struggled to make ends meet during the COVID-19 crisis. And climate change brought even more problems in the form of two major hurricanes that caused severe flooding and landslides throughout Central America in November 2020. We worked to support FAMA and their clients in these difficult circumstances, and in 2020 Accion Global Investments provided additional funds to ensure FAMA could continue serving vulnerable families and small businesses. Amid widespread instability, FAMA offers a beacon of hope for distressed communities and is working to empower them to build financial resilience for a brighter future.

Accion Venture Lab invested in and supported innovative seed-stage fintech startups that are improving the accessibility, quality, and affordability of financial services for the underserved. During the crisis, the Accion Venture Lab team enabled portfolio companies to strengthen their financial positions, adjust their go-to-market approaches, and get set up for extended periods of remote work. Accion Venture Lab portfolio companies leveraged the power of innovation and digital technology to ensure vulnerable groups could build resilience during the crisis. Pintek helped schools and students in Indonesia access credit and financial tools they needed to weather the crisis, and also worked with an EdTech platform to help schools shift to online learning. Field Intelligence, a portfolio company operating in Nigeria and Kenya, helped community pharmacies leverage AI and data analytics to manage their inventories during supply chain disruptions, and continue focusing on serving their customers.

Despite the uncertainty of 2020, Accion Venture Lab continued to find and fund innovative fintechs, like TerraMagna in Brazil. TerraMagna offers financing to small and medium sized farmers who are often excluded or poorly served by local lenders. TerraMagna leverages satellite imaging technology and various data sources to allow retailers to better underwrite loans for the inputs farmers need each planting season.

Accion Venture Lab is applying a gender lens investment strategy to support broader economic and social well-being. This process involves looking at the gender composition of their own team, as well as the leadership, staff, and customer base of portfolio companies to understand how best to bridge persistent gender gaps. In 2020, with support from the S&P Foundation, Accion Venture Lab also hosted a series of workshops for female fintech founders in Brazil, Mexico, and India to support the broader ecosystem of early-stage innovators.

Our strategic partnership with Quona Capital, a venture capital firm that invests in growth-stage fintech companies in emerging markets, continued developing the financial inclusion ecosystem around the world. Our partners at Quona are exploring important trends in the market, including embedded finance, which allows almost any company to offer a range of financial services. Kenya-based portfolio company Sokowatch is embedding financial services and products into the retail supply chain to put the power of ecommerce into the hands of informal retailers in East Africa. Quona-managed portfolio companies are also developing personal financial management tools to empower more people take control of their financial futures. For example, portfolio company Cowrywise is expanding access to wealth management tools for low-income consumers in Nigeria.

In 2020, we announced the final close of the Accion Quona Inclusion Fund, with $203 million in commitments—significantly exceeding its $150 million target—from array of leading investors. The fund is investing in scalable stage fintech companies that are expanding access to financial services for underserved consumers and small businesses in Latin America, Africa, India, and Southeast Asia. For example, in 2020, the fund made a follow-on investment in Klar, an online bank that is expanding access to financial services in Mexico, where only 10 percent of adults have a credit card. Klar has supported more than 200,000 customers with a range of banking services including credit debit, and loans—with an average loan size of just $110.

Millions of individuals and small businesses across India, especially those living in hard-to-reach rural areas, lack access to formal financial services. Backed by investments from Accion Global Investments and support from Accion’s advisory team, our partner Sub-K provides a technology-enabled financial platform for India’s unbanked and underbanked communities, serving more than 5 million clients.

Sub-K is participating in our global partnership with the Mastercard Center for Inclusive Growth, which seeks to enable more people and small businesses to participate in, and benefit from, the digital economy. Through the partnership, our advisory team supported the development and launch of SARTHI, Sub-K’s new digital financial services marketplace for small businesses. SARTHI will provide a range of financial service options, including microcredit and health insurance—initially through assisted channels and subsequently from mobile devices.

Accion has partnered with MetLife Foundation to leverage digital solutions to enhance underserved customers’ financial capabilities and engagement. In Latin America, we are working to better understand customer needs and help financial service providers design, test, and implement innovations that drive usage and improve customers’ financial capabilities.

For instance, we worked with Chilean fintech company Organizame to tailor their online business management tool to better serve low-income clients and enable them to improve their businesses. The mobile app digitizes business operations like cash flow management, bill payment, and credit applications to help entrepreneurs to consolidate business transactions and send electronic documents. In 2020, Accion Global Advisory Solutions published insights and lessons learned from the project with MetLife Foundation in the brief “To succeed, innovative financial products must be desirable, feasible, and viable”—enabling our work to serve as a demonstration model for the entire industry.

Inclusive fintech startups faced a host of challenges in 2020, including unpredictable funding, a volatile investment market, and a severe economic downturn. But these companies rely on growth for success—often through costly customer acquisition. In 2020 Accion Venture Lab published a report focused on enabling these startups to “win from within” by creating real value for their existing users.

The report, developed with the support of Mastercard Foundation, featured nine case studies of Accion Venture Lab portfolio companies that successfully retained and grew their client base by focusing on customers’ specific needs. For instance, NOW Money provides payroll services to employers of migrant laborers in the United Arab Emirates. NOW Money helps workers use a bank account, debit card, and smartphone app from which they can make local payments, international remittances, and cash withdrawals at local ATMs. Migrant laborers tend to have low trust in financial institutions, given their exclusion from the financial system. In response, NOW Money promoted mobile top-ups to encourage users to maintain balance in their accounts and create an entry-level product for migrants to build trust through low-risk, low-cost transactions.

Group lending allows people in the same communities to guarantee each other, typically relying on in-person meetings and social collateral to serve those without any credit history. Our partner Annapurna Finance, currently serving more than 1.9 million clients, caters to these and other underserved clients across India who would otherwise lack access to quality financial services

Through our partnership with the Mastercard Center for Inclusive Growth, our advisory team worked with Annapurna to reimagine the group lending process for our socially distant world by including digital tools and channels in the group lending process. Only 15 percent of Annapurna’s group lending customers own a smartphone, but a greater percentage have access to less advanced feature phones. To address this digital divide, we created an SMS-based digital emergency loan product that incorporated both tech and touch elements. Interested customers can provide a few details to their loan officer to ensure they meet the qualifications. If qualified, the customer can request disbursement of a loan through SMS and the funds are credited to the beneficiary’s bank account almost instantly.

Through a series of virtual discussions, we convened CEOs of microfinance institutions and fintech startups, policy experts, and technical advisors to share their latest insights, successes, and failures with their peers and the entire field. Across Accion, we hosted conversations on topics including the digital transformation of small businesses, adapting group lending for our digital world, cybersecurity risks and opportunities, leadership during the pandemic, and closing the digital divide through EdTech platforms.

While the COVID-19 pandemic increased demand for digital financial services, it also created uncertainty for fintechs looking to raise capital while revenues fell, and as remote work and economic uncertainty strained their human resources.

As this new reality emerged, the second year of Inclusive Fintech 50 launched. An initiative funded by MetLife Foundation and Visa Inc., with support from Accion and International Finance Corporation, and additional funding from BlackRock, Jersey Overseas Aid, and Comic Relief, Inclusive Fintech 50 creates visibility for the most promising inclusive fintechs addressing the challenges of underserved customers. An independent judging panel selects high-potential fintech startups that may not yet be on the radar of investors. The 2020 competition attracted 403 qualified applicants operating in 111 countries and reaching 116 million customers.

In 2020, the competition provided cash prizes to two winners that demonstrated a particularly strong commitment to supporting their customers’ financial resilience during the crisis. One of these companies was reach52. A fintech with operations in Cambodia and the Philippines, reach52 provides microinsurance directly to rural consumers through their marketplace service and networks of predominantly female area managers. The company operates in communities that are over an hour away from health and financial services facilities and with family incomes of USD $2-8 per day.

In 2020, CFI launched a new strategy that seeks to move the industry beyond expanding access to financial services and toward improving outcomes for low-income clients. The strategy focuses on four thematic priorities—all of which have been exacerbated or complicated by the global pandemic. They include responding and adapting to the risks of climate change, advancing women’s financial inclusion, exploring data risks and opportunities, and protecting consumers in the digital economy.

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In 2020, CFI completed a strategic integration with MIX, a leading global data resource for socially responsible investors and businesses committed to financial inclusion. MIX has leveraged its expertise in data across fintech, digital financial services, and agricultural finance—developing common standards and language, providing clarity around complex data, and generating strategic insights to help these sectors flourish. The addition of MIX has strengthened CFI’s industry-leading influence and analysis with proven data expertise.

Supported by the Mastercard Center for Inclusive Growth, CFI continues to release results of a survey of micro, small, and medium-sized enterprises (MSMEs) across 4 countries—Colombia, India, Indonesia, and Nigeria—to understand the impact of COVID-19 on business activities and the lives of the MSME owners. In the survey’s first wave, results showed a severe impact on MSMEs: 15 percent of MSME owners reported their business closed at the beginning of the pandemic, and 83 percent of businesses saw their profits decline. Results from the survey’s second wave show cause for cautious optimism, as MSMEs are generally on an upward trajectory after weathering the initial economic devastation caused by the pandemic. Closures declined by at least 50 percent, and in every market other than Indonesia, the share of businesses with profits that stayed the same or increased was larger than the share of businesses with profits on the decline.

In 2020, CFI also conducted research to assess how policymakers are responding to COVID-19, as well as case studies on investors responses to previous crises and the lessons that can be drawn for this pandemic.

More than 1,200 people registered for CFI’s 2020 Financial Inclusion Week, which convened policy experts, analysts, and industry leaders in discussion on responding to the global pandemic and other priorities laid out in CFI’s new strategy. The agenda featured more than 40 sessions covering a broad spectrum of topics, including how financial services can mitigate and adapt to climate risk, women’s financial inclusion, data opportunities and risks for financial inclusion, and consumer protection.

While more and more people have access to mobile phones globally, billions still lack access, and the digital divide is even more pronounced for women. Low-income women are also more likely to have low levels of financial literacy than men. With the support of a new planning grant from the Bill & Melinda Gates Foundation, CFI will apply a gender lens to their research initiatives to understand these and other persistent gender divides around the world. This initiative is illuminating the financial tools and delivery models that are more successful at engaging and supporting female customers, providing actionable insights for inclusive financial service providers.

Even before the pandemic, nearly half of the United States’ 30 million small businesses only had enough cash on hand to operate for 15 days without customers. As they closed their doors during quarantine, paychecks for millions of workers were put in jeopardy, with serious implications for their families, communities, and the entire economy. In 2020, Accion Opportunity Fund responded to the needs of some of the most vulnerable small business owners by providing financial relief and access to capital. In 2020, we disbursed 2,287 loans totaling $69.2 million to small businesses across the United States. This included facilitating $17.9 million in Paycheck Protection Program (PPP) loans to a total of 1,160 small business owners. We also deployed a total of more than $6 million in financial relief through loan payment deferment and forgiveness, low-interest loans, and grants.

As the pandemic unfolded, small business owners across the U.S. asked the same difficult questions: Can I stay open? Can I keep in touch with my customers when my store is closed? How do I navigate difficult conversations with my employees? For many entrepreneurs, few opportunities to connect with their peers created a feeling of isolation.

Accion Opportunity Fund organized a COVID-19 response webinar series to support small business owners in these difficult circumstances. Over 30 webinars, we reached more than 10,000 people in 49 states with expert advice and insights on a range of topics including staying connected to customers, crisis management, cybersecurity, fraud prevention, navigating unemployment, adapting supply chains, cash flow management, and more. About 60 percent of participants identified as people of color and 68 percent as women. We also continued to create new digital educational content in our Business Resource Library to address timely and urgent challenges facing small business. In 2020, we saw a 50 percent increase in traffic to these educational resources, reaching more than 676,000 people over the year, an estimated 60 percent of whom were women.

“I wanted to make sure to let you know just how helpful, important, and emotional the webinar you presented was this afternoon,” said one participant. “Thank you for sharing this information and these resources. It created a little feeling of relief that there are people out there with knowledge and the willingness to help.”

Small businesses struggled to make ends meet during the pandemic, and they needed support to keep their lights on. This urgent need prompted the music festival organizer Superfly to host Small Business Live, a virtual music experience to benefit small businesses owned by people of color across the United States. Hosted in June 2020, the event featured live performances from some of music’s biggest stars, including Lauryn Hill, 2 Chainz, Brandi Carlile, Brittany Howard, Leon Bridges, and T-Pain, to raise money for small business grants. The event generated over $1 million in donations to support small business and attracted a live viewing audience of 9.7 million.

In August 2020, Accion Opportunity Fund received a transformative grant of $15 million—the largest individual donation in its history—from author and philanthropist MacKenzie Scott. The grant has accelerated Accion Opportunity Fund’s goal to reach thousands of underfunded entrepreneurs with $1.2 billion in capital across the United States in the next five years and kicked off a $100 million campaign to increase the credit, connections, and business advice available to underserved entrepreneurs.