It’s not easy for small businesses to go digital. This market has always relied heavily on cash and paper receipts, and despite a multitude of available solutions to complete and record transactions digitally, adoption levels remain low.
This is because these solutions often fail to fully account for customer needs and behavior in their design. Many institutions believe that if they build digital products, customers will want to use them. In reality, the likelihood of digital usage at the merchant-level is driven by a range of factors, including convenience, the merchants’ digital readiness, and the aspirations and pain points they experience in everyday practices.
When Aye Finance, a microfinance lending institution based in Delhi, decided to venture into the world of digital financial services for micro, small, and medium enterprises (MSMEs), they were determined to address customer pain points and provide added benefits that would drive usage. The Mastercard Center for Inclusive Growth helped fund Accion’s advisory team’s work with Aye to develop digital solutions for its clients.
Aye lends to small-scale manufacturing, trading, and service businesses that cannot easily access capital from mainstream financial institutions in India. The average loan to these businesses is about US$2,100. The company wanted to allow its customers to build a digital transaction history, which would give clients more control and oversight over their businesses and more convenient and frictionless access to Aye’s financial services. Aye adopted three core principles in their approach to driving adoption: a customer-centric methodology, a simple solution, and a dedicated team responsible for execution.
A customer-centric approach
Rather than entering the project with a predefined idea of how they were going to deliver value to the target market, the organization conducted one-on-one interviews with customers to better understand the pain points that they face in running and growing their businesses. The team asked merchants about their business cycles, recordkeeping habits, existing relationships with financial service providers, and day-to-day transactions. Through understanding their customers’ everyday lives better, Aye was able to identify a value proposition they believed had the potential to drive mass adoption. The results pointed to five prioritized areas where Aye could deliver client value. These were focused on the need for a business management tool that could provide:
- A convenient means of recording and consolidating income and expenses
- Instant access to information on loan balance and status
- Automated reminders and simple tracking of outstanding payables and receivables
- A simplified way to manage inventory
- A less cumbersome method of keeping track of staff attendance and productivity