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What is the Investment Climate for Fintech in Emerging Markets?

A positive outlook according to our investor network

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We recently had the opportunity to survey the Catalyst Fund Circle of Investors, which connects our startups to a wider group of investors and also acts as a channel for sharing our insights about the investment climate for fintech in emerging markets. The Circle of Investors are optimistic about funding for inclusive fintech. Results of the survey provide insights into what investors think about inclusive fintech, investments and emerging markets. Read more

Originally published on the SOCAP blog on August 22, 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

 

Racing into Machine Learning: Data Readiness and the Developing World

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While machine learning has become more widespread and has been applied across different industries, few organizations have the adequate expertise to utilize the technology properly. Before jumping into a #machine learning investment, stop and consider your data and how a strong data foundation should be used to inform the insights from machine learning. Read about #datareadiness to start off on the right foot. 

How can fintech startups engender trust and best leverage AI and ML for the next generation of financial products?

Catalyst Fund’s new cohort of inclusive fintech startups spans the globe and pushes the boundaries of innovation in sectors as diverse as mobile money, agriculture and insurtech. As Catalyst Fund investees, these impact makers receive grant funding and tailored and hands-on technical advice. In turn, the startups also help us learn about three main questions:

  1. How can digital financial services be more customized, convenient and accessible than traditional offerings?
  2. How can formidable barriers to inclusion be overcome?
  3. How can investors, donors, and advisors best catalyze successful and innovative models?

Read more...

In Digital Financial Services We Trust

Photo Credit: Flickr,  Prab Bhatia  Photography

Photo Credit: Flickr, Prab Bhatia Photography

As a customer these days, trust is probably on your mind. Whether you’re choosing on what airline to fly on next or sealing a deal on a handshake, trust is fundamental to our personal and business interactions. If your customer base is with a low-income person or in an emerging market, trust is essential to create from the get-go, especially you’re talking about managing one’s money. In digital financial services, trust is a huge competitive advantage.

What we saw from our work at Catalyst Fund, providing tailored engagements to accelerate early-stage fintech startups in Mexico, ColombiaGhanaKenya and India, is that trust can be created and from the first interaction with the customer. We have been working with 10 startups in our inclusive fintech portfolio, in areas such as higher education, household workers, smallholder farmers, pay-as-you-go clean energy and microfinancing. From this perspective, we put together what we have learned and tested in the field into the Design for Trust Toolkit. Our hope is that this practical resource gives early-stage startups a way to tailor their customer and product strategies to maximize trust creation.

Who is the Design for Trust Toolkit for?

The Design for Trust Toolkit brings together the best startup-based practices from Silicon Valley and BFA own fintech and customer research expertise with low-income customers. Supported with some industry examples, this toolkit is customized for trust creation with the underserved population. If you are fintech CEO or are part of the management team, then this toolkit is a smart way to boost your team’s capacity in building trust creating features along the customer journey.

In digital financial services, trust is a huge competitive advantage.

A Peek into Design for Trust

Building trust in markets where your customers are on the lower end of the income curve and where institutions are weak, is hard to do. It can also be eroded quickly. In the case of inclusive digital financial services, we believe there are five top drivers for startups to get right and that increase the perception of trust by the customer. These elements are competencyappearancecontroltransparency and commitment & benevolence. By mapping out these drivers along your customer’s journey, you can intentionally minimize perceived risk and maximize sense of trust.

The Design for Trust Framework

For example, when trying to acquire customers in low-income markets, are you competent at designing products based on customer research — their needs, preferences and behaviors? Are you thinking problem-first or solution-first? M-Shwari is a bank account with savings and loans features offered only through M-Pesa’s mobile money transfer service. Customers can open accounts in 30 seconds and apply for short-term loans in a matter of seconds. Take a cue from M-Shwari that demonstrates high competency by making it the registration process very seamless and quick to open an account through M-Pesa.

Think about trust creation as a framework and apply it to your organization or specific customer interactions to improve

Or consider the impact of appearance to activate clients from signups to usage. Founded by non-profit lending platform Kiva.orgBranch is the branchless bank for the next generation. The mobile app employs the user data stored in phones to learn about and predict good borrowers. Without the need for a credit history required by banks, Branch can offer credit lines of $2.50 to $500 in 10 seconds. Branch is especially popular with farmers, drivers and merchants in Kenya, and intends to expand in Sub-Saharan Africa.

Like Branch, remember that your customer still might be pretty new to digital financial services on their mobile phone. This is where a simple user interface with clear shapes, colors and text sizes are important for getting your customer to take action.

To retain customers, what level of control do you provide to the customer? Consistently offering users the ability to perform and agree to upgrades and new services and contact details and knowledge base on service use are great ways to give a sense of control. Branch manages a nice balance of the online and offline experiences through chat interfaces and immediate responses from humans to extend control to their clients.

These are a few examples we cover in the Design for Trust Toolkit. It is designed so you can think about trust creation as a framework and apply it to your organization or specific customer interactions to improve. Either way, the pointers and best practices are meant to be actionable and easy to map out as a process, perhaps to visit again after you’ve mastered a stage in the customer journey.

So, visit the Design for Trust Toolkit and leave a comment for us or provide examples of other firms you think do a great job at trust creation. If you do work through the entire toolkit, be sure to provide your feedback here.

Stay connected by signing up for the Catalyst Fund mailing list and joining theInclusive Fintech Group on LinkedIn.

An Interview with Tahira Dosani and Vikas Raj of Accion Venture Lab

We recently had the opportunity to connect with Vikas Raj and Tahira Dosani, Managing Directors of Accion Venture Lab and members of the Catalyst Fund Investors Advisory Committee (IAC). As founding members of the committee, we were eager to hear from Vikas and Tahira about their experience with and perspective on Catalyst Fund as we looked back on the first year of the initiative.

Read their interview on our medium blog. https://goo.gl/UJWE01

Why Low-Income Families Don’t Send Their Children to College. Hint: It’s Not Always About Money

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There are significant behavioral reasons that discourage parents from saving toward their children’s higher education in Colombia.

Read our post on the three priorities financial services providers should consider when developing college savings products for low-income customers.  https://goo.gl/jmyLWq

The Intelligent Bank of the Future

Here’s a thought experiment: what if you had to design from scratch a new bank targeting low-income clients? This would be a bank that could focus on clients with smartphones to grow quickly and efficiently. It could also have a forward-looking CTO with a future-proof mindset.

Read more here https://goo.gl/Svr0ON

Recap of Catalyst Fund at FLII 2017

What have we learned about catalyzing inclusive fintech startups so far?

By Jonathan Uriarte

Thoughts from the Catalyst Fund Panel at FLII 2017

On Feb 15th, the Catalyst Fund hosted a panel about supporting early-stage inclusive fintech companies at FLII 2017 (The Latin American Impact Investing Forum). Held in Mérida, Mexico and in its seventh year, FLII brings together investors, entrepreneurs, nonprofits and other ecosystem players working hard to bring real impact in Latin America.

The panel, Catalyst Fund: Our Approach and the Lessons Learned from Supporting Inclusive Fintech Startups, covered how the Catalyst Fund model compares to other accelerators or incubators and more specifically, how Catalyst Fund tailors its advisory engagements using a range of startup tools all the while rolling up their sleeves working alongside the startup teams. Speaking were some Catalyst Fund investees: Jorge Camus from Destacame.cl, Miguel Duhalt from Comunidad4Uno, myself, Jonathan Duarte Escala Educación, Catalyst Fund partner Mathieu Albrieux AccionVenture Lab and moderator Gabriela Zapata from BFA.

Read full post on our blog.


Catalyst Fund Event Info at FLII 2017

Join Catalyst Fund at FLII 2017 (Foro Latinoamericano de Inversión de Impacto) for a panel on the challenges and lessons learned working with inclusive fintech startups. Featuring our investees from different stages in the investment life cycle and sectors ranging from education, and financial services for the low income customer, 

Panel: Catalyst Fund: Our approach and lessons learned from supporting inclusive fintech startups

Moderator: Gabriela Zapata, senior associate at BFA

Panelists:

Event info:

Feb 15th, 2017 3:30pm-4:30 local time
Hyatt Regency
Mérida, México

Full FLII program agenda here: