Cash-in cash-out (CICO) agents, with their last-mile reach, are the backbone of inclusive digital payment ecosystems. Estimates suggest there are over 3 million such agents across Indonesia, though they often become dormant due to low transaction volumes.
The current pandemic has worsened this situation and reduced the transaction volumes of these agents by 50%-90%. Our report explores the impact of COVID-19 on CICO agents, highlights their coping strategies, and provides policy recommendations to support their recovery.
This blog is about a startup in the Financial Inclusion Lab accelerator program, which is supported by some of the largest philanthropic organizations across the world – Bill & Melinda Gates Foundation, J.P. Morgan, Michael & Susan Dell Foundation, MetLife Foundation and Omidyar Network.
“Why should I pay for an unnecessary insurance bundle when I just need one or two products?” asks Kumar, the owner of a fabric shop in Delhi. Like many of his fellow traders, Kumar runs a small shop in a crowded, narrow street of Chandni Chowk, one of India’s oldest markets. Low-hanging, rundown electric wires line the alleyways of the market. This elevates the chances of an electrical malfunction, which may result in a fire that can easily spread and burn down many shops, harming lives and properties in an instant. Chandni Chowk has suffered many such man-made calamities, including one where a fire broke out, gutting more than 40 shops and destroyed goods worth thousands of dollars.
Despite being aware of these risks, shopkeepers like Kumar are reluctant to buy insurance to safeguard themselves or their properties. This is because insurance brokers or companies usually try to sell them generic insurance products that are more expensive and cover irrelevant risks, such as coverage against floods.
Kumar needs access to an insurance product that is customized to the risks that concern him and his shop, such as fire-related hazards.
The light-bulb moment
Suvendu, Vidya, Sorabh, and Chiranth (Figure 1) used to meet frequently at various insurance industry-related forums and seminars, where they shared their pain points and experiences. They had all experienced the complexities involved in the identification and purchase or sale of insurance products. Soon, these discussions turned more intense and passionate and they realized their common desire to solve the problems that plagued the insurance sector through technology and analytics. Hence, the idea of Riskcovry was born in February, 2018.
The unique pitch
According to reports from the Insurance Regulatory and Development Authority of India (IRDAI), India’s insurance penetration is 3.7% of its Gross Domestic Product (GDP), which is half of the world’s average. Moreover, the insurance density of India is just USD 74, way below the global average of USD 638. These statistics indicate a significant gap in the insurance market of India in terms of customer outreach and insurance products owned per customer, respectively. From an entrepreneur’s perspective, this is a big opportunity to make a proverbial “dent in the universe.”
To address this market gap, the Riskcovry team provides personalized insurance products for shop-owners like Kumar. Riskcovry carefully designed an efficient user experience (UX) journey and implemented it through a well-thought-out user interface (UI) for its online insurance portal. Through this, Riskcovry managed to transform the entire cycle from the selection of relevant insurance products to its online purchase into a quick process that involves four to five steps and does not take more than a few minutes to complete.
Riskcovry has thus set itself apart from its competitors by enabling the customization of insurance products and providing a simple and speedy process for customers to buy them online.
The impact on LMI segments
Riskcovry currently works on both relevant data points and trust, something that the low- and medium-income segment lack.
Riskcovry collects financial and non-financial data points through its online portal. Its in-house data analytics team then identifies risky but potential LMI customers who otherwise do not have enough formal data to have insurance. Riskcovry sells to these customers at a reasonable price that ranges from INR 20 (less than USD 0.5) to INR 1,500 (USD 20) and varies based on the type of insurance cover, such as life, health, or asset, as well as the duration—three months, six months, or annual.
Riskcovry identified “trust” as an important pull-factor for such customers. Since these customers prefer to buy insurance through people they know, Riskcovry distributes through local agents. It skills unemployed youth and women at block levels to work as insurance agents and sell relevant products to their shopkeeper friends, acquaintances, and family members. As a part of its “Mission Maharashtra” project, Riskcovry has already activated 5,000 entrepreneurs across 355 blocks in Maharashtra.
The roadblocks
Like any startup, Riskcovry faced its share of difficulties. The team did not take long to launch its online portal for its target customers—small shopkeepers. However, it soon realized the need to have an agent-assisted model where an insurance agent helps the customer buy the right product by walking them through the company’s online portal. This model was critical for Riskcovry as its customers were skeptical about the purchase of insurance without a “human” talking them through it. However, as a start-up, the sales team of Riskcovry was small and unable to scale up to meet the growing demand of these customers.
Moreover, another problem challenged the team at Riskcovry—it had no brand value yet. Therefore, customers who wanted to purchase insurance were reluctant to consider Riskcovry.
To overcome these challenges, the start-up sought the help of the FI lab.
Support of the FI lab
The FI lab comprises CIIE.CO and MSC, its knowledge partner, along with some prominent donors. It provides portfolio support, technical assistance, boot camps, demo days, diagnostics, support calls, and clinic sessions to each of the startups in every cohort.
Riskcovry was facing challenges concerning its inability to reach out to customers and enabling the appropriate product channels. The sales team of Riskcovry was unable to reach out to its end customers efficiently due to its small size. Besides, its end-customers had some concerns regarding trust.
The FI Lab helped build a strategy to convert Riskcovry’s B2C business model to a B2B2C model. This new model used the existing customer relationships of retail chain stores and Business Correspondent Network Managers (BCNMs). This business model addressed Riskcovry’s customer outreach problem and mitigated customer concerns regarding trust. In addition to providing market connections, the Lab also helped Riskcovry to build its pricing models and refined its pitch to help convert these connections.
The FI Lab also helped identify the appropriate product channel for Riskcovry’s customer segment of small shopkeepers. This meant reaching out to cooperative banks to use the assisted model to sell life insurance to customers. It also meant bundling loan products with insurance and using small finance banks and MFIs as channel partners.
The FI Lab helped identify the appropriate product channel for Riskcovry’s customer segment of small shopkeepers and helped strategize the appropriate channel for the relevant product. This meant reaching out to cooperative banks to use the assisted model to sell life insurance to customers. It also meant bundling loan products with insurance and using small finance banks and MFIs as channel partners.
Since the small sales team of Riskcovry was inadequate to reach out to its end customers, the FI lab helped build a strategy to convert Riskcovry’s B2C business model to a B2B2C model. The new model used the existing customer relationships of retail chain stores and Business Correspondent Network Managers (BCNMs). This business model not only solved Riskcovry’s customer outreach problem but also mitigated the concerns of its end customers regarding trust. In addition to providing market connections, the Lab also helped Riskcovry to build its pricing models and to refine its pitch to help convert these connections.
Riskcovry has forged industry partnerships with some of the top grocery retail chains and BCNMs as enterprise partners and has worked to reach numerous customers in tier II and tier III cities. Through these partnerships, the Riskcovry team has cut down the time needed to market to end customers or insurance beneficiaries from months to weeks. It has also scaled up its reach from a few customers to a few hundred customers.
Creating opportunities from the COVID-19 crisis
No one anticipated the pandemic and the health, financial and economic hardships it would bring. Hence, there was no specific insurance cover for it, anywhere in the world. The quick spread of the disease has overwhelmed many insurance companies, which took time to adapt and build policies to cover it. This is where Riskcovry’s agility and capability have come to the fore.
The startup has been quick to sense the situation and has been rapidly building customized, Do-It-Yourself (DIY) insurance coverage offerings from its insurance policy suppliers. It has recently launched insurance covers against COVID-19, which cover hospitalization and other medical expenses. You can read about it here.
By sharing APIs with non-financial service providers, such as EdTechs and AgTechs, Riskcovry is also exploring how to integrate its relevant insurance products with their product offerings.
Plans for the future
In the longer term, beyond the current pandemic situation, Riskcovry plans to promote its novel insurance idea in emerging markets across the globe. The objective is to make its distribution channels more robust, promote quick insurance products, and make insurance exciting.
Follow #TechForAll and #BuildingForBharat to stay updated on fintech start-ups driven to bridge the social, financial and economic inclusion gap
This blog post is part of a series that covers promising FinTechs that are making a difference to underserved communities. These start-ups receive support from the Financial Inclusion Lab accelerator program. The Lab is a part of CIIE.CO’s Bharat Inclusion Initiative and is co-powered by MSC. #TechForAll, #BuildingForBharat
MSC conducted a round of research to understand how the low- and middle-income (LMI) segments cope with the COVID-19 pandemic. We covered five countries—Bangladesh, India, Indonesia, Kenya, and Uganda. We spoke to 80 low- and moderate-income households in Bangladesh to examine how this pandemic has affected their lives and know their perspective. Our report, with additional inputs by Stuart Rutherford, offers a glimpse into the community’s challenges, concerns, and new opportunities in these trying times.
The COVID-19 pandemic has brought upon us the responsibility to create awareness, influence precautionary behavior, and drive the safety of State Rural Livelihoods Mission (SRLM) staff members and SHG members. We have developed engaging training material for SRLM staff members and SHG members in the form of conversational comics on COVID-19. These explain preventive measures through accessible, visual narratives and include aspects of workplace safety at the SRLM office, staff safety in the field, and ensuring customer protection. These booklets can be customized by concerned SRLM based on their specific guidelines if required. Feel free to share them and join us in fighting back. #staysafe.
Around the world, gender diversity remains a huge challenge for businesses. The profitability of businesses is on average 34% higher when they are led by a woman, according to the Roland Berger study for Women in Africa. However, although data is lacking for Africa, estimates indicate that women lead only 9% of start-ups in the subcontinent. This is despite Africa’s position as the only region in the world that has more female entrepreneurs than male ones, with 65% of the continent’s goods produced by women. However, female entrepreneurship in Africa continues to face challenges, especially in the digital world where women are underrepresented.
The financial industry, however, is evolving. It increasingly relies on information and communication technologies (ICT) as well as on big data to meet customer demands for products that are quicker and easier to use, as well as more transparent. The financial industry has been moving towards products and services exclusively centered on the customer, which has forced institutions to rethink their business models.
Africa is at the forefront of innovation and entrepreneurship. The FinTech industry is booming. An increasing number of young Africans, born in the digital age, have embarked on the FinTech journey. The FinTech sector has started to find solutions through new business models to alleviate many basic challenges, such as water, electricity, education, and health access. FinTech companies use technology to reach a larger customer base while avoiding infrastructure expenses. Through these new business models, they can manage their costs more effectively and offer a range of affordable digital financial services.
Professional african woman-vector
However, only 27% of female entrepreneurs in Africa work in technology. Few women embark on the tech entrepreneurship journey, mainly due to lack of knowledge, lack of financing, or, simply, lack of support. They also lack female role models to follow.
Culturalbarriers play a major role in adding to the reluctance of women to take up tech entrepreneurship roles. African women are less inclined to take risks or are less able to take risks compared to men. Traditionally, they are seen as the ones who manage their households, not the ones who take risks. Culturally, therefore, African women do not fit in with the world of tech entrepreneurship. They frequently limit their enterprising drive, especially in tech, out of a fear of social backlash.
“Cultural and religious conservatism in our societies leads to the development of a natural tendency for self-censorship among women”, says Ismaïl Douiri, CEO of Attijariwafa Bank, the leading Maghreb banking group.
Education is another major challenge to the adoption of tech entrepreneurship by women. In Africa, the literacy rate among boys is on average 1.3 times higher than among girls. Moreover, men are more likely to get secondary and post-secondary education than women.
According to Ismaïl Douiri, “in most African countries, education systems have been geared towards getting a degree rather than acquiring the qualifications and skills that support successful integration into the labor market.” Most students lack technical and sectorial skills. Information and communication technologies are virtually absent in the African education system. The high cost of education also makes it a significant barrier.
Women who overcome cultural and education barriers face challenges related to financing. Globally, men represent 92% of partners in the top 100 venture capital firms, and women-founded start-ups receive only 2% of the investments of these firms.
In its latest report, tech start-up investment fund Partech confirmed that across Africa FinTech start-ups raised USD 132.75 million in equity out of the total USD 1.163 billion raised by start-ups in 2018. FinTechs have benefitted from 39.7% of the total financing. However, estimates indicate that women-led start-ups globally receive only 2% of all venture capital funds, a figure that is even lower in the tech world.
Yet, supporting women’s involvement in technology start-ups offers a definite financial benefit. The purchasing power of women continues to rise across the continent. For technology companies, the ability to understand women’s needs and aspirations better creates a definite opportunity to serve them. Who is better positioned than women to design products that meet the consumer needs of women?
Initiatives are being implemented to address these challenges and empower women in the world of tech start-ups, most notably in French-speaking Africa. Banks and mobile network operators have been launching an increasing number of contests, awards, and programs dedicated exclusively to women and technology, such as the Linguère Digital Challenge, which works to advance women in the field of ICT. Similarly, The AFAWA Initiative (Affirmative Finance Action for Women in Africa), designed to improve access to financing for women in Africa, works to close the financing gap that is estimated at USD 42 billion.
Likewise, the eTrade for WomenInitiative launched by the United Nations Conference on Trade and Development (UNCTAD) works to empower women digital entrepreneurs to act as a force for inclusive wealth creation in developing countries.
In Senegal, women represent 30% of the digital ecosystem, compared to 10% in France. Senegal has a range of initiatives in place to support women and an increasing number of incubators and investment funds to help start-ups grow, with the country aiming to reach 35,000 direct jobs in the field of new technologies by 2025.
The ecosystem is buzzing with many initiatives that promote women who embark on the digital entrepreneurship journey and encourage those who hesitate.
Let us not ignore the great success stories of some women-led tech start-ups, such asQuickcash, founded by Patricia Zoundi, a money transfer company that has succeeded in taking into account the needs and realities of African people.
Arielle Kitio, heralded as the “Femme Digitale Africaine de l’année 2019” (African Digital Woman of the Year 2019) launched her start-up Caysti (Cameroon Youth School Tech Incubator), a tech awareness center for children from 6 to 15 years old, in 2017. “Thanks to our intuitive and game-based abcCode software, they learn coding in their native language—French, Hausa, or Wolof.”
In Cameroon, Rebecca Enonchong runs AppsTech, while also being a member of VC4Africa and chairing the board of AfriLabs, which brings together innovation centers and tech hubs from across Africa. Today, the AfriLabs network comprises 151 member hubs in 40 countries, which in turn supports more than 700,000 tech entrepreneurs across Africa.
Even though the numbers are evolving and mentalities continue to change, the start-up ecosystem in Africa still needs to work to enhance women’s representation. Nearly 24% of African women of working age are involved in starting businesses,which is much more than anywhere else. Women represent a strong opportunity, and they need to receive better support. They must be able to carve their role with conviction and self-confidence. To this end, they will also need tools, knowledge, and inspiration.
Are you worried about launching and developing your enterprise with little financial means? Visit the Digital Finance Hub, dedicated to the entrepreneurship ecosystem, that provides tools designed to support entrepreneurs on their journey. Creating a solid talent pool—including among women—is key to increasing the impact of tech start-ups and achieving greater economic, financial, and social inclusion. Ladies, don’t be shy, the tech ecosystem needs you!
This blog is about a startup in the Financial Inclusion Lab accelerator program, which is supported by some of the largest philanthropic organizations across the world – Bill & Melinda Gates Foundation, J.P. Morgan, Michael & Susan Dell Foundation, MetLife Foundation and Omidyar Network.
India has 15 million gig workers or around 40% of the freelance jobs offered globally, and this number has been growing steadily each year. A large proportion of the country’s school dropouts, college students, or partially employed people look out for part-time work to support themselves and their families. This kind of work, popularly known as “gig work”, is often unpredictable, unreliable, and unsustainable. In most cases, gig work arises out of a lack of full-time employment opportunities. Unsurprisingly, we find that the problem of underemployment is more acute in rural areas due to limited economic activities.
Sensing an opportunity to serve the gig economy, serial entrepreneur Lathika Regunathan founded MIMO or Minimum Investment Maximum Outcome. MIMO uses technology to help gig workers across India, especially in rural areas, enhance their earnings. Its mobile application intermediates between the service providers, such as banks and other institutions, and its field officers, typically underemployed youth. The application allows providers to set up a variety of regular and time-bound tasks that they want to outsource. MIMO assigns these tasks to geo-tagged and trained field officers within their chosen locations. The tasks typically include verification of credit card or loan application, collection of cash or documents, and so on. The app features also include analytics, dashboards, and a tracking management mechanism for service providers.
The light-bulb moment
The idea of MIMO came into being when Lathika was working in Latin America in the financial services sector. She observed that the costs of customer acquisition and operations were high in rural areas, which prevented providers from being able to serve customers at the bottom of the pyramid in a feasible manner. Moreover, providers were not able to use a cost-effective platform to serve those customers, especially in locations that were hard to reach. She realized that her home country India must also be in a similar situation, and decided to relocate there soon after to start working on this problem.
The unique pitch
MIMO’s objective is to help the rural and semi-urban workforce take advantage of the digital revolution. Its field officers are generally school or college dropouts in tier 2, 3, and 4 cities. They work with MIMO to earn a livelihood while learning in the digital world.
MIMO also helps financial service and other providers to reach rural markets cost-effectively. Providers find it difficult and expensive to serve customers due to a lack of last-mile infrastructure, distances, and remoteness of many areas. The cost of setting up an extended distribution network, particularly across dispersed rural areas, is high with low returns on investments.
While MIMO allows providers to gain access to the trained workforce and skills closer to the customers that they serve, its field officers get access to opportunities to earn within their localities.
Figure 1: MIMO using technology to connect service providers to its customers.
The impact on LMI segments
Lathika believes that MIMO has a positive impact on the livelihood of field officers. MIMO offers them an opportunity to do respectable work that enhances their social status in the eyes of their communities. They are a part of the digital world and become socially included.
Ram Sahay, one of MIMO’s field officers shared his perspective. “I am proud to work with MIMO because unlike my peers, who must carry loads of documents or application forms to their clients, I work through MIMO’s mobile app to complete the same chores in half the time,” he said with a wide smile. Field officers have said that completing tasks for MIMO has increased their income by 20-30%. They also mentioned how their productivity has improved, as they can plan their days better.
The roadblocks
Since its inception, one of the primary challenges MIMO faced was to gain and retain trust from its clients, primarily banks and other service providers. In the absence of visibility to the last mile, these clients had concerns about the credentials and capabilities of the field officers and lacked trust that the field officers could complete the work as per their requirements.
It was much easier for MIMO to overcome challenges while training field officers in technology and application. These included simple things, such as taking the picture correctly, understanding the meaning of a completed form, and so on. It took more time and repeated training to impart soft skills around communication, presentation, and confidence while dealing with customers.
Diversity in geographical regions has been another area of concern for MIMO. Nuances in work habits required MIMO to approach different states differently. In states, such as Bihar and Uttar Pradesh, MIMO struggled to get field officers to finish the tasks on their list in the allocated time. Field officers in the states in southern India are more disciplined and welcome additional tasks.
The FI Lab support
CIIE.CO and MicroSave Consulting (MSC) conducted boot camps and diagnostic sessions to support MIMO. MSC conducted a strategic business planning session with the top management of the company. This exercise helped them think strategically beyond just survival. Through this exercise, MIMO could set medium- to long-term objectives and smart goals. According to Lathika, this helped streamline their internal processes and brought the team together.
Before the workshop, the MIMO team faced issues that are typical to start-ups. The team lacked well-defined roles and responsibilities. For instance, one team member could end up performing an internal process that the other team member was an expert in, which reduced efficiencies. A lack of communication also contributed to such issues. The workshop allowed the heads of various teams to come together and understand the gaps in communication. They were subsequently able to allocate well-defined roles and responsibilities through mutual consent.
Today, MIMO has reduced the turnaround time of their processes by 25% through better work allocation and by setting up communication standards within the company. The workshop and further handholding also transformed MIMO’s management to be more focused and impactful by prioritizing tasks aligned to the broader vision of the company.
A quick diagnostic field study helped MIMO to understand different challenges that field officers face on the ground and to develop measures to address them. It also provided a fair commission structure based on industry standards.
COVID-19: Turbulent times for MIMO and gig workers
Starting with just a couple of clients and 250 field officers in late 2017, MIMO, until February, 2020 served more than 70 clients through 10,800 field officers. With its operations spanning across 19 states in India, the future for MIMO looked promising. Then the coronavirus struck. The entire country was locked down. MIMO’s field operations were shut down completely and the clients reneged on their commitments to continue their business in these times.
Determined to survive, MIMO toyed with the idea of a video verification process. This is not a big, innovative transformation but a minor tweak to make the best use of the resources available: video calling. What started as an interim solution during the ongoing crisis has quickly picked up steam with both clients and field officers, who have been working from home. The clients’ trust in MIMO’s quality of deliverables and the MIMO team’s ability to adopt the new process and train its willing field officers has started to show results. From almost zero transactions in the latter half of March to a couple of hundred today and a pipeline of two big clients joining in, MIMO could be doing even more transactions than the pre-COVID era.
This blog post is part of a series that covers promising FinTechs that are making a difference to underserved communities. These start-ups receive support from the Financial Inclusion Lab accelerator program. The Lab is a part of CIIE.CO’s Bharat Inclusion Initiative and is co-powered by MSC. #TechForAll, #BuildingForBharat
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Lathika believes that MIMO has a positive impact on the livelihood of field officers. MIMO offers them an opportunity to do respectable work that enhances their social status in the eyes of their communities. They are a part of the digital world and become socially included.