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Beyond the Transaction: Every Transaction Has a Story

Inclusive Growth: The Accion Perspective on The Power of “New Finance”

Editor’s Note: At the World Economic Forum, MasterCard CEO Ajay Banga led a public session on Inclusive Growth in the Digital Age. We are hosting an Inclusive Growth series on our blog, inviting others to share perspectives.

25-year old Phoenix resident, Jessica Gomez, had a problem. She wanted to open an online jewelry boutique, however as a first time business owner (and a young one at that) she didn’t have a sufficient income history to qualify her for a loan at the local credit union.

So, she went to eMoneyPool, a startup offering the centuries old lending pool model on a secure, digital platform. For five and a half months, Jessica made $105 payments every other week into a digital pool of ten verified individuals. Twice per month, eMoneyPool deposited the full $1,000 into one person’s bank account. When it came time for Jessica to cash out she walked away with $1,000 and, importantly, a payment history, which she promptly leveraged to secure a separate $2,000 loan from a financial institution. Three thousand dollars later, she launched her e-commerce business.

New Finance

This is the power of what we, at Accion Venture Lab, are calling “New Finance.”

New Finance combines the digital savvy and creatively destructive attitude of startups, the social mission of microfinance and financial inclusion, and insights from behavioral economics and human-centered design, creating a fresh approach to the massive challenge of delivering financial services and tools to customers’ hands who need them. Jessica is one of thousands of microentrepreneurs and SME business owners worldwide that are receiving financial access via innovative mechanisms, that New Finance affords, which exist far beyond traditional microfinance.

Take, for instance, the idea of credit scoring. Traditionally, financial institutions determine a customer’s risk based upon their past banking behaviors. But what happens when your institutional history with a bank is limited, such as Jessica’s was, or non-existent? Analytics startups, such as First Access, are expanding opportunities for credit scoring by using nontraditional data such as how customers use their cell phones to get a different kind of picture of customers and help make it easier for financial institutions to say “yes” instead of “no.”

In a different take on the same problem, companies like RevolutionCredit offer courses to customers who are applying for loans on how to best use and boost their credit, and then test the customers for comprehension, in exchange for lower fees and other benefits. On the back-end, financial institutions use data drawn from this interaction to augment their understanding of the customer and credit-worthiness. All of this leads to more access, more options and better products and service for customers like Jessica..

These are just a couple of the hundreds of examples of disruptors we see harnessing technology to enable new opportunities to engage traditionally excluded people.

At Accion Venture Lab we invest in the most innovative financial inclusion startups around the world. We provide small amounts of equity capital (typically around $300,000) and contribute our time, organizational expertise and network to maximize the chance our investees can succeed. In just over two years of operations, we’ve seen some amazing ideas and new solutions.

Realizing the promise of New Finance is certainly not easy. It requires a complex interplay of different forces and new partnerships between groups that don’t always work together – startups and big providers, for-profits and non-profits, government and industry. However, stories like Jessica’s remind us of the power at the intersection of innovation, relevance, and empathy. And it’s a place we most certainly want to be.


/Jessica’s name has been changed to protect privacy.