Southeast Asia is witnessing a seismic shift, as women are starting to take center stage in entrepreneurial ecosystems. Indonesia, home to over 64 million Micro, Small, and Medium Enterprises (MSMEs), sits at the forefront of this change. Remarkably, 64.5 percent of Indonesia’s MSMEs are owned and operated by women — nearly three times the global average. This is partly due to women’s significant role in managing household finances and establishing informal businesses to supplement family income. MSMEs in Indonesia contribute to 61 percent of its GDP, making these women the backbone of the country’s economy.

But here’s the problem: despite their critical role in driving economic growth, women-led MSMEs are disproportionately disadvantaged by financial systems. Over 70 percent of MSMEs in Southeast Asia don’t have access to the financing they need to start and grow their businesses, and women bear the brunt of this gap. In Indonesia, many are excluded from formal financial institutions that rely on outdated metrics like ownership of land or buildings — assets rarely held in women’s names due to deeply entrenched cultural, legal, and systemic barriers. The reality is even starker for women-led ultra-microentrepreneurs, the smallest and most vulnerable segment of this group.

Amartha, Indonesia’s largest P2P lender for ultra-microbusinesses, is addressing these challenges head-on by transforming the way women-led businesses access and experience financial services. With over 1.8 million active customers — 100 percent of them women — Amartha is leveraging data and technology to reimagine traditional group lending models and digitize credit access. Through a program launched last year in partnership with Mastercard Center for Inclusive Growth, Accion is collaborating with Amartha to accelerate this digital transformation, ensuring financial services are more inclusive, efficient, and impactful for women ultra-microentrepreneurs.

Amartha’s approach fills a critical gap in Indonesia’s financial landscape, as Aria Widyanto, Amartha’s Chief Risk Officer, explains: “Ultra-microbusinesses in rural Indonesia are not bankable by conventional banking standards. They need very small loans, and these are products that are not provided by banks. Amartha stepped in to provide affordable working capital loans for women while helping them transform into a digital society. Why women? Because more than half of the 64 million microbusinesses are run by women, which also creates an opportunity for us.”

Through the partnership, Accion has supported Amartha to develop, enhance, and launch inclusive credit scoring models powered by machine learning. By analyzing more than 800 variables, including loan and payment history, digital channels usage, and demographic data, these models not only identify creditworthiness more accurately but also identify eligible borrowers who can be fast-tracked through an accelerated onboarding process.  Since the launch of the new scores, Amartha has more than tripled the pool of eligible women-led microbusinesses, demonstrating how artificial intelligence can unlock financial opportunities and enable faster, more convenient access to the working capital women need to grow and manage their businesses.

Yet a score alone achieves little without a broader strategy to drive meaningful change. Taking a gender-intentional lens to strategy and product design, Amartha has integrated key tactics to enhance the experience of its women customers, while optimizing the efficiency of its field officers. Leveraging a digital infrastructure has enabled frictionless onboarding, streamlining digital repayments through a women-majority agent network, removal of guarantor signatory requirements (typically the husband), and faster, sometimes customer-led, group meetings. This technology ensures the process remains community-driven, aligned with customers’ day-to-day lives, and improves convenience for tasks like payments and applications.

The results speak volumes. Group meetings that once took an hour or more can now wrap up in as little as five minutes. Loan applications, which previously required one to two weeks to process, can be approved and sanctioned in less than 24 hours. Field officers can manage their caseloads four times faster. Everyone benefits – the customers, the field staff, and financial institutions serving microbusinesses.

For Ibu Kartiaki, who runs a clothing business in Pontianak, Kalimantan, the new digital experience at Amartha has been a game-changer. She said: “It’s much easier and much faster. I can cycle cash back into my business within one day of applying, and I no longer have to worry about coordinating so many meetings with loan officers to check my house and my business. The best part, my husband doesn’t have to take time off work just to give his signature.”

For Ibu Kartiaki — and many women like her — the issue isn’t asking her husband for agreement, as they make important household decisions together. It’s about having the freedom and autonomy to act on their own terms without being dependent on their husband’s availability. This not only saves them both time, but also reinforces her ability to lead her business confidently and independently.

The strategy to leverage credit scores and optimize business processes has enabled Amartha to substantially enhance the customer experience for microbusiness owners like Ibu Kartiaki. Customers experience less hassle and can get back to their already busy lives juggling businesses, side hustles, and spending time with their families. Together, these innovations don’t just ensure access, they empower women with the tools and confidence to grow their businesses and lead their communities.  Here are some key learnings from our work for providers looking to optimize their group lending practices:

Tap into alternate data and predictive modeling to evolve traditionally stringent group lending models for women entrepreneurs.

Institutions can tap into data and technology to “individualize” the customer experience without deteriorating the foundational group structure. The goal isn’t to replace group lending, but to innovate it to be more inclusive for even the hardest-to-reach or most vulnerable segments. By tailoring the risk assessment to an individual’s repayment capacity, institutions can provide a more personalized customer experience, while maintaining the community structure that underpins the model’s success.

Ground new processes or product interventions in organization-wide change management practices to ensure that staff are on board and customers will engage.

The complexity associated with serving women ultra-microentrepreneurs often ignores the need to generate internal buy-in, trust, and confidence for the new intervention at every level of the institution, especially among the field staff. Identifying and resolving key points of resistance, transparent and continuous communication from head office to field operations, goal-based compensation structures, and change champions are critical to ensuring smooth implementation and adoption by the end customers.

Many financial institutions have started exploring innovative approaches to evolving the group lending model to build individual financial health and resilience for MSMEs — particularly for women-owned MSMEs.

Together with Amartha, we are striking a balance between the collective benefits of group lending and the precision of individual risk profiling. As we have seen, the real impact of AI tools, like behavioral scoring and predictive analytics, depends not just on their capabilities, but on implementation and the operational strategies that support them.