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Proven Strategies for Making Fintech Inclusive

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Catalyst Fund seeks to uncover how inclusive fntech companies are creating new and superior value propositions, and to determine whether they are driving financial inclusion deeper and further. We work with early-stage fintech companies that span the globe and push the boundaries of innovation in sectors as diverse as lending, agriculture and insurance. Run by BFA, Catalyst Fund provides fintech innovators with grant funding and tailored technical assistance to complement their skill sets. In turn, the startups help us learn about how to advance financial inclusion among low-income populations in the markets where they operate.

We are examining how deep can Inclusive Fintechs get into their markets? Explore our proven strategies for reaching low-income customers: will they continue to be owners of these enhanced value propositions? And can they continue to maintain and improve offerings as they scale?

Read and download the brief here

Finance's helping hand: making refugees self sufficient

                         (Source: The Banker) 

                        (Source: The Banker) 

"The world's refugee camps are often home to displaced entrepreneurs who set up small enterprises, driving the business case for financial services. But getting providers to take notice is a tough call, exacerbated by problems of access and identity, James King reports."

Through its investments and global partnerships, the Omidyar Network is tackling one of the biggest obstacles around refugee IDs – that of interoperability. In essence, this is the difficulty facing a refugee or migrant when every service provider or agency they encounter requires a different form of identification. Developing a foundational and interoperable form of ID would enable refugees to access a far wider suite of services and opportunities. But to achieve this, regional and global co-operation from various stakeholders is needed.

“We want governance structures that allow the interoperability and portability of digital IDs across multiple markets,” says Ms Anderson. “There are a variety of stakeholders working to address somewhat different aspects of a similar problem but often in silos. Identity is an issue that needs to be solved at scale. For this to happen, actors must work in a more collaborative and consensus-building way,” she adds.

Reaching this endpoint will take time and will demand an effective intersection between technology and regulation. In the meantime, other private sector actors are looking at the steps that can be taken on the ground. Increasingly, issues of refugee financing are attracting the attention of fintechs and start-ups who have been sold on the business case. Leaf Global Fintech, a Nashville-based business, is a case in point.

Co-founded by Nat Robinson and Tori Samples, both of whom had prior experience working with refugees in Africa and the US, Leaf aims to address the refugee challenge virtually. The company, which is focusing on Rwanda and the Democratic Republic of the Congo, partners with local banks and mobile money operators to ensure the safe passage of funds for a refugee crossing the border between two jurisdictions. It achieves this by using blockchain technology. 

Ms Samples says: “There’s a lot of hype around blockchain. We are using it to facilitate cross-border transfers rather than storing any value on it.”  For example, a user in the Democratic Republic of the Congo can open an account with Leaf via SMS, cross the border to Rwanda and receive their savings through a partner institution. In doing so, the company is addressing one of the key impediments facing mobile money networks in the region.

“Mobile phone penetration across east Africa is high. Mobile money accounts are growing much faster than bank accounts. That’s also an avenue that we are looking to tap into. But the issue with mobile money is that it doesn’t cross borders. The issue with that is that it’s offered through national telcos,” says Mr Robinson.

Continue reading here

(Leaf is a #CF20 company and is an integrated financial services provider whose mobile platform enables the conversion of physical to digital fiat currency through blockchain technology. Refugees deposit cash at a mobile money agent in their home country and then send that money into a Leaf account. The company stores the transaction on the blockchain and works in partnership with regional banks to safeguard currency.)

Meet the Five Startups Shaping the Future of Inclusive Fintech in Emerging Markets

Meet the Five Startups Shaping the Future of Inclusive Fintech in Emerging Markets

Through Innovations in e-Commerce, Blockchain, Mobile Money Integrations, and Agrifintech

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At Catalyst Fund, we have been working with a wide range of startup companies to bring much-needed essential financial products and services to improve the lives of people on low incomes. We are proud to announce the five latest “inclusive fintech” companies to join Catalyst Fund: BancoMare, Hover, Leaf, payAgri, and Sokowatch. These startups are tackling enormous challenges to bring more accessible, affordable, and appropriate financial services to the 1.7 billion underbanked customers in Africa, India, Brazil, and Southeast Asia.

There has been progress in financial inclusion over the past 5 years, with 515 million people gaining access to a bank or mobile money account, bringing the percent of adults globally with bank to 69 percent. However, too few people on low incomes actually use financial services, and we are yet to see the variety of products that can truly improve the financial health of these customers. We invested in these startups because their solutions can accelerate financial inclusion by: 1) overcoming infrastructure barriers currently limiting mobile money innovation; 2) facilitating partnerships among ecosystem players such as digitizing data for financial service provision; and 3) bringing tailored products to the most vulnerable people through advanced technology.

Read more about these companies here

Building Trust, Engagement, and Loyalty: Five Ways to Innovate Like a FinTech

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What can startups and companies do to build trust, loyalty, and engagement with customers? Catalyst Fund identified five strategies that enable companies and startups to innovate like a fintech.

Five ways to innovate like a fintech

  1. Keep the design simple and adapted to your customer base.
  2. Prove your abilities to users.
  3. Give users a sense of control in managing their actions.
  4. Be transparent about what you do and why.
  5. Commit to doing what is right for the customer.

Learn more about designing inclusive products here.

Risky business: how to de-risk your fintech startup before it’s too late

 Running a Risk Diagnostic can help mitigate risk

Running a Risk Diagnostic can help mitigate risk

Co-written by Elizabeth Davidson

Early identification of key risks can help fintech startups invest in the business support they need early on before a risk takes down the business. These risks can scare off investors, who want to ensure that entrepreneurs understand the key challenges they face. Instead of waiting for entrepreneurs to identify key risks, early stage investors can work with startups to tackle these risks before or in conjunction with their investment.

Catalyst Fund has taken just this approach. By working with our entrepreneurs to identify risks, we can tailor technical assistance to solve these risks so that investors are more confident in the future success of the business.

 Our Risk Framework as a Focusing Device

Our Risk Framework as a Focusing Device

Taking an honest look at their own key risks can be difficult for entrepreneurs, who may be too deep in the weeds to step back and look at the bigger picture. This is why the Catalyst Fund developed a risk diagnostic to help startup leaders get a better grasp on their challenges, and understand those within or outside of their control. The tool offers a checklist of possible mitigation strategies for the entrepreneur. Read more here.

Timing isn’t quite right for SaaS startups in Africa

 Source: Alrami.info

Source: Alrami.info

Let me tell you how I failed to build a scalable SaaS (Software-as-a-Service) startup in Africa.

Remember the hockey-stick growth chart? This is what an entrepreneur signs up for and what investors want to see.

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But let’s face it, hockey-sticks are not part of the reality in Africa… not yet. So why are software-as-a-service startups not taking off? Three reasons:

  1. 1. Businesses are competing for the investor dollar, not for superior tech
  2. 2. Economies of scale can only work at scale
  3. 3. Scaling across the continent is harder than it sounds

Read more here

How social entrepreneurs can strike partnerships with big companies

 It can take a lot of effort to get a partnership off the ground. Image: REUTERS/Krishnendu Halder

It can take a lot of effort to get a partnership off the ground. Image: REUTERS/Krishnendu Halder

While the opportunity is clear, the bad news for growing social enterprises is that closing a technology partnership is time-consuming and risky.

Some social enterprises may be able to endure the long time horizons, but for many early-stage ventures, investing in a partnership with a larger, better-resourced player, with extensive due diligence and decision-making processes, may be a deal-breaker. These delays can be a death knell for early ventures that do not have the time or capital.

At the same time, not all partnerships are valuable. Startups need to carefully understand the potential of a collaboration by analyzing mutual benefits and determining which processes and priorities will dominate the relationship. Our partner, Accion Venture Lab, offers additional strategies for “Enterprise Sales for Fintech Products and Services.”

A quick guide for social enterprises to land successful partnerships, read more.

Two Problems, One Solution: How Fintech is Boosting Access to Banking and Insurance for Domestic Workers in Mexico

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More than 2 million domestic workers in Mexico are virtually invisible to the financial system. They perform work as housekeepers, cleaners, cooks, carers, drivers, gardeners and doormen, among other professions. Nearly all are informally employed, which means they get paid in cash, make no contributions to a social security or pension fund, and are uninsured. 

Yet many domestic workers have a relatively stable source of income (when work is available) and they are financially active. More than 75 percent of them earn up to only 58,000 pesos a year (about US$3,100).

In this environment, Comunidad4UNO (4UNO), an early-stage Mexican fintech startup and Catalyst Fund company, is tackling the dual challenges of financial exclusion and affordable insurance access among this market segment. The company is providing domestic workers with tailored and market-based financial products through their employers via an online marketplace, helping reduce their vulnerability to accidents, health issues and the financial challenges they can cause- read more.

Fintech finds a way to reach domestic workers with financial services in Mexico

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Lola, a single mother of three, earns a living cleaning houses in Mexico City. She gets paid in cash every week, and asks for an advance from her employers when she really needs it, like when her mother passed away in her village and she had to cover transportation and funeral costs or when she was mugged on a public bus. Lola stores small sums of money at home to pay for food, rent, electricity, water and gas.

As is the case with many domestic employees, her job is informal and unsecured. Sometimes, she has to miss work when her kids get sick and, depending on the employer, she may or may not get paid for those missed days. She is unfamiliar with her labor rights and her employers, who are primarily concerned with employee retention, are generally oblivious to their legal obligations.

Although Lola uses several financial instruments to make ends meet, pay her bills and provide for herself and her children, her transactions generate no records in the financial system, thus making her invisible to banks and other financial institutions- read more.

Three Powerful Tools for Fintech Practitioners

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Since we launched the Catalyst Fund in 2015, we have helped 15 fintech entrepreneurs deploy novel approaches to bring products and services to their customers. We have distilled the successful patterns and behaviors we have observed into toolkits and posts for those considering fintech methods for their businesses, whether they be startups or established players.

At a high level, successful fintech startups adopt principles of Design, Risk Management and Product Management, and also put modern technologies like smartphones, artificial intelligence and cloud computing at the core of their value propositions. At successful fintech startups Designers, Product Managers, CEOs and Engineers reinforce each other in multidisciplinary teams to explore the overlap between what customers find desirable, what engineers can build, and what the business requires to grow - continue reading.

 

Why We Invested: Meet the newest Catalyst Fund Companies

 Abalobi: The fisher's journey

Abalobi: The fisher's journey

What we’re seeing in insurtech and digital credit

We’re excited to announce the latest companies to join the Catalyst Fund portfolio! Our new cohort of inclusive fintech startups is innovating in two promising areas: insurance technology (“insurtech”) and digital credit. As a group, these companies exhibit strong founding teams, experience working in emerging markets, and a resolute commitment to reach the underserved. As an early-stage accelerator committed to expanding innovative financial solutions for the the underbanked, we invested in these companies because they share the following qualities. Read more.

How can investors use machine learning to pick the right startups?

 Photo credit:  Machine perception

Photo credit: Machine perception

When considering a startup, especially an early-stage startup, investors want to conduct as much due diligence as possible. What little data they can gather is scattered all over different sources including Crunchbase, LinkedIn, Pitchbooks, company websites, etc. Consolidating this data takes a great amount of time and effort. Furthermore, the data sets can be incomplete or biased depending on the search queries — imagine overlooking a keyword. To make the due diligence process fairer and less cumbersome for investors, various platforms are using machine learning (ML) to pull together information about startups from all available resources to help investors assess companies and investment opportunities. But where machine learning really shines is in the interplay of data-driven insights that are qualified by human intuition and personal experience. Read full blog here.

Top 100 Emerging Market Inclusive Fintechs

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You may have heard of companies like WePay and Oscar. WePay is an online payments service provider; and Oscar is a user and technology-centered health insurance company. And you might have witnessed how these fintech companies are contributing to the transformation of the financial services sector in the United States. But what’s happening in the global south? There, “inclusive fintech”, or fintech products and services that serve the bottom of the pyramid, is thriving in its own right with the likes of Tala and Branch. The sector is growing – enough to compile a list of our top 100 inclusive fintech companies by funding raised in emerging markets.

Catalyst Fund presents the Top 100 Emerging Market Inclusive Fintechs. Get insights about accessibility, affordability & flexibility, customer-centric design, speed and digital-first approaches and how these approaches can improve outcomes.

Article originally published on the World Economic Forum

Next-level computer vision: When off-the-shelf software options don’t cut it

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Let’s say you’re in Tokyo and you see a billboard with a catchy photo. You want to know what the billboard says, but you can’t read Japanese. No problem! You can use Google Translate to take a picture of the billboard, highlight the text you care about, and then your phone will translate it into English. This is a prime example of computer vision, which allows us to automatically extract, analyze, and understand information from images due to recent advances in machine learning.

Given these advances, we thought it would be straightforward to adapt off-the-shelf computer vision programs to pull important data from identification documents, a task that most fintech companies face in the field. Ultimately we found that off-the-shelf computer vision programs were not sufficiently accurate  - continue reading here.

Early insights on incentivizing Indian customers to go cashless

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Early this year, Amitabh Kant, CEO of the National Institution for Transforming India (Niti Aayog), declared “Cards, ATMs, POS will all become redundant in India by 2020, and India will make this jump because every Indian will be doing his transaction just by using his thumb in thirty seconds….”Although evidence indicates that demonetization has moved India towards a digital economy, there is still much work to do before Kant’s vision becomes a reality. Read insights on going cashless.

SOCAP Conversations: The State of the Inclusive Fintech Field

The Inclusive Fintech Track at SOCAP17

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We are excited to announce that Catalyst Fund and JPMorgan Chase & Co. are supporting a content track on Inclusive Fintech at SOCAP17. David del Ser, Director of Inclusive Fintech for Catalyst Fund, and Colleen Briggs, Executive Director of Community Innovation at JPMorgan Chase & Co. sat down with the SOCAP organizers to discuss the state of the inclusive fintech field and the sessions they are developing for SOCAP17. Read the interview http://bfa.works/thest2ce2

Originally published on the SOCAP blog on September 12, 2017.

Register for SOCAP17 to attend the Inclusive Fintech Sessions and learn more.

Catalyst Fund and JPMorgan Chase & Co. are sponsoring the Inclusive Fintech Track at SOCAP17

The AI-Driven Bank in Emerging Markets

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Article written by David del Ser and Alexandre Lazarow

If you think artificial intelligence is a thing of the future, ask yourself why your Amazon homepage looks different from ours or how Google translates websites on the fly. Consumers in developed and developing countries are benefiting today from these smarter types of software. In particular, the subfield of Machine Learning is making rapid strides in everything from detecting rare types of cancer to correcting our grammar. In essence, software development is transitioning from a process where humans figure out a few rules for the machines, to one where the machines learn the many implicit rules from the existing data. Continue reading.

An Interview with Alexandre Lazarow of Omidyar Network

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Catalyst Fund recently had the opportunity to speak with Alexandre Lazarow, CFA, Principal, Investments at Omidyar Network and member of the Catalyst Fund Investors Advisory Committee (IAC) about the Catalyst Fund model, fintech startups, innovations and InsureTech. Read his interview on our medium blog