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Inclusion Startups: all digital isn't always the answer!

Customers are changing as technology becomes cheaper, faster, and more readily available and as customer attitudes to this technology and financial services in general shifts. These changes present tremendous opportunities for FinTech for inclusion startups to reach more of the underserved, but it will require startups to take a more nuanced look at their specific customers’ needs and preferences. While customers are becoming more comfortable with using technology, things are still slow to change. Nearly 2 billion of the 5 billion mobile subscribers remain offline. Even where they have access to affordable handsets, reliable data connectivity, and stable power, many people find accessing digital financial services challenging. After all, these customers may not be familiar or comfortable with technology or financial products, and they may not have reason to trust financial service providers. The result is that FinTech companies will need to continue balancing new digital technologies with appropriate human interactions to engage, educate, and support their customers.

AAA Solutions for the Underserved

Inclusive FinTech startups are reaching low-income customers with life-changing financial products in Credit, MicroInsurance, PayGo energy, and education. These firms are masters at understanding low-income customer needs. By leveraging innovative technology, data analytics, and new business models, they deliver products and services. AAA Framework (pronounced Triple-A), and which stands for Accessible, Affordable, and Appropriate is a practical blueprint for building and assessing products and services that low-income customers need and want. Offerings whose features are prioritized to be accessible, affordable and appropriate address the challenges of customers who live in low-trust, low-tech, low-resource and last-mile environments.  

Inclusive FinTech Startups in Emerging Markets

Between 2014 and 2017 some 515 million adults worldwide gained access to a bank account at a financial institution or through a mobile money provider, bringing the total number of adults who have an account to 69 percent. Access to technology has been one of the fundamental drivers behind this progress.  However, even with this progress, 1.7 billion adults around the world remain unbanked. Mobile phones may be the key to unlocking access as two out of every three adults own a mobile phone, which could be leveraged to expand access to financial services dramatically. The World Bank reports that formal banking reaches about 40% of the population in emerging markets, while 90% have mobile phones. In fact, mobile phone connections already exceed bank accounts in some markets in Africa. Around the world, technological advancements, open platform interfaces, and the availability of more and better data from non-traditional sources are providing critical data for a new wave of financial services. The potential for FinTech solutions to expand access to and improve the quality of financial services available to poor people in emerging economies is unparalleled. New FinTech solutions are emerging to deliver easier, cheaper, and faster financial services that can benefit low- and middle-income customers. At the forefront of such a product, innovation is nimble and innovative startups, which can harness the latest technology and deploy lean operating models to quickly develop strong, customer-centric value propositions. Yet only a few FinTech startups have reached scale in emerging markets. Many promising new enterprises fail to pass the idea stage because they lack adequate financial and human resources to launch and test their products. Starting a business is particularly challenging in emerging markets because the ecosystem for funding, skills, and other essential inputs is thin and fragmented, especially for technology businesses. Moreover, FinTech businesses face a unique set of risks and challenges around new technologies as well as unclear or evolving regulations, for which the sector requires deeper technical expertise and flexible upfront capital. To address these challenges, donors, investors, banks, mobile network operators, and other stakeholders are supporting pitch competitions, boot camps, incubators, and accelerator programs to spur FinTech innovation. These interventions seek to identify promising businesses and to increase the rate at which they gain traction and scale. Most programs offer services such as capacity building and technical assistance; networks and mentoring; financial and non-financial resources (such as collaboration or office space); and access to follow-on investors. Some accelerators also seek to share lessons learned from their work to influence and spur additional innovation in the sector.

Noticeable Examples

Startups working to broaden economic opportunities around the world were awarded $1.6 million in prizes at the MIT Inclusive Innovation Challenge (IIC).

The $250,000 grand prize winners were:


JobGet, a mobile platform that matches low-income job seekers with employers; JobGet, which earned the top spot in the income and job creation category, has been onboarding job seekers and employers to its mobile app for about eight months. At that time, the company has helped nearly 10,000 people, primarily in blue-collar fields, improve their employment options and job security. “[JobGet] is a mobile app; there’s no resumes required, no cover letters, no interview questions,” Director of Community Caroline Forrest said. “All you need to do is set up a profile, which takes anywhere from two to five minutes. After you have that profile, you can apply to hundreds of jobs.”


TiendaPago, an online lender giving small, mom-and-pop stores in Latin America short-term loans. TiendaPago, the winner of the financial inclusion category, has created a lending tool that helps small stores in Latin America maintain inventory without relying on informal loan sharks that demand high-interest rates. The company’s short-term credit can be accessed with cell phones through WhatsApp, SMS messaging, or the company’s mobile app. TiendaPago has already enrolled more than 27,000 store owners in Mexico and Peru, and it aims to help more than 150,000 families around Latin American in the next two years.


Agros, a company using remote sensing and precision agriculture to assist small farmers in Latin America; Agros, the winner in the technology access category, uses precision agriculture technologies like satellite images, weather data, and georeferenced information to improve yield for family farmers across Latin America. The information collected is also shared with financial institutions to help farmers get loans with lower interest rates. “Now these farmers have the opportunity to access technology in their own language, leaving all the complicated aspects to us, so they can focus on what they do best: feed the world,” said Agros founder Robinson Lopez.

Reaktor Education

Reaktor Education, which uses online courses to teach people about artificial intelligence; Reaktor Education, the winner of the skills development and opportunity matching category, builds its online educational content with focus groups to ensure the programs about AI are easy to navigate, empowering, and fun. “We believe there’s a better way to educate, across demographics and at scale, using our combination of humanist copyediting, design, and technology,” Reaktor chief operating officer Megan Schaible said. The company partnered with the University of Helsinki in Finland to create its first free online course, Elements of AI, which launched in 2018 and has attracted more than 230,000 registrants. The company says more than 40 percent of the people who signed up for the class are women, while more than a quarter of registrants are over the age of 45. The company is now expanding around the world, working with governments and universities to replicate its early success.

Nairobi-based child care startup Tiny Totos. The company offers loans for daycare centers, training for caregivers, and a mobile app that allows daycare managers to track attendance, income, and expenses.

While the inclusive FinTech community has a vibrant conversation around success and innovation, the dialogue around challenges and failures is less apparent. Today, most conferences, networking events, and demo days focus on achievements, and founders put their best foot forward in an effort to show that everything is going well and according to plan. However, in reality, most things do not go according to plan! And there is a lot to be learned as a community from these improvisations and failures. One of the biggest struggles for CEOs still remains to raise capital to develop and scale their business, particularly in emerging markets. Several investors, on the other hand, shared how they struggled to navigate the early-stage startup space and called for better tools to help unlock funding at these earlier stages. Partnerships can amplify outcomes if they are structured correctly and data is leveraged appropriately. For example, by leveraging new forms of data and facilitating the customer journey, FinTechs can help traditional financial institutions build solutions that work for low-income customers.

FinTech the Future

Financial inclusion has been a recurring theme of financial sector reforms that the IMF and World Bank have advocated in financial assistance and macroeconomic consultations. Financial inclusion is especially important in emerging markets, like Asia, Africa, and South America. It is a multifaceted concept that encourages access to formal financial services at affordable costs that can boost an economy’s overall growth and welfare. Often those targeted – families and small- and mid-sized companies – have either no or only very limited access to financial services.

Financial innovation propelled by FinTech plays a key role in bolstering financial inclusion and makes simple financial instruments accessible. Two examples highlight the power and benefits of FinTech, its role in enabling access to credit for small- and medium-sized enterprises (SMEs) as well as in reducing households’ financial transaction costs.

In China, Kenya, and Indonesia, FinTech companies are already easing credit market frictions and reducing transaction costs – two distinct aspects of financial inclusion that policymakers are trying to promote. FinTech companies often start as online shopping and telecommunications companies, then quickly move to build up a network of customers and providing them with financial services. This process is described by the Bank of International Settlements as the “DNA” of FinTech firms, namely the interaction between “data analytics, network externalities, and interwoven activities.” One key contributing factor is FinTech’s ability to secure and retain a large number of regular users, thus building big data on users’ behaviors and nurturing trust. After all, as many policymakers and key FinTech players acknowledged in a policy panel during the IMF/World Bank Spring Meetings in April 2019, trust, not technology, is the big challenge that FinTech needs to address to achieve their full potential and generate economic and social benefits.

FinTech, and with it our more digital world, is changing our lives every day. Some things we know or have known might become obsolete in the future. Kalin Anev Janse, secretary-general and a member of the management board of the European Stability Mechanism (ESM), was recently looking for a “piggy bank” for a family member’s baptism. His dream was that the baby would keep it for the rest of her life. It made him wonder – when she is older – will she even be using these small pieces of metal called coins?