Transforming communication protocols for social assistance programs in Indonesia

Posted on by MSC

In response to the COVID-19 crisis, nations across the world launched 1,100 social protection programs (SPPs) to help more than 1.8 billion people. While this looks impressive on paper, often, less than 50% of the intended recipients know of the programs or how to access these benefits.

Effective communication of SPPs is essential to avoid misconceptions, undesired behavior, and setbacks in implementation. For example, poor communication of the rationale behind the program made farmers in India reluctant to enroll for Direct Benefit Transfers in Electricity (DBTE). Designing an effective communication process for social protection programs remains a global issue, more so in times of emergencies like COVID-19, when the assistance needs to reach the most excluded segments quickly and efficiently. In this paper, we present a comprehensive framework for demand and supply-side communication needed between the government and relevant program stakeholders, especially for SPPs announced as part of emergency response during crises.

Social protection programs in Indonesia: The context

The Government of Indonesia (GoI) currently implements more than 80 social assistance programs. Of these, 12 programs were launched or modified in response to COVID-19. These SPPs cover more than 20 million low-income beneficiaries through conditional cash transfers, food staples, and utility bill waivers.

In addition, the GoI has also embarked on the ambitious G2P 4.0 vision to improve the delivery of existing SPPs. The proposed reforms will enable beneficiaries to select their choice of payment service provider and create opportunities for the private sector in the delivery of social assistance. However, this will further add to the complexities of communication around four key building blocks of the proposed vision, as shown below. In addition, a robust and accessible grievance resolution mechanism will also be critical to allow beneficiaries and frontline workers to submit queries and register complaints.

Challenges in existing communication and social efforts around the delivery of social protection programs

The GoI has published clear guidelines for the communication and socialization of its two most significant SPPs—Program Keluarga Harapan (PKH) and Kartu Sembako. The guidelines state that all related information should be delivered to diverse stakeholders. Beneficiaries are the primary stakeholders, while local governments, facilitators,[1] and banking agents or e-warongs are other key stakeholders of these programs. The communication content comprises five major topics – the onboarding process for beneficiaries, transaction with KKS (Kartu Keluarga Sejahtera)[2] cards, confirmation of fund transfer in every disbursement schedule, program-related policies for the beneficiary, and transaction compliances for e-warongs.

Despite such standardized guidelines, challenges persist around awareness, communication, and socialization efforts directed at beneficiaries and frontline workers. For example, MSC’s study on PKH revealed that only 70% of beneficiaries were aware of their exact entitlements. Our most recent study on the impact of COVID-19 on PKH implementation validated these findings. While most beneficiaries were aware of the revised disbursement schedule, a majority of them remained unaware of their modified entitlements.

The existing communication and socialization efforts suffer from the following constraints:

  1. The education and socialization process relies heavily on in-person interactions between field facilitators and beneficiaries. In addition, such interactions rely on physical aids for communication. This makes the entire process resource-heavy, logistically cumbersome, and difficult to scale.
  2. Key messages are not enforced properly, which leads to inconsistent communication. Moreover, local context and the perception of field teams can sometimes influence the content of the message.
  3. Evidence suggests that beneficiaries lack awareness of the resolution process and are ill-equipped to report or manage grievances. Formal grievance resolution systems remain inaccessible for most.

The COVID-19 pandemic has further dampened awareness and socialization efforts. Restrictions on movement imposed to curb the spread of the virus forced the Ministry of Social Affairs (MoSA) to limit in-person interactions between the frontline staff and beneficiaries. Frontline workers, such as PKH facilitators were allowed to conduct regular meetings only in green zones—areas with a low number of COVID-positive cases. MoSA also mandated frontline workers to follow strict health protocols, adjust the verification process, and relax requirements for the verification of elderly and severed disabled beneficiaries. While these measures were important from health protocols standpoint, it also restricted communication efforts in the field, which highlights the need for digital alternatives to program communication.

Can digital channels streamline communication and socialization efforts in SPP delivery in Indonesia?

Indonesia has a booming digital economy that is predicted to reach USD 124 billion by 2025, up from USD 44 billion in 2020. Of the 180 million internet users in the country, 150 million are active users and 105 million are service platform users. 84.92% or 70,670 of the 83,218 villages in Indonesia can access 4G network services. A recent study from Google-Temasek-Bain points out that the COVID-19 pandemic has boosted digital adoption, with 36% of first-time internet users in Indonesia. The number of such new users was much higher in non-metro areas. MSC’s most recent study on the impact of COVID-19 on PKH implementation found that around 50% of beneficiaries owned a personal mobile phone, most of which were smartphones.

These numbers indicate an opportunity for the country to utilize digital channels in SPP delivery. Many government agencies in Indonesia have been using technology to streamline their public service delivery efforts. Recently, the Health Ministry of Indonesia collaborated with Facebook and WhatsApp to disseminate structured information about the vaccine for COVID-19 and developed a chatbot to accelerate registration for the vaccination of medical staff. Regulatory agencies, such as OJK and BI have also chalked out ambitious plans to use technology to supervise the financial services sector efficiently.

What potential digital solutions can help streamline communication, socialization, and grievance resolution efforts for the delivery of social protection programs?

  1. Chatbots powered by artificial intelligence (AI) and natural language processing (NLP)

Policymakers across the globe have increasingly started to use AI- and NLP-powered chatbots to digitize communication with the general population. Modern chatbots use NLP capabilities to understand text communication and respond with either standard messaging templates like FAQs or channel the communication to the relevant live agent for resolution. These chatbots can be hosted on multiple platforms including SMS, web portals, social media platforms, and mobile applications, among others. They can also be connected to multiple databases as well as customer relationship management (CRM) systems to provide real-time information on relevant queries and maintain digital records of communication. During the pandemic, governments across the world used chatbots to deliver behaviour change communication on COVID-19 safety protocols. Countries like Myanmar continue to use chatbots for financial education, especially for micro-entrepreneurs. Policymakers in Indonesia can also consider deploying chatbots, especially to make grievance resolution systems in SPPs more accessible for beneficiaries and frontline workers.

  1. Social media platforms to communicate with relevant SPP stakeholders and gauge public perception on the effectiveness of SPP delivery

The popularity of social media platforms like Facebook, Instagram, Twitter, and WhatsApp continues to grow in Indonesia, even among low-income segments.

In this context, the government must invest resources to increase its social media presence on multiple platforms. This will enable transparent two-way communication with relevant program stakeholders. The government can also use social media platforms as channels to share important program updates and educate relevant stakeholders on the aspects of social assistance delivery.

Additionally, Indonesian policymakers can also explore opportunities to gauge public sentiments on SPP delivery by using big data analytics on the social media activity of citizens. Such a solution can serve as critical monitoring and supervision tool and the insights can enable the government to make processes for SPP delivery more efficient. Policymakers across the globe have started to institutionalize such tools to draw important policy insights from the social media activity of citizens. For instance, the Central Bank of Kenya used a sentiment analysis tool to monitor consumer complaints against digital credit providers.

  1. AI-powered speech recognition technology and outbound Interactive Voice Response (IVR) for oral segments

Social protection programs often target segments that are new to technology and perhaps new to the formal financial system. Many of these beneficiaries are “oral,” and not comfortable with written text. According to our most recent study on PKH, 64% of beneficiaries have completed only primary education. Many of these beneficiaries may be effectively oral. In-person interactions, visual aids, and voice-based technology solutions like IVR are the most effective means to communicate effectively with the oral segments. For instance, the Government of India used a missed-call-based IVR with pre-recorded FAQs to increase the awareness of COVID-19 in rural areas. Indonesia can use similar measures to enhance the effectiveness of its SPP communication and education efforts. In addition to IVR, the government can also explore opportunities to utilize speech recognition or analytics technology to automate and supervise operations at call centers. Though still in the early stages of development, the application of this technology has shown positive results in generating deeper insights into the satisfaction levels of customers and beneficiaries with products and services.

The way forward

As the government continues to expand its existing social protection efforts, it needs to enhance the awareness and communication of these programs. MSC’s guiding principles can be synchronized with digital efforts to ensure that the right information reaches intended stakeholders. The government can use this framework and guide to optimize the implementation of digital communication for social protection programs.

[1] The facilitators for PKH are called PKH facilitators, and those for the Kartu Sembako program are called TKSK (Tenaga Kesejahteraan Sosial Kecamatan)

[2] KKS or Kartu Keluarga Sejahtera is a basic savings account for the delivery of PKH and Kartu Sembako payments to beneficiaries. KKS cards enable beneficiaries to withdraw the benefits received through ATMs, banking agents or e-warongs, and bank branches.

Impact of COVID-19 on FinTechs: Senegal

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Before the COVID-19 pandemic struck, the Senegalese FinTech industry was growing steadily. Gradually stimulating the interest of investors, FinTechs in Senegal rolled out a range of products and services to bridge gaps in existing financial services. This report attempts to understand the impact of the pandemic on FinTechs in Senegal, the measures policymakers took to support FinTechs, and their effectiveness. It further highlights the sentiments of investors toward this sector.

 

Click here to read the report in French.

Impact of COVID-19 on FinTechs: Côte d’Ivoire

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Before the pandemic struck, the Ivorian FinTech industry was growing steadily. Gradually stimulating the interest of investors, FinTechs in Côte d’Ivoire rolled out a range of products and services to bridge gaps in existing financial services. This report attempts to understand the impact of the pandemic on FinTechs in Côte d’Ivoire, the measures policymakers took to support FinTechs, and their effectiveness. It further highlights the sentiments of investors toward this sector.

 

Click here to read the report in French.

Can digital approaches enable better access to formal financial services to MSMEs?

Posted on by MSC

Experts estimate that the digital credit industry worldwide will be worth more than USD 890 billion by 2024. Users of digital credit around the world appreciate its convenience and immediacy. While digital credit has catalyzed access to finance for the mass market, it has barely begun to meet the needs of MSMEs.

The demand for affordable, relevant, and quality financial services for MSMEs has grown over the past few decades. In 2010, McKinsey estimated that the total unmet need for credit by all formal and informal MSMEs in emerging markets was worth USD 2 trillion. However, a recent study by CGAP estimates that the unmet need for credit among micro and small enterprises (MSEs) in emerging markets is around USD 4.9 trillion. Several factors constrain access to credit for MSMEs. These include the high cost of accessing credit, limited awareness, lack of credit history, and short repayment periods.

The COVID-19 pandemic has further reduced the supply of formal financial services to MSMEs, which currently face a squeeze on credit, have limited access to capital, and face stifled growth. The process of their recovery from the debilitating effects of the pandemic will call for enhanced access to suitable financial services. As per our research, almost one-fifth of entrepreneurs gradually began using digital platforms to sell their products during the pandemic. As the entrepreneurs build their digital footprint and profile, financial service providers have an opportunity to use digital information to assess creditworthiness and offer digital credit facilities.

The chance to use digital approaches to enhance access to finance for the entrepreneurs

Financial institutions have a clear opportunity to enhance access to formal financial services to MSMEs by:

Supporting MSMEs to build digital footprint:

Financial service providers can increase access to finance for entrepreneurs by understanding their footprints better—whether they are digital or potentially digital. As the providers build the footprints of entrepreneurs, it is crucial to assess their readiness and receptivity to transition to a digital future and segment the entrepreneurs accordingly. For example, at MSC, we have learned that providers cannot promote merchant payments through standard “cookie-cutter” solutions. Therefore, we need to look at merchants as distinct personas to decipher their characteristics and explore ways to change their behavior. Our research identified that merchants embody one of four key personas: go-getters, receptive reticent, high-hanging fruits, and easy-catch merchants.

Notably, while MSMEs have some digital presence, most transactions remain in silos. The entrepreneurs themselves are not aware of the data trails they generate and remain in the dark about potential use-cases for data, now or in the future. Moreover, financial institutions cannot utilize the data trails fully to increase financial access. A snapshot of data trails generated by an entrepreneur below illustrates what data could financial institutions digitize to enable better credit assessment.

Lenders and financial institutions can build a nuanced understanding of the status of the digital data footprint of entrepreneurs across different segments and activities. Assessing the digital footprints may include answering questions, such as:

  • What are the digital data streams? Who owns them?
  • What is the availability of data? Is it aggregated or disaggregated? Is it analog or digital?
  • What is the depth and quality of the existing digital data footprints?
  • How can data be aggregated and ownership restored with the entrepreneur?
  • Does the entrepreneur have control over the data to open it to financial institutions and inform credit decisions?
  • How can the entrepreneur use data for better services and services at a better price point?
  • In light of regulations on data privacy, how does a financial institution ensure security and ethical use around ownership, usage, handling, storage, and data transfer?

Once the financial institutions have helped MSMEs enhance their digital footprints, they may use the digital data to develop new business models, innovate risk management approaches, and formulate and implement new products anchored on alternate data.

Building skills and capacities of MSMEs on business management

As discussed in our previous blog, “Digitizing the operations of MSMEs: A big step to strengthen their resilience”, we argue that financial institutions may support enterprises to trust, navigate, and use technology to market their products and services, receive payments, and access digital financial services. Carefully designed and delivered digital skilling programs based on an understanding of their mental models can enable MSMEs to use digital technology to grow their businesses.

Digitizing enterprise finance operations

In our blog, “How can financial institutions use digital transformation to help MSMEs recover from the impact of the COVID-19 pandemic?” we argue that financial institutions may have to use a multi-pronged approach anchored on digitization to support MSMEs as the entrepreneurs revive businesses and build resilience through several avenues. These ways include:

  • Developing a digital business model and digital solutions for MSMEs;
  • Digitizing front-end and back-end processes;
  • Using an omnichannel approach and embed digital channels to distribute financial services to enterprises;
  • Providing superlative user experience using a digital engagement approach.

Developing and implementing adequate digital products for MSMEs

Financial service providers, including FinTechs, have the opportunity to design and implement customized and relevant digital products for MSMEs. Such products may include:

·  Short-term loans with a tenure of a day to a week to help market traders who currently use loans repayable over weeks or a month to finance their business cycles, which run from early morning to afternoon. Mahindra Finance, a non-bank finance company from India has plans to launch digitally-driven small-ticket loans in 2021.

·  Goal-based savings and loans offer a new approach to wealth management that helps an individual plan for a specific life-cycle goal. Such products have an appropriate financial planning tool embedded in the app or USSD interface. Many financial institutions offer goal-based products to their customers. ALAT, Nigeria is Africa’s first fully digital bank launched by Wema Bank. It provides simple, automated saving plans that are goal-based and earns an annual interest of 10%—triple the typical bank rate. Similarly, Equity Bank offers EazzySave to helps customers save toward a goal and often backs it up with a loan.

  • Digital credit for enterprises: Digital credit provides instant, automated, and remote credit to users. Millions of users have benefited from digital credit to meet their consumption needs. While some enterprises use digital credit for their sundry needs, digital credit is seen as a last resort to meet larger working capital needs. Digital credit providers may develop MSME-specific products to on alternate data sources, customized credit-scoring approaches, and aggregating existing and potential digital footprints. We see this in action as in the case of U GRO Capital, a small-business lending platform from India. The platform plans to roll out an end-to-end digital lending platform for the sector and plans to reach out to 500,000 MSME clients.
  • A merchant cash advance (MCA) is a point-of-sale (POS)-based loan product for entrepreneurs offered for a fixed tenure (usually less than 24 months) to meet their working capital needs. Such products enable automatic access to credit as lenders can tap into the entrepreneurs’ cash-flows to use them to help make credit assessments, disburse loans, and collect repayments linked to the sales automatically. The sales-linked repayment allows the entrepreneurs much more flexibility than a regular loan. Bidvest Bank in South Africa offers merchants a loan facility based on the business’s future turnover. It has designed MCA alongside Merchant Capital and catering South African MSMEs. Similarly, Neogrowth in India assesses creditworthiness based on the cash flows through the POS terminals of merchants. It electronically collects loans each day from the sales on the POS terminals, thus addressing issues around seasonality in merchants’ business.
  • Receivables-based, invoice-based, and inventory finance help MSMEs easier access to credit. Like their larger counterparts, micro and small entrepreneurs also buy and sell on credit and maintain stocks and inventory—albeit in analog format. Lenders could help MSMEs digitize sales, cash flows, stock movement, invoices, receivables, and inventory details to assess credit risk and extend credit at a discounted value to the entrepreneurs. The receivables, invoices, and inventory could also act as a psychological guarantee. The increasing use of digital contracting and push from governments toward formal invoicing by enterprises irrespective of their size provides further impetus for this type of finance. Reserve Bank of India, which is India’s central banker, instituted an online bill-discounting platform, the Trade Receivable Discounting System (TReDS). This gave MSMEs the power to raise funds by selling trade receivables from corporates.

How can we help providers and entrepreneurs utilize digital approaches to enhance access to finance for MSMEs?

The market offers a clear opportunity to use digital tools to enhance access to finance, skills, and market linkages for enterprises through a multi-pronged approach at the level of policy and regulation, providers, and entrepreneurs. Such an approach will help resolve the legal, operational, and other barriers for enterprises to access finance, skills, and market linkages. Significantly improving digital financial services design and delivery will require an ecosystem-wide approach to enable entrepreneurs to choose, use, and prefer digital tools and approaches.

MSC plans to build a holistic Enterprise Finance Lab (enFinLab) to:

  1. Support providers develop customer-centric products;
  2. Support enterprises transform digitally;
  3. Build digital platforms to enhance better access to finance, skills, and market linkages; and
  4. Work with policymakers and regulators to build a conducive environment for the growth of enterprises.

We invite investors, donors, and financial institutions interested in partnering with us to get in touch to participate in the enFinLab and enhance access to credit to millions of un(der)served enterprises

The Helix Institute at MSC Masterclass 2 with Leesa Shrader, AgriFin Accelerate Program Director at Mercy Corps

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In our second Master class series, we spoke to Leesa Shrader, the Director of the AgriFin Accelerate Program at Mercy Corps. She is a trailblazer in the financial inclusion space and specifically in the agriculture sector. She spoke at length about her professional journey, key achievements, challenges and lessons learnt and also leaves a few nuggets of wisdom for the future breed of women leaders.

This conversation goes deeper to focus on:

  • The role of agricultural digital platforms in agricultural transformation, and inclusive financial systems in Sub-Saharan Africa. She gave us a walkthrough Digifarm, one of the successful cases of the agriculture digital platforms and lessons learnt in building future platforms
  • Key lessons on partnerships and collaborations emerging from the current digital agriculture platforms
  • The role of youth in agriculture digital ecosystems
  • The medium to long-term impact of COVID-19 on inclusive agriculture finance systems and
  • Recommendations for the players in the agriculture ecosystem

Click here to watch more of our master classes

How can financial institutions use digital transformation to help MSMEs recover from the impact of the COVID-19 pandemic?

Posted on by MSC

The COVID-19 pandemic has left micro, small, and medium enterprises (MSMEs) decapitalized. With nowhere to turn for reasonably priced credit to reboot their businesses, many will likely be forced to shut down.

Though MSMEs contribute significantly to the economy and employment, they face severe challenges in access to formal financial services. The COVID-19 crisis has exacerbated this lack of access.

In May, 2020, at the peak of the pandemic, only 22% of the enterprises that MSC surveyed in India, Indonesia, Bangladesh, the Philippines, Uganda, Kenya, and Ghana had managed to access credit from formal financial sources. With the onset of COVID-19, the incomes of MSMEs dropped while their access to credit decreased. Struggling to manage liquidity in the wake of rising household and business expenses, MSMEs continue to dip into their savings.

What are the key constraints that limit the growth of MSMEs?

The illustration below highlights the range of challenges MSMEs face. More than 35% of enterprises rated limited access to financial services as the key constraint that prevents them from growing their businesses.

Several studies on the MSME sector suggest that the multiple growth constraints mentioned above can be linked largely to inadequate access to finance. Lack of access to formal credit from financial institutions forces most entrepreneurs to seek funds from family, friends, and informal lenders. Though easily accessible, informal credit comes at prohibitive costs with interest rates of 3–10% per month.

Why do MSMEs have limited access to formal finance?

The reasons for limited access to formal finance for MSMEs are as follows:

  • Information asymmetry: The inherent nature of MSMEs is the reason behind the demand-supply gap in access to finance. MSMEs are generally informal and young, have less publicly available information, and operate in unfamiliar sectors. This results in higher information asymmetries and risk, which discourages banks from lending to them.
  • Lack of documentation: Most MSMEs do not have enough assets that they can use as collateral. Moreover, financial institutions often require documents, such as certificates of incorporation.
  • Process inefficiencies: Most informal enterprises use manual processes, which are costly and inefficient. Process inefficiencies negatively affect record-keeping, cash flow management, and profit optimizing, and compromise loan appraisal metrics by financial services providers.
  • Limited digital footprints: Since most MSMEs are informal, the entrepreneur’s profile and business transactions are likely unrepresented or underrepresented in the formal financial ecosystem. This leaves the financial institution with limited digital transactional trails to build a credit score and provide customized financial solutions.
  • Perceived as low-return enterprises: Financial institutions do not view MSMEs as a viable target segment compared to large corporate firms. Their perception of MSMEs as high-risk enterprises that offer inadequate returns does not warrant lending to them.
  • Inadequate solutions: Limited information and the perception of low returns of MSMEs affect the development of financial services for this sector. This results in none or limited customization of solutions for MSMEs.
  • Limited reach to MSMEs: In developing markets, many MSMEs are located outside main market areas. This marginalizes them from the reach of formal financial touchpoints.

How can financial institutions use digital transformation approaches to help MSMEs recover from the impact of the COVID-19 pandemic?

Financial institutions have a clear opportunity to enhance access to finance for MSMEs in emerging economies. Financial institutions may use a multi-pronged approach anchored on digitization to support MSMEs, revive businesses, and build resilience. This will lead to enhanced access to useful, relevant, appropriate, preferred, and used financial solutions for MSMEs delivered using digital tools. The table below summarizes the approach financial institutions can employ to enhance access to finance for MSMEs:

Let us look at each of these aspects in detail.

What digital technologies can financial institutions embed in their business models for MSME finance?

Existing formal financial solutions fail to meet the needs of MSMEs, which presents a significant opportunity for innovation in business models and products. Some approaches to the adoption of innovative business models are as follows:

  • Traditional financial institutions that use specialized services in collaboration with service providers, offer technology-driven services, such as credit assessment and risk monitoring, electronic document management, workflow management, digital inventory management and record-keeping, and process automation.
  • A focus on enterprises along specific clusters and segments, such as Kopo Kopo in Kenya for mobile money merchants, Neogrowth in India for merchant cash advances, Konfio in Mexico for micro-businesses, and Tienda Pago in Peru for small stores.
  • A digital marketplace or platform for financial services, such as SME Corner in India and Yoco in South Africa.

How could financial institutions develop better financial solutions for MSMEs?

Financial institutions can enrich their assessment of client needs, profiles, and segments by better understanding their footprints—digital or potentially digital, to innovate products and services. This data, clubbed with an analysis of behavioral patterns, could lead to hyper-customization of solutions on the go to meet specific needs of MSMEs. Some interesting product-level innovations include digital overdrafts or working capital credit for enterprises, merchant cash advances, invoice discounting within a value or supply chain, receivables financing, and reverse factoring.

How can financial institutions enhance the efficacy of MSME finance by digitizing processes?

The table below highlights how financial institutions can use digital technologies to enhance efficiency and effectiveness across the process flow.

How could financial institutions use an omnichannel approach and embed digital channels in distribution?

An omnichannel experience involves using technology platforms to improve customer acquisition and user experience while transacting. It allows customers to interact with numerous distribution and delivery channels simultaneously. The emergence of digital platforms and alternative channels has changed the way customers bank. The more access points they have, the better the user experience. Increasingly few customers now want to step into a bank branch.

With the changing market dynamics and preference for more ways to connect and transact, financial institutions need to consider using multiple seamlessly integrated channels to enable entrepreneurs to transact. Despite the complexity of an omnichannel experience, it provides entrepreneurs with a holistic brand experience while financial institutions benefit from the unified view of an entrepreneur. To serve entrepreneurs effectively, financial institutions can use agents, mobile banking applications, internet banking applications, and API-based integrations, besides branches and ATMs.

MSC, through its experience of enabling the digital transformation of financial institutions, has observed that “phygital” models, a combination of physical approaches with the use of digital tools, work better as opposed to an entirely digital model. This is especially the case when users are about to make a decision. A human interface at the point of decision-making reassures users and encourages them to prefer, choose, and use digital financial services confidently. Financial institutions can use trained agents to help entrepreneurs understand solutions and decide which ones to use.

How could financial institutions provide a first-class user experience using a digital engagement approach?

A great user experience involves customer-centric solutions and a manner of delivery that mimics the behaviors and attitudes of users. This ensures that the provision of services is clear, obvious, and intuitive for end-users. To build a customer-centric solution, financial institutions need to focus on user experience, assess bottlenecks that hinder users, incorporate the customer journey approach, embed the progressive learning curve of users, implement design thinking, and personalize user experience.

Financial institutions can utilize digital technology to enhance access to finance for MSMEs. The use of digital technology to enhance access to finance has assumed greater importance since the onset of the pandemic. For this, financial institutions first need to resolve key constraints through the following measures:

  • Use alternative data to accurately assess key risks in lending to enterprises and make informed decisions on providing access to finance to MSMEs
  • Use cost-effective digital channels to reach MSMEs
  • Enhance the efficiency of processes through business process re-engineering and automation to enable a quicker turnaround
  • Enhance returns through low-cost, digitally-enabled operations
  • Deliver end-user customizable solutions that MSMEs will prefer, chose, and use
  • Provide a first-class user experience