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Not Just Another Startup Accelerator in India: How the Financial Inclusion Lab is Shining a Light on Underserved Customers

Posted on by MSC

India today has an accelerator for almost every domain, ranging from fintechs to the Internet of Things (IoT), from healthcare to consumer retail. You name it, we have it. It often seems that there is an accelerator in every corner of India’s major cities, with a new one springing up every month.

So why am I writing an article on another incubator/accelerator in India’s fintech domain?

The reason is that many accelerators face a common shortcoming: inclusivity. So when an accelerator comes along that addresses that issue, it’s worth noting.

The Indian fintech ecosystem has still not been able to reach underserved communities, especially the low- to medium-income (LMI) population of the country—households that earn between US $2-10 daily, with volatile and unpredictable incomes. A huge digital divide plagues our society, and few seem to care about it.

We at MSC decided to take it upon ourselves to create an impactful support system to boost the nation’s progress toward financial inclusion, and build a legacy that relevant ecosystems in India and other countries can benefit from. To that end, MSC conducted an intensive landscape study on the startup ecosystem to determine the type of support that could be given to startups to strengthen the financial inclusion movement in India.

As a result of these deliberations, the Indian Institute of Management Ahmedabad’s Centre for Innovation Incubation and Entrepreneurship (CIIE.CO) set up the Financial Inclusion (FI) Lab under the Bharat Inclusion Initiative in 2018, with MSC as a partner.

Lessons Learned from the FI Lab so far

The Lab offers a holistic package of support for each startup, ranging from mentor hours and grant capital to field studies led by financial inclusion experts for consumer and market insights. Since its inception, the Lab has successfully supported 18 startups across two cohorts and is currently running the third cohort of startups. These startups are from diverse domains of financial services, from savings to insurance to agri-finance. The infographic below depicts the combined impact of our lab.

fintech lab

While these numbers appear quite impressive, serving these startups has been challenging. In the process, we have learned six lessons about how best to provide technical assistance to them. We have also learned or reinforced three fundamental lessons for the ecosystem.

No one-size-fits-all solution: One-size-fits-all solutions will not work across the LMI segment. To take just one example, one might expect that women self-help groups (SHGs) would share enough similarities across geographies that a standardized approach could work for them all. But in Pune’s suburbs, these SHGs’ members can pay their households’ dues using smartphones and mobile apps. On the other hand, many SHGs in Rajasthan’s towns include users who only own basic feature phones. This means that an intuitive mobile solution designed for Pune’s SHG customers may be too complex for Rajasthan’s SHGs.

Beware of copy-paste solutions: Most of the startups building solutions for the LMI segment simply extend the solutions they’ve developed for urban, tech-savvy folks—a classic copy-paste approach. For instance, so many Indian mobile apps use a “shopping cart” icon, which blue-collar factory workers or people living in tier–II cities who have never seen a supermarket or a cart cannot relate to or identify.

Founder participation in Lab activities helps them build faster, superior solutions: The Lab was able to give its startups a deeper understanding of the LMI segment, and challenge their solutions and their applicability to LMI customers. This provided new understanding – and prompted new thinking – among many of our enterprises. For instance, the EasyPlan founding team, during its participation in the Lab’s field research activities (such as customer interviews and market surveys), realized that its solution was not a fit for its target customer segment. It quickly adapted to build a new product-market fit for a new LMI customer segment that would buy its products willingly.

How the Lab is Unique?

There are several reasons why the Lab’s approach is uniquely suited to helping startups serve LMI customers.

We start from where others have left off: Many startups and accelerators stop at the point of creating a product or service they think will serve the LMI segment and fulfill the objective of financial inclusion. For us, that’s just the starting point. Once these products and services have been created, we work with startups to help them customize and implement their solutions with their LMI customers. For example, Navana Tech builds a text-free, image-based and voice-enabled software development kit (SDK) for the LMI segment. Navana Tech’s clients build intuitive, user-friendly mobile apps leveraging this SDK to cater to their LMI end customers, such as smallholder farmers, micro-loan borrowers, etc. We helped Navana Tech build image-based mobile applications by validating their mobile user interfaces with actual target end-users.

We support startups to support themselves: While most of today’s accelerators have become intermediaries that merely connect startups to venture capital funds, we believe that startups should first be mentored to build self-sustainable businesses that will become investable.

We understand the LMI segment: period: Many fintech accelerators focus on financial inclusion but have limited knowledge about the nuances of the LMI segment. Since this population comprises the core customer segment for financial inclusion, these accelerators are unable to provide the required support. All the startups from our cohort believe that by working with us, their understanding and sensitivity towards this segment has increased manifold.

Credibility is the name of the game: We have brought together credible partners and CSR grant money. Additionally, a high-level advisory and steering committee has provided further credibility, along with helping startups avoid any regulatory pitfalls. As a result, joining the Lab signals that they are a part of an authentic portfolio of impact investors. This has helped many of them to raise funds more easily.

Gender diversity: We are proud to support startups that are led by women founders. This shows in the rich mix of our selected startups, wherein more than a third of them have women co-founders. The “ladies in the lead” hold the mantle of their respective businesses through their roles as chief executives to chief marketing to chief technology officers.

The Lab actively promotes India’s technology infrastructure: India Stack, the world’s largest application programming interface (API), helps startups reduce the development costs for APIs by 90%, as compared to developing or using other commercial APIs. The Lab also mentors and supports its startups in utilizing this infrastructure, and helps to strengthen it through more avenues of innovation by building a diverse range of solutions on top of the stack.

FI Lab’s response to the Covid-19 Pandemic

As I write this article, the COVID-19 crisis has started to affect India’s startup community badly. In brief, these are some of the major challenges facing the country’s startups as the pandemic unfolds:

  • They have had to completely shut down field operations, including onboarding new customers through physical visits.
  • Their revenue streams have shrunk, because customers are delaying or even refusing payments.
  • Their suppliers have started asking for pre-payments, and have stopped giving credit.
  • There is no government or regulatory support ready yet for fintech startups.
  • Startups are looking at cost-cutting measures more actively than ever.

MSC and the Centre for Innovation Incubation and Entrepreneurship have been modifying our approach to offering high-touch support to help the Lab’s startups navigate these troubled times. Some of the measures that we have initiated already include:

  • Maintaining the flow of field-based insights to startups by re-working our strategy of conducting research — from on-site field research exercises to telephonic and remote interviews.
  • Coaching startups to automate their internal processes and digitize communication channels with end customers.
  • Building short-term (1-4 months) and medium-term (4-8 months) contingency plans and strategic roadmaps for startups

The Lab’s evolving focus for Fintech in India

As mobile technologies and better information systems can bring more LMI segments into the realm of financial inclusion, we believe that India’s new wave of fintechs should start focusing more aggressively on building products and services that will empower these customers to take the following actions, as outlined in the infographic below.

fintech lab

We firmly believe that by engaging with fintech and providing them with relevant inputs, we can create impactful solutions together to serve the financially excluded and build a better, less digitally divided society for the benefit of all.

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

This blog was also published on Next Billion on 15th of June, 2020

Bridge2Capital and Navana: Seniors of the batch!

Posted on by MSC

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.

Brothers Raoul and Jai Nanavati started Navana Tech in 2018 from their study room. At around the same time, Mohammed Riaz and Nishant Singh left their senior positions in well-established companies to pursue their entrepreneurial ambitions, which bore fruit as Bridge2Capital. Today, while Navana Tech is a part of the elite list of top 30 tech startups in India, Bridge2Capital has been shortlisted as one of the most promising fintech startups by India Fintech Awards Association.

Bridge2Capital and Navana have been with the Lab since the first cohort. In a way, the Lab and both the startups have grown together since day one.

Though they are from the same cohort, the founding teams are quite a contrast to each other. Bridge2Capital comprises veterans who have deep and vast experience in the rural distribution space in India. On the contrary, Navana Tech comprises younger blood and recent Cornell graduates who seek to build software for the low-literate and low-income groups of India. Yet their passion to serve the low- and moderate-income (LMI) segment that remains vastly underserved is a common bond that ties them and our Lab together.

Bridge2Capital’s journey so far

Bridge2Capital started with a simple idea: to support local mom-and-pop stores, or Kirana stores as they are known in India, to turn their inventory over in the most productive way. These stores usually depend on supplier credit to stock inventories and sell to customers. They do not have much in terms of credit history as they deal in cash, which does not leave a digital or a paper trail. Hence, they are mostly unable to provide sufficient proof of their business flows and get loans from formal financial institutions to expand and grow. Bridge2Capital solves this problem by financing these small shopkeepers based on GST-authenticated supplier invoices.

Though Bridge2Capital was doing quite well at the end of the first cohort, it was able to muster only around 200 odd shops from three to four tier-II and III Indian cities on its platform. You can read about Bridge2Capital and its business model in our previous series on cohort 1. Now, after the second cohort concluded, Bridge2Capital has on-boarded more than 1,000 shopkeepers across 18 tier-II and III cities of India on its platform. 

What made it happen? 

Bridge2Capital

A few factors contributed to this:

  1. Resilience: The Bridge2Capital team kept on going to different kinds of shops to collect data, such as the size of the shop, history of existence, and information about the shopkeeper. The team tested each cohort of shops and shopkeepers carefully with small loan sizes. They failed many times in those pilots, but with each failure, they learned what not to do and made sure they did not repeat their mistakes.
  2. Business intelligence: The founding team has built a data-centric culture in the startup. The on-field teams collected data methodically and objectively and paid equal attention to organizing it. This allowed Bridge2Capital to utilize the data quickly, to run nimble experiments, and to select and persist with the right kind of shopkeepers—ones who could and would pay them at regular intervals with minimum interventions.
  3. Thinking ahead: Startups need to evolve continually—not only to stay ahead of the competition but also to stay motivated and dream of bigger achievements. Like many other credit-underwriting fintechs that use alternate data, Bridge2Capital had built a robust algorithm to generate a reliability score based on the payment history of each of its onboarded shopkeepers. 

However, it realized that the market lacked a technique to ascertain the intent of the shopkeeper or borrower in general to pay their dues. 

Therefore, Bridge2Capital started to explore other methods, such as behavioral analysis and psychometric evaluations to see how these can be combined with its existing credit underwriting algorithms, to produce even better and more reliable predictable scores for existing and new shopkeepers.

The Lab supported Bridge2Capital in becoming more efficient and productive

The Lab helped the startup team through a mix of academic and pragmatic approaches. The boot camps and classroom sessions took an academic approach to build a business, while the field surveys, market research exercises, and data analysis defined and delivered a practical approach to lending. The support allowed Bridge2Capital to:

  1. Lower its customer acquisition costs by identifying and overcoming inefficiencies in the customer onboarding process. 
  2. Experiment with newer ideas to enhance business productivity and learn what it should not do.

Helping shopkeepers in the time of the COVID-19 pandemic

Empathizing with its customers, the shopkeepers, Bridge2Capital has introduced the following measures to ease the financial hardships caused by this pandemic:

  1. It has allowed its shopkeepers to convert their short-term loans (payable within a month or two months) into longer-term loans that span six to 12 months, by paying up a small conversion fee. 
  2. It has allowed Reserve Bank of India’s (RBI’s) three-month moratorium on the repayments for its shopkeepers. Many shopkeepers are still willingly paying the interest part of their borrowings during this period. 
  3. It has introduced a new product, Bridge2Pay to enable its shopkeepers to receive payments in a “presence less” mode, to maintain social distancing. The shopkeeper uses WhatsApp to forward a unique QR code generated by Bridge2Capital to its customers. This helps the customer to just scan the code through their mobile phones and pay the shopkeeper through Unified Payment Interface (UPI).

Navana Tech: Adapt-as-you-go

You already know about Navana Tech from our previous blog series, so we will talk about what the brothers, Raoul and Jai, have been up to since then. From the beginning of the first cohort until today, Navana Tech has continued to pivot its product ideas. It started from an operating system (OS) layer over Android OS and moved to a simpler, text-light, image-based phonebook app, from which it transitioned to a software development kit (SDK). The SDK allows businesses, especially banks, to build mobile applications for the illiterate and semi-literate populations of the country. 

One constant for the company has been its steadfast focus on serving the community of users who form a bulk of the LMI segment of our country. It has a deep understanding of the user experience of its customer segment and has expertise in building intuitive user interfaces for them. This has earned it a place among other promising startups of not only the FI Lab but also among the Microsoft for Startups program.

Today, Navana Tech partners with prominent microfinance institutions (MFIs) and small finance banks (SFBs), such as Ujjivan and Shubh Loans. These institutions serve the LMI segment across the country by lending to them at reasonable interest rates. However, these MFIs and SFBs faced challenges in transforming their manual, paper-driven processes of a regular bank to automated, digital, and more user-friendly processes. Navana is helping them do that today.

Navana Tech has also recently gone beyond the financial services domain and started running pilots with Digital Green to help it develop hyper-local mobile applications. The applications allow small landholder farmers to become entrepreneurs, who in turn recruit other farmers and sell their collective produce to suitable marketplaces nearby.

Navana Tech created a user interface (UI) that uses voice and natural language processing (NLP) to “hear” and “understand” what a customer speaks in their local languages. By doing this, Navana Tech is breaking a pivotal barrier that can help bring the LMI segment into the fold of regular smartphone users who perform a variety of tasks, such as mobile banking from the place of their choice.

The start-up’s team continues to run pilots with these institutions and enrich its database to build robust solutions that can serve a range of people who speak different dialects.

The team started with barely a minimum viable product (MVP) with no clients at the beginning of the first cohort, with both the founders working from their homes in Mumbai. Today, Navana Tech has moved to a formal office space in Whitefield, Bengaluru. It employs a team of nine, with three clients: Ujjivan, Shubh Loans, and Digital Green in its kitty. 

Navana has shown the following attributes as it grew its business: 

Navana

  1. Agile mindset: The team led by the brothers, developed its software in multiple, short iterations by continually testing it with their pilot customers and feeding their concerns into making better designs.
  2. Open to new ideas: The Navana team has not confined itself solely to the domain of financial services. Today, it works with Digital Green, an agri-services provider, and intends to work with a few healthcare companies that cater to the LMI segment.
  3. Passion and knowing when to say no: Despite having some lucrative opportunities after graduate school, the brothers stuck to their plan and refused to take up opportunities that could have diverted them from their vision of serving semi-literate and illiterate people.

Surviving the pandemic

The COVID-19 situation has been particularly harsh for Indian startups. The payments that existing clients owe them are delayed, and no new clients are willing to give business. Given this, the Navana Tech team has been taking the following measures to survive:

  1. The startup has reduced its variable costs by switching to cheaper tools for software product development.
  2. It has initiated conversations with prospective clients, including non-financial service providers, and offered them freemium versions. The terms of payment for these versions are flexible and the clients can opt-out at any time. This strategy has strengthened its sales pipeline.

Way forward

The COVID-19 pandemic has had an impact on startups like Bridge2Capital and Navana Tech. Their short-term goals for growth have been deferred. However, both teams have been quick to adapt to the situation. Their immediate plans are to survive through the next 3-6 months by staying lean in terms of staff-strength and nimble in terms of strategy and implementation to adapt to the rapidly changing business environment. They have plans to consolidate their businesses with their existing clients or customers, build more digital features in their products, and keep their team’s morale high.

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 

Connecting India to Bharat through P2P lending

Posted on by MSC

This blog is about a start-up in the Financial Inclusion Lab accelerator program, which receives support from 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.

People shopping in the market

For small borrowers like Indumathi, this problem is insurmountable. A typical bank finds it costly to assess a small borrower and difficult to underwrite them as they have limited or no credit history. Start-ups like RupeeCircle look at these opportunities and wish to capitalize upon them. RupeeCircle is a digital marketplace that connects these kinds of underserved, credit-worthy borrowers with investors. 

The company claims that a typical nationalized bank rejects more than 70% of the loan applications it receives due to the high costs of underwriting. On the other hand, the loans from microfinance institutions are of low value, usually require a group, and do not always meet a borrower’s requirements. Faced with such barriers, many people are forced to borrow from the informal sector at exorbitant interest rates, which increases their financial burden and impedes their growth. Often, they are caught in a vicious cycle as they are forced to take one loan to repay another.

The pitch: New age underwriting

RupeeCircle came into being when Ajit, an engineering graduate from IIT Bombay, noticed this vicious cycle, having spent several years with major banks doing risk and data analytics. His friend Abhishek, who is an Engineer with CFA and MBA degrees, realized that they could use technology and data science to underwrite and manage the risks. They understood that they could disrupt the traditional intermediation of banks and link the borrowers to net savers who seek better risk-adjusted returns. Their classmates, Ashish and Piyush, joined Ajit and Abhishek and started the journey of RupeeCircle.

Fueling the aspirations for growth of the LMI segment

As a digital peer-to-peer (P2P) lending marketplace, RupeeCircle connects credit-worthy borrowers with investors who seek faster and better returns on their investments compared to traditional instruments, such as fixed deposits or liquid mutual funds. The company uses proprietary credit-scoring models to assess and underwrite loan requests, uses new technology to process the applications, and matches borrowers to investors (lenders). It uses a variety of alternative data points to assess a borrower’s ability to pay back even when they lack traditional credit history. 

RupeeCircle reaches out to borrowers from the salaried and self-employed low to middle-income (LMI) segment who earn less than INR 30,000 (USD 400) per month. RupeeCircle has developed an in-house loan origination and loan management mobile app and backend systems to onboard borrowers and lenders through a step-by-step assisted digital process. Once an investor applies and completes the Know Your Customer (KYC) processes, they get an overall view of all the registered borrowers. They can also see detailed reports of any borrower and can accordingly decide the amount they would invest in them. 

The RupeeCircle system categorizes all the borrowers based on their risk profiles. This categorization helps investors to diversify their risks and hand-pick suitable borrowers for themselves. The step-by-step assisted digital approach has helped RupeeCircle take its proposition to the doorsteps of people from the under-banked segments. They comprise many who are first-time users of the app or may even be nascent digital users and include house cleaners, drivers, factory workers, and security guards. 

Recently, Reserve Bank of India (RBI) sought comprehensive financial data from all the NBFC P2P players in the market. The P2P business works on volume as operational costs are high. RBI used this data and decided to increase the lending cap from INR 1 million (USD 13K) to INR 5 million (USD 65K). This gives a fillip to the business of companies like RupeeCircle, which has already made considerable progress within two years, as highlighted in the figure below.

expectations of FinTech start-ups from the Côte d’Ivoire government

The evolution: Strategy to increase business in existing areas and to expand to new areas

RupeeCircle started its services in 2017 and was part of the second cohort of the Financial Inclusion Lab. Before joining the Lab, RupeeCircle faced the challenges that a start-up typically faces—primarily sporadic growth and unpredictable declines in revenue. Hence, its challenge was to arrive at sustainable go-to-market and scale-up strategies. It also wanted to understand its market potential based on various segments that it could target across geographies. Boot camps, diagnostic sessions, and clinics conducted by CIIE.CO and MSC helped RupeeCircle to identify these challenges and strategize its expansion plans in a more stable, sustained, and structured manner.

The MSC team helped RupeeCircle build a city-selection matrix based on a group of selection parameters for Indian cities, ranging from smartphone penetration to a city’s susceptibility to natural disasters. The start-up used this matrix approach while expanding its market and customer segments in Chennai and Kochi. A better understanding of the target customer segment helped RupeeCircle to rethink and redesign the product. The team mentored RupeeCircle to amplify its reach using better and create targeted digital marketing strategies by tailoring them for relevant social media outlets, search engine channels, and content to address specific target segments. Besides gaining wider visibility, the company was also able to overcome operational challenges by making use of the India Stack.

Weathering the COVID-19 pandemic

The coronavirus pandemic has put both the lenders and borrowers of RupeeCircle under stress. Many borrowers have lost their livelihoods and consequently their re-payment capabilities, for the time being. The lenders prefer to save in very low-risk financial instruments for the metaphorical “rainy day” amid the crisis. To survive this, RupeeCircle plans to:

  • Onboard borrowers from the “essential goods and services” sector, such as delivery boys of the grocery-delivery companies—at least for the short term. This sector is booming and will continue in this trajectory due to the ongoing mobility restrictions and lockdowns for the general population in many Indian states. As a result, the employment opportunities and incomes of delivery boys is on the rise. By onboarding borrowers from this sector RupeeCircle will be able to retain some of the existing lenders as well as scout for potential lenders by mitigating the risk of default.
  • Further automate and digitalize the borrower and lender on-boarding process to the best extent possible, thereby reducing physical touchpoints and maintaining social distancing.
  • Re-calibrate its credit rating and lender-borrower matching algorithms to adapt to the current situation.

The long-term goals

Looking past the pandemic, RupeeCircle wants to be the “Amazon of Credit” that connects the under-banked segments of India with the new-age millennial investors of India. It is currently operational in Mumbai and Chennai but has plans to have a pan-India presence. Its future objective is to scales up to serve the generation of 500 million “credit-invisibles” and “credit-unscorables” in the country. To supplement its borrowers, RupeeCircle also plans to undertake various marketing and public relations activities to project P2P lending as a high-potential, alternative asset class that offers favorable risk-adjusted returns to suit the burgeoning high-income millennial population in India. With its customer-centric model, data science, technology, and continuous innovation, its ambition is to disrupt the banking system as we know it today.

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 

Impact of the COVID-19 pandemic on CICO agents in Indonesia

Posted on by MSC

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.

Riskcovry: Insurance-in-a-box

Posted on by MSC

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 

Coping with COVID-19 in Bangladesh

Posted on by MSC

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.