Awaaz.De: Mobile-based interventions for social change

Posted on by MSC

This blog talks about a start-up called Awaaz.De, part of 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.

Birth of an idea

A decade ago, Dr. Neil Patel decided to look beyond his home state of California and apply his Stanford University Ph.D. research to pressing problems in international development. His thesis won awards at world-class academic conferences, including the CHI conference, which focuses on innovations in interactive technology and brings technology for development research into mainstream academia.

Neil explored the design and deployment of Information and Communications Technologies (ICTs) to empower underserved populations. During his research, Neil developed a prototype of a mobile communications platform that cuts across language and literacy barriers to disseminate contextual and relevant content and collect data from farmers in Gujarat. The prototype also allowed users to post to a voice message board, which people could access through simple phone calls.

Dr. Tapan Parikh, Neil’s advisor at the University of California, Berkeley, nudged him to turn this idea into reality. Thus, Awaaz.De was born. The start-up’s current technology platform builds on more than 10 years of research (Patel et al., ICTD 2012) and a two-year Harvard RCT, which estimates that every USD 1 invested into its systems generates USD 10 in additional income for end-users.

The journey so far

Awaaz.De is a FinTech enabler and social enterprise based in India that works to expand access to finance for the underbanked. Awaaz.De’s 360-degree Customer Connect sends personalized, interactive nudges and confirmations throughout the customer’s lifecycle. This drives market-proven results for loan collection and up-sell of products and empowers customers to report discrepancies and make informed financial decisions. Currently, Awaaz.De caters to 8-10 million customers each month, which primarily include low-income women from rural geographies. It also works on feature phones, which is the most commonly used phone among the low- and moderate-income (LMI) customers of Awaaz.De’s clients.

In its early years, Awaaz.De scaled its work in agriculture through partnerships with Digital Green and Precision Agriculture for Development. It worked with many development sector organizations in health, education, and financial inclusion. Awaaz.De raised seed funding from the Aavishkaar-Intellecap angel network, Sattva Capital, and IIM-A’s CIIE.CO. With funding for research and development from the Bill & Melinda Gates Foundation, Awaaz.De developed and launched its platform for the financial inclusion sector in 2016.

Since then, Awaaz.De has partnered with many leading financial institutions, including Axis Bank, Ujjivan Small Finance Bank, L&T Financial services, and Samasta Microfinance. These institutions rely on Awaaz.De’s platform to improve collections, drive growth, cut operating expenses, and accelerate digital transformation. Awaaz.De’s clients also use its SaaS platform to engage and acquire last-mile customers through mobile communication in more than 10 local languages.

The roadblocks

In 2020, the COVID-19 pandemic disrupted the core business operations of Awaaz.De and its partners. As businesses came to a grinding halt, the Awaaz.De team immediately shifted gears. They focused on identifying opportunities to use their platform to help partner institutions send critical communications to their customers at scale. These communications ranged from tips from public health experts to prevent COVID-19 to information on eligibility for government entitlements, such as benefits under PMGKY and the moratorium on EMI announced by the central bank. Awaaz.De bore the entire cost of these messages to facilitate people’s access to reliable information.

As the microfinance industry rebounded, Awaaz.De’s platform became more critical than ever. It enabled financial institutions to strengthen direct, digital connections with their customers across India, at a fraction of the cost—less than 95%—of telecalling. Despite its many challenges, the pandemic offered Awaaz.De and other innovative FinTech companies a once-in-a-generation opportunity to accelerate digital transformation.

Support from the FI lab

As a part of the Lab’s accelerator program, CIIE.CO and MSC supported Awaaz.De with a set of mentoring and technical assistance (TA) activities. Based on its call data, we helped the organization identify a correlation between call-response patterns and the tendency of customers to default on loan repayments.

We conducted the following two levels of analysis on the dataset:

  • The first level identified high-risk and low-risk customers based on their behavior on loan installment reminder calls using variables like average time spent on a call, calls missed, among others.
  • The second level ascertained the relationship between branch locations and high- and low-value customers.

Support from the Lab helped Awaaz.de uncover new ways to provide more robust analytics and recommendations to its partners, such as banks, non-bank financial corporations, microfinance institutions, among others. This paved the way to deepen their engagements with its partners strategically.

Plans for the future

Awaaz.De continues to grow and diversify its customer base in India and abroad. It collaborates with like-minded organizations and uses their expertise and the immense potential of ICTs to create social impact.

The COVID-19 pandemic has accelerated the digital transformation of the financial inclusion sector. The crisis has also created a demand for innovative FinTech solutions to reduce dependence on field staff, use alternative data streams for underwriting and up-selling, and scale cashless transactions. With its existing reach that continues to grow and long-standing institutional partnerships, Awaaz.De seeks to meet this demand and play a pivotal role in accelerating digital transformation for its clients and end customers.

Awaaz.De has also been building a personalized and interactive platform through the micro-segmentation of its target audience, algorithmic push-messaging, and AI-powered chatbots to enhance user experience. It plans to explore opportunities to improve voice technology in speech analytics and recognition, integrating voice biometrics, speech-to-text, and text-to-speech to make the platform more secure and scalable. We are excited to watch its journey unfold in the next few months.

This blog post is part of a series that covers promising FinTechs that make 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

EasyPlan: Easing the middle-income segment into a more robust savings behavior

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This blog looks at EasyPlan, a startup that was part of 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

EasyPlan’s journey till now

Nihar, Siddhi, and Mayur are in their mid-twenties and reside in India’s urban locations. They fall under the middle-income segment (Figure 1) and prefer flexible saving options to achieve their short-term goals. Earlier, they could not save efficiently as most banks do not offer short-term saving instruments at desirable interest rates. Thus, they ended up spending their income on discretionary expenses. EasyPlan emerged as a solution with its offering of mutual fund-linked savings. It gives its customers the flexibility to save as much as possible, withdraw within a day’s notice, and earn higher returns than traditional savings products. These features encouraged Nihar, Siddhi, and Mayur to try EasyPlan’s simple and intuitive mobile application, and soon they started saving money. (See our previous blog for more on EasyPlan).

EasyPlan has reached a customer base of 200,000 in India. The startup has impacted the lives of its customers in several ways. As illustrated below, EasyPlan has helped Nihar, Siddhi, and Mayur fulfill their goals by helping them build regular saving habits and providing them accessible and flexible options to invest in.

The COVID-19 pandemic altered the behavior of EasyPlan’s customers and redefined the startup’s business approach

As COVID-19 ravaged people’s lives, India witnessed a significant change in consumer sentiments. With economic instability and job losses leaving profound impacts on all strata of society, people from across income segments changed their financial behavior. While the GDP fell, people grew increasingly uncertain about future incomes and started to save whatever they could, fearing “rainy days” ahead. People’s saving levels as a share of GDP increased from 10% in the first quarter of FY 2019-20 (Jan-Mar, 2020) to 21% during the same period in FY 2020-21 (Apr-June).

Likewise, people in the middle-income segments too saw the pandemic upending their lives. In India, the middle-income segment can be divided into three sub-segments—strugglers, aspirers, and the mid-affluent, as indicated in orange in Figure 2 above. Each sub-segment’s financial behavior is characterized by its financial health, demographic, socioeconomic, and behavioral factors. These differences play a crucial role in determining their perception, uptake, and preferences toward various savings and investment instruments.

In the wake of the pandemic, each sub-segment faced distinct sets of challenges that affected their livelihood (as depicted in Figure 2). Many of them saw their income decrease and faced a cash crunch during emergencies. EasyPlan observed similar changes for its customer base across these sub-segments. It analyzed the savings behavior of its existing base, which revealed that even though the income of people during the pandemic became irregular, the pandemic has strengthened savings behavior. This change in behavior also snowballed into EasyPan acquiring new customers from the middle-income segments. However, before doing so, it delved into understanding how the middle-income segment portrays diversity across the wider income range that builds this segment.

EasyPlan then moved forward with a much more nuanced understanding of the savings requirements, risk appetite, and needs of the various sub-segments, as highlighted in Figure 2 above. This understanding helped them target the new customers as per their needs and support them throughout the pandemic. As a result, EasyPlan could retain its existing customer base while onboarding a new set of customers by tapping into their savings needs.

As seen in figure 3, the Lab investigated challenges that Mayur, Nihar, and Siddhi faced. The investigation identified factors that affected the behaviors of the sub-segments, as represented by the three personas, and influenced their perspectives toward different financial instruments. These factors include demography, socioeconomic situation, financial health, and goals. The Lab assessed various internal and external factors that play a vital role encouraging the adoption of mutual funds among customers, such as their level of financial literacy, preferences around liquidity, time horizon, risk resilience, complexity of products, and availability of the overall infrastructure.

With deeper insights based on market research and the Lab’s support, EasyPlan narrowed the target market to “Aspirers.” Accordingly, the EasyPlan team was tweaking its business strategy at the time of writing to stay ahead of the competition.

“This analysis helped us highlight the sub-segments that form a part of the bigger monolith of the middle-income segment in India and learn how these sub-segments portray varied needs in choosing savings instruments and possessing different levels of risk appetite. We also understood how their savings behavior changed during the pandemic.” — Manisha Pandita, co-founder, EasyPlan

Way forward

EasyPlan’s simple yet powerful business concept of goal-based savings for its target segment found resonance with a promising Indian neobank, Jupiter. Through collaboration and partnership, it envisions building a mobile banking application for India’s smartphone users. The platform will not act merely as a technology-empowered banking platform. Instead, it will serve as a finance app for users by giving a single view of their accounts across other banks along with their savings and spending patterns. EasyPlan’s savings solution will be an integral, and independent part of the platform—and it will complement Jupiter’s objective of acquiring new customers to use their savings products, along with its existing customer base which will get access to an advanced savings product.

This blog post is part of a series that covers promising FinTechs that have been making a difference to underserved communities. These startups receive support from the Financial Inclusion Lab accelerator program. The Lab is a part of CIIE.CO’s Bharat Inclusion Initiative, and co-powered by MSC. #TechForAll, #BuildingForBharat.

 

Frontier Markets: Building strong rural marketplaces

Posted on by MSC

This blog talks about a startup called Frontier Markets, part of 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.

The problem

Many energy enterprises produce innovative “green energy” products such as solar torches/lanterns but face barriers from a lack of awareness of, or trust in, the technology; and the absence of a localized distribution system. These factors impede the sale and delivery process to end-users, especially those in rural geographies. Frontier Markets identified these problems and converted this into an opportunity for last-mile distribution partnerships with enterprises with a strong market potential in rural India.

The solution

Frontier Markets digitalized while maintaining a human touch in its physical+digital or “phygital” delivery model. The startup’s business model is to onboard women entrepreneurs from rural areas, known as “Sahelis,” by partnering with local self-help groups (SHGs) and non-governmental organizations (NGOs). Frontier Markets then trains these Sahelis and gives them an app. The app is carefully designed to be intuitive and contains a catalog from which the customers can select the products they want. The Saheli records each selected item in the customer’s account and sends the aggregated demand from her verified customers to the Frontier Markets fulfillment team. This team collaborates with the relevant supplier and logistics teams to deliver the items to the customer’s doorstep with Saheli’s support.

Thus, this business model allows Frontier Markets’ e-commerce platform to offer rural consumers a wide range of products and services. The startup’s gender-sensitive and data-driven approach create a sustainable way to achieve large-scale rural growth and provide dignified livelihood opportunities to rural women.

This approach also helps to achieve trusted and strong household connections in previously hard-to-reach rural areas. Such connections, in turn, open channels into the untapped rural market for distribution of global and local brands of consumer goods that were inaccessible to this market because of the high cost of distribution for these brands. The model employed by Frontier Markets has proved to be beneficial for product companies too. It uses a robust, regional language-based technology platform to equip the Sahelis to fulfill orders. This allows Frontier Markets to capture rich rural consumer data that provide valuable insights. These insights help the product companies grow, curate, and refine their product offerings—creating a data feedback loop that enables rural innovation at scale. Furthermore, product companies do not just serve the massive untapped rural consumer base. The insights allow them to offer new and curated product lines to their rural consumers.

The impact

The Sahelis have benefitted both socially and economically from Frontier Markets’ unique approach. Frontier Markets has developed a market for its low- and middle-income consumers—whose households experience volatile and unpredictable patterns of income, ranging between USD 2-10 per day. Frontier Markets has built a network of 10,000 rural entrepreneurs, who collectively generated a sales revenue of INR 250,000,000 (USD 3,362,215) since 2015. Frontier Markets has delivered more than a million products and services to the doorsteps of over 350,000 rural households within 48 hours of orders being placed.

Frontier Markets’ journey has seen its fair share of obstacles. In its early days (2011-2015), the startup had to contend with a lack of a suitable ecosystem in the country, logistics-related problems arising due to bad roads, lack of mobile connectivity, and unreliable electricity in rural areas. So initially, the organization had to work on a high-touch, tech-free model to reach rural customers and build trust.

Things changed in 2016 when the sudden policy move of demonetization of high-value currency notes. That gave a boost to digital payments and channels. Frontier Markets worked with digital services like Jio and Paytm to bridge the liquidity gaps faced by the startup’s consumers by giving credits and advances. It also partnered with local manufacturers to address shortcomings in supply chains.

The latest pivot

The rise of the COVID-19 pandemic, followed by a slew of lockdowns across the country, marked the next turning point for Frontier Markets. The organization had to pivot its product offerings away from prominently consumer durables and energy products. It now had to include essential grocery items, which were in great demand in the rural regions. The agile strategy of revamping its product base allowed Frontier Markets to sustain and grow despite unfavorable market conditions.

Support from the FI Lab

The FILab (CIIE.CO and MSC) has been involved closely with Frontier Markets as one of the startups selected for the Financial Inclusion Lab accelerator program.

Besides imparting workshops to refresh its skills on business strategy, product, and building robust organizations, among other areas, we supported Frontier Markets through mentoring and customized technical assistance in the use of existing data to deliver actionable business decisions. MSC’s technical assistance was along three lines:

  • Saheli profiling: To identify the factors that contribute to their performance
  • Market basket analysis (combination of products): To find which products can be grouped for cross- and up-selling
  • Customer segmentation: To identify loyal customers

Plans for the future

What does the future hold for Frontier Markets? The organization seems poised for growth and intends to raise USD 6,000,000 in its next equity round. The founder believes the fundraising will help Frontier Markets strengthen its existing Saheli network by 1,300% and increase the number of villages it serves by 1,250%. The startup also expects to expand its geographical footprint from three to seven states in partnership with NGOs and SHGs.

Frontier Markets also plans to diversify its products and services. Through its current platform and consumer insights, it hopes to deliver more value-added services in finance and agri-savings, insurance, loans, agri-inputs, and tools, among others, for its consumer base. It has successfully managed the precarious task of adopting new technologies while retaining a human touch through its Sahelis and customer-centric teams.

This blog post is part of a series that covers promising FinTechs that are making a difference to underserved communities. These startups 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

Women take the lead

Posted on by MSC

India is a hotspot for start-ups. However, the country has only 297 women-led tech start-ups and just two women-led unicorns. Women entrepreneurs face more challenges in their entrepreneurial journey as compared to men. This video highlights how start-ups under the FI Lab continue to empower women and pave the way for gender inclusivity.

The role of technology in bridging financing gaps for MSMEs

Posted on by MSC

Micro, small and medium enterprises (MSMEs) play a key role in a country’s GDP growth. However, several factors obstruct their access to formal financial services. This video highlights how start-ups under the FI lab have been trying to solve these challenges through alternate data sources and technology, and democratizing finance for the MSME segment.

Bridge2Capital: Breaking the patterns of the erstwhile normal

Posted on by MSC

This blog looks at Bridge2Capital, a startup that was part of 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.

The journey so far

Back in 2017, Bridge2Capital began with a simple idea—to provide working capital support to retail merchants in India, including local mom-and-pop stores called kiranas in a timely and easy manner. Our earlier blog narrated Bridge2Capital’s journey as it adopted an uncommon, yet robust, strategy of Goods and Service Tax (GST) based invoice discounting. Instead of paying to its borrower, Bridge2Capital directly paid to the supplier to ensure the end-use of funds. Under this process, retailers got timely access to working capital to run and grow their businesses and serve more customers. As retailers earn over a period, they pay back the capital in evenly distributed installments over a few weeks or months.

Bridge2Capital has on-boarded more than 1,200 shopkeepers on its digital platform till now. The startup has grown its network from about 300 retailers in 3-4 cities when it joined us in the first and second cohort to explore new geographies and increase its footprint. Bridge2Capital has now started to increase its digital footprint and enhance the overall business of shopkeepers by adding various new products.

How did COVID-19 change Bridge2capital’s strategy?

The government imposed nationwide lockdowns in March, 2020 to flatten the curve of infection and prepare the country to handle the crisis of COVID-19. The pandemic slowed down the economy and brought financial hardships for kirana retailers. Curfews and the strict lockdown had a severe impact on the livelihood of retailers who borrowed from Bridge2Capital.

To provide relief to these retailers, RBI announced a moratorium on loan repayments. Many borrowers of Bridge2Capital found it difficult to pay back their installments and opted for the moratorium. Yet unlike many other startups that succumbed to the pressures of the pandemic, Bridge2Capital found an opportunity in the adverse time to re-think, re-plan, and re-emerge with a holistic strategy. It focused on three key pillars to redefine and adapt its business to a new normal.

  1. Human capital: Despite tough times, the management did not lay off a single team member. Instead, it found ways to keep them employed gainfully. With the focus on customer care, Bridge2Capital redefined the KRAs of its staff. It cross-skilled its staff to play multiple roles, based on ever-evolving needs during the pandemic and encouraged and supported them to further the company’s vision.

  1. Product development: With changing needs of their customers in these times, Bridge2Capital realized the opportunity to introduce relevant products. As the pandemic struck, the demand for savings and insurance products shot up due to the prevailing uncertainty, and the resultant risk to health and future earnings.

Using a human-centered design approach, Bridge2Capital has been building a full-stack financial solution for its shopkeepers that supports their varied financial needs. To arrive at the right solution, the startup interviewed existing and potential customers and brainstormed with the frontline sales team that deals with retailers, UI/UX specialists, and tech teams.

Based on these discussions, Bridge2Capital worked on solutions, such as gold-based savings, digital insurance products, and pension services for its existing network of shopkeepers to build their financial well-being. The startup also introduced a digital ledger to help its shopkeeper borrowers to manage their finances easily. This feature helps the borrowers engage more with customers and also generates additional data sets for the company.

3. Digital expansion: As COVID-19 restricted the scope to reach customers physically, Bridge2Capital decided to go fully digital. With a focus on digital marketing, the startup hired skilled resources—even in these difficult times—to set up a plan to grow the business.

 Before the pandemic, the process of financing invoices was fully digital, but on-boarding and customer support were highly human-centric and manual processes. Bridge2Capital changed some of those manual processes like replacing physical- with remote- (video) KYC, moving from physical support to onboarding customers with telephone-assisted processes, among others.

To spruce up its digital communication, the startup focused on targeted social media campaigns for brand building, customer acquisition, and cross-selling. These efforts paid off and helped Bridge2Capital expand rapidly while reducing the costs of customer acquisition.

The FI Lab supported Bridge2Capital in building a holistic strategy

  • As the pandemic was making everyone learn new skills and new ways to work, the Lab also used remote assistance tools to help Bridge2Capital to create a structured plan to fulfill its objectives. The Lab ran a customized strategic business planning (SBP) workshop for founders and senior team members. This helped condense their ideas by understanding the competition, building on their objectives, and thus prioritizing the company’s goals and resources for the next three years. The SBP also helped the management analyze strengths and weaknesses and build agility in business operations.
  • Considering the constraints imposed by the pandemic, the Lab worked with Bridge2Capital to create a digital marketing roadmap to engage various stakeholders. This included assistance to create brand awareness, loyalty programs, and digital on-boarding for customers. In particular, the Lab helped Bridge2Capital to focus its marketing efforts on the targeted low-middle-income (LMI) sub-segment of kirana store owners. With its nuanced approach, the roadmap created an impactful market strategy to increase conversions, build trust, and enhance Bridge2Capital’s brand value for this sub-segment and provide a strong mechanism to resolve grievances to refine the overall experience of its customers. 

Way forward: The future is digital

COVID-19 has triggered a complete digital transformation. Accordingly, Bridge2Capital will focus on going 100% digital in the next six months. Goal-based campaigns, referral bonuses, and influencer marketing will continue to drive conversion and engagement. For effective outreach, the startup will focus on understanding the needs, habits, preferences, and behavioral triggers of the customer segment. The insights will help deliver relevant products and create effective communication and strengthen customer relationships.

Bridge2Capital has also been in talks with leading organizations for strategic partnerships. It also intends to continually explore new geographies as it goes 100% digital, to create a nationwide presence. While Bridge2Capital improves its business and marketing strategy, it will continue to focus on strengthening the financial profile of small shopkeepers and their empowerment through unique financial solutions that suit their needs.

This blog post is part of a series that covers promising FinTechs that have been making a difference to underserved communities. These startups 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