<p>Chrissy has 10 years of experience in expanding access to financial services, working with a diverse set of stakeholders ranging from MNOs, social enterprise, donors, non-for-profits, and multilateral institutions. At MIX, she is leading the development of the Fintech Data Solution through a user-centered product design process. Chrissy started her career launching the first mobile money product in Haiti with the mobile network operator Digicel. Since, she has served as the Customer Experience Manager at the social enterprise Zoona in Zambia and Malawi, and as Senior Digital Finance Specialist with USAID&#8217;s Digital Development team.</p>


Fintech Data Solutions Lead, MIX

Chrissy Martin Meier

Simon Agez

Matthew  Barger

Brief

COVID-19 has reinforced the importance of financial services in helping people navigate the effects of the pandemic and lay the foundations for recovery. The rapidly changing context presents a unique opportunity for fintechs and other digitally driven business models to step in and onboard new customers to meet this evolving demand.

The 2020 iteration of the Inclusive Fintech 50 competition maintained the core value proposition of the 2019 initiative — a transparent methodology, independent judging panels comprised of industry experts, and a strong focus on inclusion — while iterating to ensure relevance in a particularly challenging year. The 2020 competition attracted 403 qualified applicants operating in 111 countries and reaching 116 million customers.

Drawing on the data submitted by the 2020 cohort of applicants, this paper provides insights as to how early-stage fintechs are adapting to the current economic uncertainty and continuing to advance financial inclusion and resilience for the estimated 3 billion financially underserved people worldwide.

Follow CFI and #InclusiveFintech50 for updates on Inclusive Fintech 50. For more information about the competition, insights from previous cohorts, and more, visit <a href="http://www.inclusivefintech50.com">InclusiveFintech50.com</a>.

Inclusive Fintech 50 White Paper [2020]

Maha Khan

The absence of face-to-face meetings poses yet another challenge for matching fintech startups with investors. Here are some ways the community is adapting.

Blog Post

“<a href="https://www.themix.org/publications/fintech-benchmarks-report" target="_blank" rel="noopener noreferrer">Evidence shows</a> that fintechs face difficulties raising capital, especially those that are addressing the last-mile challenges that leave an estimated 3 billion people underserved by the financial sector.”

When we wrote these words just a few months ago, the world looked very different. Since then, the challenges facing fintech startups have increased exponentially as a result of the COVID-19 pandemic. In April, we spoke with <a href="https://www.themix.org/news-blog/disrupting-fintech-four-ways-early-stage-firms-are-adapting-to-deal-with-the-effects-of-covid-19" target="_blank" rel="noopener noreferrer">fintechs and investors</a> to understand how they were coping with the crisis. We found that fintechs are reconfiguring internal operations, refocusing on core products, and helping customers weather the storm – all while looking for the cash they need to prove their business model and scale. Investors have reported that, in the midst of the crisis, they are pausing investments or looking mainly to those startups whom they <a href="https://twitter.com/TheDFSLab/status/1257718687081156613?s=20" target="_blank" rel="noopener noreferrer">met in person</a> before the pandemic. Some fintechs we spoke with reported a lead investor abandoning a Series A, for example, or they paused fundraising to focus their attention on managing through the crisis.

Those conversations happened a little over a month ago. Now, investors are telling us that as the immediate crisis subsides, they are looking to engage with fintechs – especially those that have proven resilient through the crisis. As they do, however, the traditional tools that investors and fintechs rely on to find each other – travel, conferences and meetings over coffee – may not return for months or even years. If the absence of these traditional tools prevents investors from discovery, the industry risks missing out on many emerging fintechs – particularly those who are developing ideas designed specifically for a post-COVID world.

To avoid missing out, investors will need a robust and creative set of tools to support remote discovery. There are already a wide range of data services available for investors and startups to find information on the current investment landscape and recent deals, ranging from Crunchbase to Pitchbook to Owler. Yet we’ve learned that investors and fintechs focused on emerging markets and inclusivity find that the existing data does not fully cover emerging markets or is focused primarily on later-stage companies.
<blockquote>Investors will need a robust and creative set of tools to support remote discovery.</blockquote>
In the wake of COVID-19, we are pleased to see an initiative, <a href="https://www.findthenest.org/" target="_blank" rel="noopener noreferrer">The Nest</a>, take the lead in leveraging an innovative, low-cost way to support remote discovery. The Nest is a weekly Zoom “shark tank” designed to connect aspiring entrepreneurs in frontier markets with angel investors from around the world. It has raised more than $450,000 in the month since its inception. The company behind The Nest is <a href="http://www.untapped-inc.com/" target="_blank" rel="noopener noreferrer">Untapped</a>, itself a fintech supporting innovation in frontier markets through asset financing.

The founder, Jim Chu, recently told us that the virtual forum makes it easier to create a “critical mass” of interest from both investors and early-stage startups to build the ecosystem in frontier markets. The critical and diverse mass of investors, he believes, has been the key ingredient for The Nest’s success, as it increases the risk appetite of those who have not invested in frontier markets before.

“If you have a whole group of investors coming together, there’s more trust and knowledge because there will be that one person who will have expertise in a given sector or market.” Interestingly, the Nest has seen more interest from those who typically don’t invest in frontier markets.

The online platform reduces barriers to entry for early-stage startups: they don’t necessarily need access to Silicon Valley networks or trips to meet potential investors. Moreover, investors can obtain key financial indicators during the virtual pitch and conduct due diligence remotely with support from locally based investors. The Nest currently is most active with African startups, but plans to decentralize further by partnering with local angel investor groups in Asia, Latin America and the Caribbean to ensure that global investors connect with regional investors and leverage the knowledge they bring and close the capital gap that many early-stage startups face.
<blockquote>We are developing a data solution for fintechs and investors to support remote discovery and address investors' and fintechs' needs in the post-COVID world.</blockquote>
Meanwhile, at MIX, a unit within CFI, we are developing <a href="https://www.themix.org/relay-fintech" target="_blank" rel="noopener noreferrer">a data solution</a> for fintechs and investors to support remote discovery and address investors' and fintechs' needs in the post-COVID world. For fintechs, this solution will partner with <a href="http://www.inclusivefintech50.com/">Inclusive Fintech 50</a> – which launches on June 15 – to offer a new incentive to 2020 applicants: dynamic, targeted data on investors to help fintechs focus their fundraising efforts. We are also partnering with <a href="https://bfaglobal.com/project/catalyst-fund/">BFA’s Catalyst Fund</a> to offer fintechs a survey and analysis to illuminate how their customers are being impacted by COVID-19 in terms of financial health, income generation, and product usage.

For investors, the solution will provide access to fintechs’ profiles as well as the ability to generate customized industry benchmarks based on a standard set of performance KPIs – thereby supporting remote discovery and industry research. The solution will also provide specific data and insights relevant to how fintechs have coped with the COVID-19 crisis, including data on how the crisis has impacted, for example, cash runway and customer growth rates. This data will help investors understand which fintechs are best placed to succeed as the crisis subsides and investors are ready to rebuild pipelines.

Are you a data provider interested in partnering with the MIX team to offer better data and insights on inclusive, early-stage, and emerging market fintechs? <a href="mailto:fintech@themix.org" target="_blank" rel="noopener noreferrer">We’d love to hear from you</a>.

&nbsp;

&nbsp;

Fintech’s Next Big Ideas Might Be Discovered Remotely

Blaine Stephens

Report

<p class="">Investment capital is flowing into fintech startups, yet it is still challenging to get capital to many fintechs addressing last-mile challenges. Evidence suggests this is driven in large part by a lack of information. Using data collected to test an initial set of Data Standards for Inclusive Fintech, this report presents insights into what we can learn about fintechs as businesses and how they address challenges of inclusion. <em>This report was made possible by generous support from MetLife Foundation.</em></p>

Results of the Fintech Benchmarks Proof-of-Concept

Inclusive innovation means including more fintechs from more places. Here's how it can become a reality. 

According to the most recent <a href="https://globalfindex.worldbank.org/#about_focus">Global Findex data</a>, 1.7 billion people worldwide are currently underserved by the financial sector. But fintech companies from China to India to Silicon Valley aren't just challenging the status quo; they’re upending it. As a result, many of these companies are generating record levels of buzz and excitement in the <a href="http://fortune.com/2018/08/08/fintech-crypto-trend-vc-invest/">commercial</a> and <a href="https://www.dw.com/en/is-fintech-the-latest-weapon-in-the-fight-against-poverty/a-45920457">impact</a> sectors alike.

Those of us who care about financial inclusion for the poor must ask if this excitement is translating into real change for those who are, and have historically been, underserved. As Greta Bull, CEO of CGAP, wrote in a recent <a href="https://www.cgap.org/blog/great-expectations-fintech-and-poor">essay</a>: “Poor people…remain central to the story but are easy to lose sight of in the excitement around technology and innovation.”

How, then, can we channel the excitement around fintech to drive not only innovation, but inclusive innovation, which delivers real value to the poor and underserved? It’s a complex challenge.
<h2>Investment in Fintech: Highly Concentrated and Highly Uneven</h2>
Certainly at least part of the equation is understanding how capital and investment are flowing into fintech. While we know that a lot of capital is flowing there, when we look at how this happens, we see two challenges: investment is currently highly concentrated among a relatively small group of investee companies, and there is a lack of understanding of how to define and measure inclusion, even among those concerned with impact.

Digging into the first challenge, we find that fintech investment is highly concentrated in part because it can be challenging for investors new to fintech to sort through the large number investment opportunities available, especially as many fintech companies are at an early stage and are developing largely untested business models. This pushes investors to rely on pre-existing networks and contacts for sourcing their investment pipeline.
<blockquote>It can be challenging for investors to sort through a large number investment opportunities.</blockquote>
Unfortunately, this process leaves out most entrepreneurs, especially in developing countries. For instance, in East Africa, Village Capital found in 2017 that 72 percent of all venture capital in the region went to just three startups, and 90 percent of that capital went to companies with at least one expatriate founder. This does not necessarily mean that these startups aren't inclusive. However, the concentration of capital based on access to traditional networks creates a risk that investors will overlook local entrepreneurs who are creating innovative solutions to local problems, undermining the goal of financial inclusion.
<h2>Data Can Help Address this Disconnect and Drive Innovation</h2>
We at <a href="https://www.themix.org/">MIX</a> are in the process of designing a new data solution to attract capital into inclusive fintech. To understand how such a solution can be best designed to meet the needs of both fintechs and investors, we're conducting several rounds of interviews. We're finding varying degrees of awareness of the problem of high concentration of capital. While investors may be aware that a large portion of the available capital is going to specific regions and companies, with a few exceptions actively addressing the challenge, most investors don't see this concentration as their problem. Since there are so many fintechs out there, the pipeline of each investor is full. This fact – combined with the restrictions, requirements, and specific risk appetite in place at each investment firm – leaves little room or incentive for an investment officer to find fintechs outside of the small circle of known, relatively safe bets.

How can data help address this disconnect? Our hypothesis is twofold.
<ul>
 	<li>We can use data to highlight gaps in current investment flows, surfacing new, promising companies with founders who have non-traditional networks.</li>
 	<li>We can use standardized data on fintechs to create benchmarks that make it easier to define and measure inclusion.</li>
</ul>
This type of data can provide investors with the tools they need to make the case that investing in a broader range of fintechs will close industry gaps and accelerate inclusion.
<h2>About Inclusive Fintech 50</h2>
<a href="https://www.inclusivefintech50.com/">Inclusive Fintech 50</a>, a competition implemented by MIX to recognize promising early-stage fintechs driving financial inclusion, is providing insight into the broad and diverse landscape of fintech companies. The competition is funded by MetLife Foundation and Visa with support from Accion and IFC. Enthusiasm by fintechs to submit shows that even early-stage fintechs can and will share data to demonstrate financial performance and inclusion.
<blockquote>Even early-stage fintechs can and will share data to demonstrate financial performance and inclusion.</blockquote>
An early look at the applications has shown us that fintechs come from a wide range of geographies, with more than 70 countries represented and wide global distribution: nearly 30 percent of the applicants come from Sub-Saharan Africa, between 10 and 15 percent each from East Asia and the Pacific, Latin America, south Asia, Europe and Central Asia, and North America, and around 10 percent from the Middle East and North Africa.
<h2>You Can Help us Create a More Inclusive Fintech Landscape</h2>
Our next step is to combine the data and insights from Inclusive Fintech 50 with the insights from our interviews with investors and fintech companies to design a data solution that can help drive investment to create a more diverse and inclusive fintech landscape. We hope that you’ll get involved: we're looking investors and fintech companies to provide feedback on our approach and to test the standardized data categories and key performance indicators (KPIs), which we’ll use to benchmark both financial performance and inclusion. Together, we can ensure that fintech delivers on its promise to deliver affordable, accessible, and innovative financial services to everyone, everywhere.

<em>To learn how you can get involved, please email fintech@themix.org.</em>

Chrissy Martin Meier

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