MSC launched the ‘Financial Inclusion Lab’ in India—a one-of-its-kind incubation program that aims to address financial exclusion. The lab will provide intensive consulting, catalytic support, prototyping capital, and customized services to early-stage FinTech start-ups that focus on the low- and middle-income (LMI) segments.
The USD-9.5-million initiative will identify and bring to scale early-stage FinTech start-ups that help LMI families. The start-ups will enable access to and use of appropriate financial products and services, such as savings, credit, and insurance for LMI households. The Lab is part of IIMA-CIIE’s Bharat Inclusion Initiative (BII), a program that incubates and supports start-ups that develop technologies to benefit under-served communities in the areas of livelihoods, financial inclusion, health, and education.
The Bharat Inclusion Initiative receives support from Bill & Melinda Gates Foundation, the Michael & Susan Dell Foundation, and the Omidyar Network. The overall initiative would channel approximately USD 25 million over the next 3-4 years to back start-ups that use the ongoing digital transformation in India to create access to services for hundreds of millions of families.
At the time of writing, the Financial Inclusion Lab was gearing up to incubate six cohorts covering about 60 start-ups over a period of four years.
In India, MSC has have been associated closely with the growth story of M-PESA, Vodafone’s mobile money transfer service. We have been instrumental in providing technical support, especially in building agent networks. On applying for M-PESA, customers get a mobile wallet issued by Vodafone and a mobile money account with ICICI Bank. Customers can access the account through USSD. Vodafone had launched a mobile application for this purpose.
MSC experts studied the ease of use of the USSD service from a user perspective to review navigation and content. We conducted primary research in five states in India to develop recommendations on improving the UI of M-PESA’s USSD platform and suggestions for improvement in platform communications. M-PESA implemented these changes, which had a positive impact on its 3-million-strong customer base at the time.
MSC undertook an MSME landscape study commissioned by Reserve Bank of Fiji (RBF) and Market Development Facility (MDF), a program funded by DFAT. MSMEs contribute to 18% of the national GDP in Fiji, and the central bank has been keen to strengthen them.
MSC’s research was a first-of-its-kind study that focused on enterprise development, including business incubation, advisory services, and access to finance. The study helped RBF, MDF, and ministries to develop strategies and formulate policy interventions for MSME development.
The stakeholders accepted the key recommendations, including setting up of a development finance institution and the amendment of the definition and classification of MSMEs. Other recommendations accepted include rationalizing compliance processes, such as business registration and licensing, improving market linkages, and providing business incubation and advisory services to MSMEs.
The project culminated with RBF constituting a task force to commission a feasibility study to develop an MSME bank in Fiji.
MSC provided technical assistance to non-bank financial institutions to promote the growth and sustainability of urban micro and small enterprises in India.
MSC advised five institutions—an MSME-focused financial institution, two microfinance institutions, a leading agent network manager, and a peer-to-peer network. The technical support included a survey in five states of India, development of MSME strategies for the institutions, and the development of products, processes, and systems. We also developed a statistical credit engine based on predictive data analytics that helped underwrite enterprise loans.MSC supported the financial institutions to pilot-test a new product and ensured that they achieved success.
The pilot scaled to a combined INR 1 billion (USD 15 million) portfolio in less than a year. After the project, the partner institutions rolled out the microenterprise lending (MEL) product and diversified into new business segments. The MEL product became a runaway success and an inspiration for the sector to adopt a successful model.
The Michael & Susan Dell Foundation commissioned this project.
MSC worked with IFC to train and build the capacity of Indian farmer producer companies (FPCs) on governance, financial management, risk management, and business planning. We conducted a training-needs assessment and developed training modules besides conducting a training-of-trainers sessions, all using adult learning principles. We developed replicable and sustainable capacity-building models to support the use of the curriculum, content, toolkits, and methodology across various states and geographies.
The program resulted in nearly a million smallholder farmers being trained. Several financial service providers are now able to extend significantly more credit to farmer producer organizations and their member farmers. This has been made possible because of better management, operations, and governance, which stem from MSC’s training and capacity building. Many financial service producers have also adopted the curriculum. MSC’s training now enables them to train and skill producer organizations at scale.
Visa commissioned a secondary research on the global emerging middle class, with a particular focus on three markets—Nigeria, the Philippines, and Peru. The research uncovered key customer insights to help Visa design a go-to marketing strategy in the global emerging economies.
MSC studied the sources and uses of cash by these segments. Our teams worked on understanding consumer needs, behavioral dynamics, and emerging trends. We assessed and analyzed opportunities for the use of digital financial services and products.
There has been a significant growth in consumer preference for digital payments in each of these countries over the past three years. According to the National Bureau of Statistics of Nigeria, retail digital transactions have grown by 202% in terms of volume between 2015 and 2018. Of these, card-, internet-, and mobile-based transactions have grown nearly 600% during this period (report). Likewise, according to a consumer survey by Visa in the Philippines, 57% Filipinos mentioned a preference for electronic payments in 2017, compared to 46% in 2015.
The report is available here.
