• Innovations in digital lending are enabling financial service providers (FSPs) to reach new customers, drive engagement, and promote financial inclusion.
• There is often a gap between an FSP’s vision of digital lending and the reality that it must effectively navigate to complete that institutional transformation.
• Report defines and explores digital lending, and provides a practical framework for FSPs to assess their digital capabilities and identify next steps for digital transformation.
Washington, DC – April 5, 2018 – Global nonprofit and financial inclusion pioneer Accion released a report today that explores innovations in digital lending and provides a framework with practical steps, key considerations, and challenges for FSPs to consider. This report was developed with the support of the Citi Foundation.
“Lending to underserved consumers is often time-consuming and costly,” said Michael Schlein, President and CEO of Accion. “Innovations in digital lending are enabling financial service providers to lower costs, reduce transaction times, and provide relevant, convenient, and affordable financing.”
Digital lending is shaping today’s rapidly changing landscape of digital financial services. Lenders can leverage improving connectivity, increasingly available customer data, and new technologies to offer more affordable digital products at increased scale. These products can offer customers a convenient, fast, and personalized experience that builds engagement and promotes financial capability. The report explores this evolving space and introduces the Digital Maturity Matrix – a tool to help FSPs assess their current digital lending capabilities and identify next steps toward adopting a successful digital lending methodology and mindset.
“Some financial service providers are overwhelmed by the concept of digitization and don’t know where to start,” said Paul Lamont, co-author and Director, Digital-Africa, Global Advisory Solutions at Accion. “This report distills emerging best practices and trends into a framework to help practitioners take their first steps toward digital lending.”
Digital lending also brings new risks and challenges, and can have unanticipated negative effects on both institutions and clients. FSPs must carefully and systematically approach digital product design and development, with a deep understanding of client needs and market trends, and with the right systems and processes in place.
This report was written by Accion’s Global Advisory Solutions team, which provides experienced operational and management support to strengthen and maximize a financial services provider’s impact on financial inclusion. The team leverages innovations to increase the quality and lower the cost of financial services, and thus help to build sustainable and scalable institutions focused on serving the financial needs of underserved individuals and small businesses.
Accion is a global nonprofit committed to creating a financially inclusive world, with a pioneering legacy in microfinance and fintech impact investing. We catalyze financial service providers to deliver high-quality, affordable solutions at scale for the three billion people who are left out of – or poorly served by – the financial sector. For more than 50 years, Accion has helped tens of millions of people through its work with more than 90 partners in 40 countries. More at http://www.accion.org.