Investing with heart and wisdom: Strategic amplification of female agency frontlines

Posted on by The Helix Institute at MSC

The stories of female financial agents are strikingly similar worldwide, no matter where they operate or their business lifecycle. Regardless of their specific contexts, female agents work under far-from-ideal conditions. Unlike their male counterparts, they often grapple with inadequate support, pervasive social barriers, and scarce resources imperative to sustaining and growing their businesses.

In Nigeria, while female agents are more visibly engaged in agency banking, they face significant hurdles, particularly in maintaining sufficient cash flow. A weekly cap on bank withdrawals worsens their challenges—a common issue in other countries—which forces these female agents to rely on loans to run their businesses and manage liquidity. This reliance on borrowed funds adds another layer of complexity to their already challenging roles.

In India, female agents have limited customer outreach and may not get support like male agents and BC Sakhis (a type of female agent supported by the government). Meanwhile, in Uganda, female agents face cultural expectations that confine them to domestic roles, which limit their time and mobility to manage their businesses effectively. 

A gender-balanced network of DFS agents helps bridge the gap between underserved populations and formal financial systems to accelerate financial inclusion. Female agents play a unique role in fostering trust and accessibility, especially among female customers who may feel more comfortable interacting with someone of the same gender. This comfort can break down social and cultural barriers that often prevent women from accessing financial services. 

While policy focus on female agents remains limited globally, notable exceptions exist in countries such as India, Pakistan, and Nigeria, which have introduced targeted initiatives. However, these efforts are far from comprehensive, and the broader ecosystem worldwide continues to present significant hurdles for female agents.

What can amplify female agents’ numbers and performance?

Our research found that providers may lack a fair understanding of the business case for female agents, which results in a limited focus on women’s recruitment and retention. A lack of gender-disaggregated data worsens this situation. 

Many markets, such as Uganda, Kenya, and Ethiopia, lack the mandate to collect gender-disaggregated agent data. This prevents providers from understanding the differences between male and female agents and makes the creation of targeted policies and support mechanisms difficult. Providers do not prioritize gender-disaggregated data collection, often due to a perception that female agents offer limited business value. This oversight strengthens barriers to female agents’ recruitment, retention, and overall success.

Even where gender-disaggregated data is collected, it is often underutilized, which prevents providers from assessing differences in the unit economics of female and male agents. This issue is prevalent in both developed and emerging markets.

We analyzed gender-disaggregated data from a few providers who record gender disaggregation. It revealed that female agents are more likely to serve vulnerable groups, such as women, customers with disabilities, and elderly customers. We also identified methods to tap into networks for recruitment.

In East Africa, although women manage their liquidity needs as well as men, if not better, they have less working capital. Women report holding 10-30% less cash and e-float than men across three East African markets. In Uganda, some female agents borrow from their village savings and loan associations (VSLAs) and savings and credit cooperative organizations (SACCOs), while others, especially in rural areas, buy float from super agents, which carry premiums compared to borrowing directly from providers.

Lending to agents is primarily driven by the private sector and often lacks customization for female agents, who frequently struggle to repay loans within short timeframes. This difficulty arises from barriers, such as high upfront business costs, often higher for women. The high costs, in turn, stem from factors such as limited access to affordable startup capital, expenses to secure accessible and safe business locations, and funds needed to set up and maintain the agency infrastructure. 

Additionally, women often face higher transaction costs due to mobility constraints and the need for additional security measures to ensure their safety while they operate their businesses. Household responsibilities and other social norms further exacerbate these challenges. However, the most significant challenge is their lower income and savings, which makes them economically vulnerable and potentially risky for lenders. As a result, female agents face unique viability concerns that impact their sustainable participation in the digital financial services ecosystem.

While all agents grapple with viability, gender-specific products at CICO locations have been shown to enhance women’s financial inclusion and female agents’ income. However, many FSPs lack products tailored specifically for female clients that female agents can promote and deliver. 

Female agents in countries such as India are often the last to receive training on non-CICO products, such as credit lead generation, which could significantly enhance their business viability. This lack of targeted service offerings and training limits female agents’ ability to utilize their market presence fully and meet client needs. Similarly, female agents in Bangladesh frequently struggle during recruitment due to cultural norms and safety concerns, which discourage their participation in agent networks and lead to a gender imbalance. Moreover, female agents in Nigeria face higher dropout rates due to a lack of mentorship programs and inadequate support systems that fail to address their unique challenges, such as balancing work with domestic responsibilities. These gaps in recruitment and retention strategies hinder female agents’ growth and sustainability across these regions.

All these challenges are compounded by deeply rooted social norms that often discourage women from taking on roles perceived as unconventional, such as managing a financial outlet. Policymakers and service providers have long struggled to recruit female DFS agents, retain them, and address the barriers that limit their participation and success. 

The heart and the wisdom

A significant challenge in recruiting and retaining female DFS agents is the lack of a clear and well-understood business case for their inclusion. Female agents earn less than their male counterparts, even when they enroll more customers. 

However, the current economics also do not show a clear picture, as they fail to account for many nuances, such as the Lifetime Value (LTV) of agents. Various stakeholders we spoke to indicated a lack of understanding of the LTV of agents disaggregated by gender. For example, they overlook that female agents often provide superior customer service, a valuable asset for FSPs, and they recruit more customers (including female customers) who, in turn, bring business over the years. 

If these female entrepreneurs are provided adequate support—which we know is often lacking—they are likely to perform better. If FSPs are to address these disparities, they must develop business models that acknowledge the lifetime value of female agents in terms of their role in maintaining a consistent and inclusive business and driving revenues for the provider, even if they earn less. By valuing these contributions, the financial sector can create a more inclusive environment that supports female agents’ growth and success. If the sector can focus on the unique challenges of female agents, they will go beyond merely participating in the ongoing evolution of CICO agent networks—to lead it. 

The strategic amplification of female agency frontlines in digital financial services is not just a matter of gender equity. It is a critical component in expanding financial inclusion. As the stories of Amina and many other women across diverse regions illustrate, female agents face unique challenges that require targeted interventions and support. Addressing these barriers—whether related to social norms, access to capital, training, or mobility—is essential for unlocking female agent networks’ full potential. 

[1] The figures mentioned here correspond only to this mobile network provider interviewed as part of this study. The provider here is an established market player with a huge network, and hence, these figures may vary for other providers depending on their size and other parameters.  

Can Bangladesh close the credit gap of microenterprises through digital platforms?

Posted on by Saumya Dixit

Digital platforms can offer a transformative solution to the credit crisis Bangladeshi microenterprises face by leveraging data to offer tailored financial products

Microenterprises lack access to formal credit due to a lack of collateral, limited financial history, and high transaction costs. Photo: TBS

 

Microenterprises play a crucial role in driving Bangladesh’s economy. They comprise 90% of the country’s business and contribute 27% to the GDP. However, they struggle to access formal credit due to a lack of collateral, limited financial history, and high transaction costs. This forces many to rely on informal lenders who offer unfavourable terms.

Amid these challenges, digital platforms have emerged as a scalable solution to improve business operations and facilitate access to credit. Studies show that digital platforms can reduce operational costs and increase monthly incomes—from $592 to $993. Yet, the vast potential of digital platforms lies untapped, unlocking which can transform access to credit for microenterprises.

Traditional credit assessment methods often exclude microenterprises that lack bank statements or formal records. However, digital platforms generate vast amounts of transactional and behavioural data, which range from sales volume and payment history to inventory turnover and customer engagement.

Financial institutions can use this data to build more accurate credit profiles of microenterprises, assess their creditworthiness without traditional credit histories, and create tailored loan products.

For instance, in Indonesia, Finfra and Xendit have developed a new system of API-enabled bank accounts that open accounts on the borrowing party’s behalf. Through these Finfra- and Xendit-built accounts, users can avail themselves of short-term loans that provide the necessary capital, offer repayment flexibility suited to their needs and enable business growth.

Countries like India, Kenya and Nigeria have also shown how digital platforms can reshape the financial landscape for microentrepreneurs through partnerships with financial institutions.

Bangladesh can follow suit—only if it enables partnerships between financial institutions and digital platforms to provide flexible, data-driven credit solutions that empower microenterprises to grow and achieve long-term sustainability. Such partnerships must be supplemented with policies that enable seamless partnerships. Policies should support co-branded loan products, such as BRAC’s e-loan with ShopUp, by promoting the use of e-KYC for identification and collateral-free loan models.

One significant policy shift that can enhance credit access is the introduction of a Digital Business Identity Number (DBID) for microenterprises that operate entirely online. A DBID can formalise digital microenterprises, which would allow them to build a recognised financial footprint. This unique identifier can enable financial institutions to assess the creditworthiness of microenterprises based on their digital sales records, transaction history and customer engagement.

Beyond DBIDs, policy reforms should strengthen trade license policies to facilitate microenterprise formalisation. A centralised digital system for trade licenses, with online applications and local government-led verification, can streamline registration and ensure wider financial recognition.

Additionally, policies must support the integration of digital platforms with financial institutions so they can use the platforms for credit access. By enabling structured collaborations, digital platforms can provide microenterprises with tailored financial solutions, such as BNPL options and sector-specific loan products for different businesses.

As policies evolve to support digital platforms, credit products tailored to specific business cycles can maximise the growth and profitability of microenterprises. For instance, in the retail and social selling sectors, businesses peak during Eid and Durga Puja, which creates a short-term need for capital.

Similarly, in transport and logistics, the demand for trucks peaks from March to June due to increased imports and again from September to November, driven by export demand. Hence, financial institutions must recognise these patterns through the data-driven capability of digital platforms and provide working capital at the right time to help microenterprises scale effectively.

Digital lending has immense potential. Yet it becomes effective only if its implementation is safe and responsible. The Bangladesh Bank should develop clear regulatory guidelines to ensure that microentrepreneurs benefit from safe and effective lending.

These guidelines should help integrate digital platforms and financial institutions seamlessly while mitigating associated risks. The guidelines should also address data privacy, cybersecurity and risk management concerns and strengthen frameworks that protect customer information to encourage trust and enhance the adoption of digital lending solutions.

Today, Bangladesh stands at an inflection point where it can revolutionise financial inclusion for its microenterprises. The country must seize this opportunity to unlock the full potential of digital platforms.

The right mix of policies, technology and collaboration can enable small businesses to thrive, create jobs, and contribute to the nation’s economic progress. The Bangladesh Bank’s leadership will be crucial to drive this initiative forward. The ultimate goal should be to make access to credit a right for all—rather than a privilege for a select few.

The op-ed was first published on The Business Standard on 13th March, 2025

From Borrowers to Builders—Women’s Role in India’s Financial Growth Story

Posted on by Deepesh Singh

This report, “From Borrowers to Builders—Women’s Role in India’s Financial Growth Story,” is the result of a collaboration between the NITI Aayog, TransUnion CIBIL, and MSC (MicroSave Consulting). It bridges a critical knowledge gap in India’s financial landscape. It offers a comprehensive analysis of women’s participation in the country’s retail credit market and explores key trends in credit uptake, loan preferences, regional variations, and self-monitoring. It provides detailed insights to understand women as a diverse customer segment.

Small investments, big hurdles: Why SEBI’s SIP initiative needs a stronger backbone

Posted on by Deepesh Singh

SEBI’s proposal for ₹250 small-ticket SIPs aims to boost financial inclusion by making mutual funds more accessible to LMI (lower- and middle-income) groups. With SIP contributions rising from₹17,610 crore in December 2023 to₹26,459 crore in December 2024, India is witnessing a shift from traditional savings to market-linked investments. While this initiative leverages growing investor interest, reducing entry barriers alone won’t ensure success. Systemic challenges like financial literacy, trust deficits, digital access, and investor protection must be addressed. Without robust regulatory support and awareness efforts, small-ticket SIPs risk being an underutilized tool rather than a transformative financial solution.

Investor trust and awareness deficit

Unlike bank deposits that ensure capital safety, mutual funds come with inherent risks that can undermine trust in formal financial products if not properly communicated. Without sufficient investor education, LMI individuals may enter SIPs with unrealistic expectations, leading to premature withdrawals and disappointment. A 2019 assessment by the National Centre for Financial Education (NCFE) revealed that only 27% of adults were financially literate, with just 3% investing in stocks—a figure that drops to 2% in rural areas. This highlights the urgent need for awareness initiatives to bridge the knowledge gap and foster informed investment decisions.

High administrative costs for AMCs

Scaling small-ticket SIPs presents a cost challenge for Asset Management Companies (AMCs), as operational expenses remain high. Even within the Unified Payments Interface (UPI) ecosystem, transaction costs for low-value investments range from 80 paise to ₹1. With minimal management fees from small investments, revenue generation remains limited, making AMCs hesitant to actively promote these products. This reluctance could hinder SEBI’s goal of driving widespread adoption, highlighting the need for cost-efficient solutions or policy incentives to ensure the viability of small-ticket SIPs at scale.

Behavioural and retention challenges

Attracting first-time investors is just the first step; keeping them engaged is a bigger challenge. Research shows that many new mutual fund accounts go dormant within months, with young investors often speculating without fully grasping risk. Without effective retention strategies, small-ticket SIPs could see high dropout rates, reducing their long-term effectiveness and undermining SEBI’s financial inclusion goals.

Digital and infrastructure barriers

While digital platforms improve accessibility, India’s digital divide remains a significant hurdle, especially in rural areas where internet penetration and fintech adoption are limited. Additionally, the efficiency of financial service delivery, akin to the Gross Rent Multiplier (GRM) in real estate, remains a challenge. In the context of investments, a swift GRM—or rapid and tangible returns—becomes crucial. If financial products fail to deliver timely benefits, investors may revert to traditional savings methods or informal financial practices.

Successful micro-investment models worldwide offer valuable insights for SEBI. The USA’s Acorns leverages behavioral finance to encourage habitual investing—an approach SEBI could adopt through fintech partnerships. Kenya’s M-Akiba, a mobile-first government bond initiative, demonstrates how UPI can simplify SIP investments for LMI users. Meanwhile, Singapore’s CPF Investment Scheme links small-ticket investments to long-term financial security, a model India could explore by integrating SIPs with PM-Jan Dhan Yojana (PMJDY) or the Employee Provident Fund Organisation (EPFO).

However, without policy and ecosystem-level interventions, small-ticket SIPs may fail to achieve meaningful financial inclusion. To ensure long-term success, SEBI must go beyond simply lowering the investment threshold and adopt a multi-pronged strategy:

1) Financial literacy and awareness: SEBI should collaborate with educational institutions, NGOs, and fintech platforms to drive nationwide financial education campaigns. These should focus on risk awareness, realistic return expectations, and long-term investment principles to prevent investor disillusionment.

2) Incentives for AMCs and distributors: To encourage active participation, SEBI could introduce tax incentives or regulatory support for AMCs developing low-cost, diversified SIP products. Additionally, digital infrastructure subsidies can help reduce transaction costs, making small-ticket SIPs more viable.

3) Enhanced digital accessibility: SEBI should issue guidelines to streamline UPI-based payments and simplify KYC processes, ensuring seamless investor onboarding. AI-driven chatbots and virtual assistants can further enhance accessibility by providing real-time, user-friendly financial insights to first-time investors.

4) Robust monitoring and investor protection: Implementing a data-driven monitoring framework would help SEBI track adoption trends, investor retention, and potential misuse. Introducing capital protection funds or micro-investor insurance could mitigate risks, fostering investor confidence and sustained participation.

5) Integration with government schemes: Linking small-ticket SIPs with PMJDY or EPFO can leverage existing trust and infrastructure, driving greater participation while ensuring long-term financial security for LMI investors.

By addressing these systemic challenges, SEBI can transform small-ticket SIPs into a powerful tool for inclusive financial growth, making market-linked investments a viable option for all.

SEBI’s initiative has the potential to bridge the financial inclusion gap, but its success depends on multiple factors aligning effectively. A robust policy framework, adopting global best practices, can transform this initiative into a true enabler of financial security for India’s LMI segment. However, without addressing key challenges such as financial literacy, operational feasibility, investor protection, and long-term retention, small-ticket SIPs may remain a well-intentioned but ineffective tool. Risks for LMI investors persist due to a weak support ecosystem, low customer trust, and limited market awareness. Without policy interventions and ecosystem-level reforms, small-ticket SIPs may struggle to achieve their intended impact.

This article was first published in ET Edge Insights on 3rd March 2025.

The Gig Economy’s Big Moment: What Comes Next?

Posted on by Deepesh Singh

The Indian Finance Minister’s budget announced a comprehensive initiative to extend formal recognition and social security benefits to platform-based gig workers by providing their ID cards with registration on the e-Shram portal. This marks a significant step toward formalizing India’s rapidly expanding gig economy. With over 7.7 million gig workers in India as of 2020–projected to grow to 23.5 million by 2029-30 (NITI Aayog, 2022)–this sector plays a pivotal role in the country’s digital services ecosystem. From ride-hailing drivers to food delivery personnel and freelancers, gig workers have transformed urban economies, yet they remain largely excluded from formal financial systems and social security nets.

The announcement rightly acknowledges the need for formalization and financial inclusion of gig workers. It could help bridge the gap by enabling access to formal credit, insurance, and government welfare schemes. Currently, only 8% of gig workers have access to health insurance, and less than 2% contribute to retirement funds (NITI Aayog, 2022). Integrating this policy with financial literacy programs, microcredit solutions, and pension schemes such as Pradhan Mantri Shram Yogi Maan-Dhan (PMSYM) can ensure long-term economic security for this workforce.

For the policy to have a lasting impact, it must also address the intersection of the gig economy with India’s youth employment landscape. With over 62% of India’s population in the working-age group (15-59 years) and a median age of 29 years by 2030, structured skill development is essential. Young workers, particularly those from low- and middle-income segments, often lack career guidance and face a mismatch between acquired skills and industry demands.

In this context of the digital nature of work profiles (characteristic of industry 4.5 and 5.0), the flexibility allowed by digital interfaces, creating pathways for gig workers to join formal employment, and the flexibility to move back and forth will be crucial. After all, gig work should serve as a stepping stone to formal employment for those who seek stability and career progression while also being a viable, sustainable career path for those who prefer flexibility and autonomy. Some ideas worth considering include recognizing the skills of gig workers, such as those under the Recognition of Prior Learning scheme and recognizing and promoting gig work as work-based learning in formal education. Singapore’s Skills Future initiative provides lifelong learning credits to workers, enabling continuous skill development and career adaptability.

The government needs to maintain a delicate balance between providing social security benefits and not overregulating through the current labour laws, as the latter can limit the sector’s USP–flexibility and growth.

Further, investment in AI-driven reskilling programs and apprenticeships aligned with emerging job markets is imperative. For example, a 2023 NASSCOM report indicates that over 50% of Indian companies struggle to find workers skilled in AI, robotics, and cybersecurity. The World Economic Forum (2023) highlights that by 2025, 97 million new jobs will emerge globally in automation and digital sectors, many requiring adaptable skill sets. Tailoring training programs to meet these demands can enhance job readiness and economic productivity.

Collaboration with industry leaders and businesses can help. Employers should be encouraged to add minimum remuneration and skilling standards. Policies should incentivize companies to invest in gig worker training and offer learning stipends for gig workers to encourage participation in upskilling programs. More collaboration could encourage portable benefits models, such as those in France and the Netherlands, allowing gig workers to accumulate social security benefits regardless of their employer. Additionally, fostering collaboration among gig platforms, banks, and skilling institutions can ensure affordable access to credit, insurance, and continuous learning opportunities.

In conclusion, formalizing gig workers through identity cards is a commendable move, but its impact can be realized only if it is integrated with financial and skilling initiatives from both the public and private sectors. By aligning market needs with youth aspirations, the country can unlock the full potential of its human capital and position itself as a global leader in the future digital and industrial economies.

This article was first published in The Print and The Tribune on 28th February 2025.

Mutual funds for small investors? A good idea that needs the right execution

Posted on by Deepesh Singh

SEBI’s recent move to introduce small-ticket systematic investment plans (SIPs) with a minimum monthly investment of just Rs 250 is a big swing aimed at boosting financial inclusion by making mutual funds accessible to lower- and middle-income (LMI) groups. SIP inflows are up, from Rs 17,610 crore in December 2023 to Rs 25,320 crore in November 2024 and there’s a real interest in market-linked investments. But let’s be real: Just dropping the entry fee won’t guarantee inclusion. For this, we would need to tackle the underlying issues that could stop this plan from truly helping those it’s meant for.

Imagine this: For many people in LMI segments, traditional savings channels just aren’t cutting it anymore. With inflation eating away at returns from bank deposits, the need for better options is pressing. Banks haven’t exactly been rushing to attract these potential investors. They often overlook the strategic efforts needed to engage this segment. So, how can a small-ticket SIP really make a difference in their lives?

Let’s picture a working-class woman juggling her job and family expenses. For her, setting aside even a small amount can feel daunting. Now, what if she could put away Rs 250 each month? It might sound like peanuts, but over time, it can grow into something significant. SIPs are all about building that saving habit — a habit that can be life-changing for folks who’ve always been left out of the wealth-building party.

But here’s the thing: Research by the National Centre for Financial Education (NCFE) back in 2019 showed that just 3 per cent of Indian adults invest in stocks, and that number dips to 2 per cent in rural areas. If new investors don’t really get mutual funds, they might pull out their money early, leading to frustration. SEBI needs to make investor education a priority, so people get the risks, the returns, and the long-term nature of these investments.

And while small-ticket SIPs might sound like a way to bring in millions of fresh investors, the truth is more complex. Processing these tiny investments on a massive scale isn’t cheap. Even with UPI, transaction costs for low-value payments can climb as high as 80 paise to Rs 1. Given how little revenue these small-ticket investments generate, Asset Management Companies (AMCs) might not be too thrilled to promote them aggressively.

Let’s look at some success stories from around the globe. In the US, platforms like Acorns have revolutionised how people think about investing by allowing users to invest as little as $5 or $10 at a time. This model has led to nearly 54 per cent of Americans owning mutual funds as part of their portfolio by making investing feel accessible and manageable — even for those on tight budgets. Similarly, Kenya’s M-Akiba initiative offers government bonds through mobile phones, making it easy for everyday citizens to invest small amounts regularly. Imagine if Indian students started learning about investing early on through similar schemes — it could change everything in the long run.

To truly unlock the potential of small-ticket SIPs, a multi-pronged strategy is paramount.

Build investor awareness: SEBI must forge strong alliances with schools, fintech platforms, and NGOs to spearhead comprehensive financial literacy campaigns. These campaigns should demystify investing, highlight the inherent risks, and stress the importance of long-term financial planning.

Incentivise AMCs: To entice AMCs to develop low-cost, diversified SIP products that cater to the unique needs of LMI investors, SEBI could offer enticing tax incentives or other forms of regulatory support. Lowering transaction costs through strategic subsidies or digital infrastructure investments would also be a game-changer.

Improve digital access: SEBI must streamline UPI payments and simplify those often-confounding KYC regulations to make investing more accessible, particularly in underserved rural areas. The integration of AI-powered chatbots and virtual assistants can also provide invaluable guidance for first-time investors navigating the often-complex investment landscape.

Prioritise investor protection: Establishing a data-driven system to meticulously monitor adoption trends, investor retention rates, and overall investor behavior is crucial. Introducing safety nets like capital protection funds or micro-insurance products can also shield LMI investors from potentially devastating risks.

Link with government schemes: Seamlessly integrating small-ticket SIPs with established government programs like PMJDY or EPFO would build trust and foster greater participation. This synergistic approach could pave the way for long-term financial security for millions of Indians.

While SEBI’s initiative is undoubtedly a step in the right direction, its ultimate success hinges on proactively tackling these multifaceted challenges. A robust policy framework, informed by global best practices, will be the linchpin in transforming this initiative from a well-intentioned idea into a genuine catalyst for economic empowerment. Without these essential reforms and interventions, small-ticket SIPs might end up being a missed opportunity to truly democratise finance in India.

This article was first published in The Indian Express on 27th February 2025.