This report and infographic examine data from the 250+ eligible fintech applicants from the fourth Inclusive Fintech 50 competition to better understand the state of early-stage fintechs. CFI analyzes all applications to identify trends and to find innovations with disruptive potential. The massive scale that is only possible with digitalization matters greatly to the financial inclusion agenda, and this year’s IF50 applicants are already collectively reaching 54 million people, many of whom were previously underserved, across 101 countries of operation. The fintechs are young and small now, but as we’ve seen in past years, they grow to reach millions more people and raise millions more in investment. However, despite this tremendous outreach and potential, there are also areas that require attention: funding and gender gaps, inconsistent practices around data privacy and consent, and limited data collection for outcomes management.

Insights from the 2022 Inclusive Fintech 50 Applicant Pool

There has been a lot of talk in recent years about the promise of fintech to help advance financial inclusion. This has been especially true during the pandemic: acceleration in digital adoption, spurring further growth in the inclusive fintech sector. Much of this growth has taken place in Africa, where fintechs raised <a class="Hyperlink SCXW16100441 BCX0" href="https://thebigdeal.substack.com/" target="_blank" rel="noreferrer noopener">$2.3 billion dollars in 2021, up from $830 million in 2020</a>, helping to catch up with funding levels in South Asia and Latin America.
<blockquote class="pullquote--right">While inclusive fintechs are developing innovative ways to reach new customers, meaningful customer segments remain underserved.</blockquote>
With this growth, there also is more data and insights about fintechs and their customers. Last year, two reports, CFI’s <a class="Hyperlink SCXW14958972 BCX0" href="https://www.centerforfinancialinclusion.org/insights-from-the-2021-if50-applicant-pool" rel="noreferrer noopener">Inclusive Fintech 50: Driving Innovation in an Era of Uncertainty</a> and Catalyst Fund’s <a class="Hyperlink SCXW14958972 BCX0" href="https://bfaglobal.com/catalyst-fund/briter-catalyst-fund-state-of-the-fintech-industry-report/" target="_blank" rel="noreferrer noopener">State of Fintech in Emerging Markets </a>(in collaboration with <a class="Hyperlink SCXW14958972 BCX0" href="https://briterbridges.com/" target="_blank" rel="noreferrer noopener">Briter Bridges</a>), leveraged such data to take stock of the industry’s progress. The reports arrived at similar conclusions: while inclusive fintechs are continuing to develop innovative ways to reach new customers, meaningful customer segments remain underserved and fintech funding remains concentrated.

The truth is that we are still in the early stages of bringing the power of fintech to bear on the challenges that low-income and vulnerable populations face. Advances have certainly been made, but the greatest gains only can be realized through intentional and collective efforts on the fintech frontier. This will help pave the way for strategies to turn these underserved markets into opportunities for growth.
<h1>Outreach to Underserved People</h1>
On the bright side, early-stage fintechs continue to proliferate. Last year, nearly 300 such fintechs applied to <a href="http://www.inclusivefintech50.com/" target="_blank" rel="noopener noreferrer">Inclusive Fintech 50 (IF50)</a>, an annual competition to showcase early-stage fintechs driving financial inclusion around the world. Expert judges selected 50 winners from this applicant pool based on established criteria of inclusivity, innovation, scale potential, and traction. 

IF50 applicants have shown a continuous drive to innovate, demonstrated by their broad range of product areas, with varied models, partnerships, and customer acquisition strategies. The fintechs also are finding diverse ways to reach underserved people, such as through the provision of in-person digital skills training, use of agents, and product offerings that can be accessed without a smartphone.

Applicants are also designing solutions to address challenges in areas that are fundamental to people’s livelihoods – including climate resilience, health, and support for micro and small enterprises. For example, IF50 2021 winner <a href="https://gotugende.com/" target="_blank" rel="noopener noreferrer">Tugende</a> uses asset finance, technology, and a customer-centric model to help informal sector entrepreneurs in Africa grow their businesses and access value-added services such as medical insurance. Eighty percent of IF50 2021 applicants reported that their solutions helped customers access essential services during the pandemic, such as healthcare, government relief, and clean energy.

&nbsp;

<img class="size-full wp-image-44679 aligncenter" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2022/06/Tugende-Snapshot-03-e1655994301976.png" alt="" width="1000" height="599" />

&nbsp;
<h1>Gaps in Inclusivity</h1>
Despite this progress, significant gaps in customer outreach remain. For example, only 23 percent of fintechs in the Catalyst Fund sample reported that women constituted more than 50 percent of their customer base. Moreover, 38 percent of the IF50 2021 applicants do not disaggregate client data by gender.

Catalyst Fund and IF50 both also found that most inclusive fintechs do not focus mainly on low-income people. In the IF50 sample, 41 percent of applicants reported primarily targeting low-income customers. More than 70 percent of startups in the Catalyst Fund sample reported that fewer than 25 percent of their customers live under the poverty line, although poverty rates in the countries where these startups operate are closer to 35-45 percent.

The Catalyst Fund data also showed that as startups grow, they tend to move upmarket. Particularly for early-stage startups looking to raise capital, showing strong acquisition numbers is imperative, and middle- and higher-income customers tend to be <a href="https://medium.com/caribou-digital/what-are-the-limits-of-the-private-sector-in-serving-the-poor-3ee9a9a468fc" target="_blank" rel="noopener noreferrer">easier and cheaper</a> to acquire.
<h1>Concentration in Funding and Geographies</h1>
The pressure to acquire more customers may be driven by the underlying scarcity of funding for early-stage fintechs. Although investment flows have grown dramatically in recent years, funding in emerging markets is concentrated among very few startups. Out of 101 Sub-Saharan African startups in the IF50 2021 sample, five accounted for 65 percent of the funding. In Latin America, five of 36 applicants received 83 percent of funding.

Not only is funding concentrated among a few startups, but those startups are also based in a select few countries. Sixty-four percent of total funding reported by IF50 2021 applicants went to fintechs based in five countries: Colombia, India, Mexico, Singapore, and the United States. In Latin America, four countries (Brazil, Mexico, Uruguay, and Colombia) accounted for over 99 percent of funding in the Catalyst Fund sample. Such geographic concentration particularly excludes countries with lower levels of financial inclusion. Of the 16 countries in the IF50 sample that received over $10 million, only three have financial inclusion levels below 40 percent. Similarly, <a href="https://qz.com/africa/2029505/everything-you-need-to-know-about-fintech-financing-in-africa/?utm_source=email&amp;utm_medium=africa-launch-list&amp;utm_content=017e81c9-90b4-11ec-8d42-724a485ab421" target="_blank" rel="noopener noreferrer">fintech funding in Africa is concentrated in Kenya, Nigeria, and South Africa</a> (87.9 percent), all countries with higher levels of financial inclusion and/or more developed fintech ecosystems.
<blockquote>Not only is funding concentrated among a few startups, but those startups are also based in a select few countries.</blockquote>
Deals are also concentrated in certain types of products: those in payments, digital credit, and neo banks, and those that require a smartphone. In contrast, savings and insurance fintechs receive less funding, as do models that leverage USSD or lower-tech accessibility. IF50 data found that funding to fintechs offering services that require smartphones was about 3.5 times greater than those needing only a basic or feature phone. This may be because lower-tech models cost more to operate and users cannot bear higher-margin pricing.

Investment flows continue to favor men, and along all stages of growth, men founders raise more than women founders. According to 2021 IF50 data, women founders, on average, raised one-third the amount raised by men founders.

&nbsp;

<img class="wp-image-44683 size-full aligncenter" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2022/06/IF50-blog-post-stacked-graph-1-e1656002022248.png" alt="" width="1000" height="652" />

&nbsp;

Overall, the data demonstrates that the majority of inclusive fintech startups, particularly those servicing more excluded segments, continue to find it difficult to access investment capital.  Being able to prove the business case of untapped markets is difficult, but Okapi Finance, an IF50 2021 winner, aims to demonstrate the potential by focusing on women merchants in Africa’s informal sector.

&nbsp;

<img class="aligncenter wp-image-44681" src="https://content.centerforfinancialinclusion.org/wp-content/uploads/sites/2/2022/06/Okapi-snapshot-01.png" alt="" width="1000" height="599" />

&nbsp;
<h1>Looking Ahead</h1>
While there are opportunities for early-stage fintechs to build commercially viable businesses that are truly inclusive, more effort is needed from the broader ecosystem to ensure that innovative solutions can take hold. Startups are continuing to emerge on the frontier, but they need access to the visibility, resources, expertise, and networks that support their growth into sustainable and impactful companies.

Supporters of digital financial inclusion can help by directing greater attention to innovative startups in overlooked markets. Competitions like IF50 and those organized by <a href="https://www.womensworldbanking.org/fintech-innovation-challenge-2021/" target="_blank" rel="noopener noreferrer">Women’s World Banking</a> and the <a href="https://www.afi-global.org/newsroom/news/applications-open-for-the-2022-afi-inclusive-fintech-showcase/" target="_blank" rel="noopener noreferrer">Alliance for Financial Inclusion</a>, and market insights provided by research organizations like Briter Bridges, also help to raise awareness. Incubators and accelerators, such as <a href="https://bfaglobal.com/catalyst-fund/" target="_blank" rel="noopener noreferrer">Catalyst Fund</a>, can assist in de-risking less proven models and making them more market-ready via grant funding, mentorship, and other venture-building services. And finally, greater investment, particularly in the $250K to $1M range, can help to fuel early-stage ventures pioneering innovative solutions.

The application period for the 2022 <a class="Hyperlink SCXW136892565 BCX0" href="https://www.inclusivefintech50.com/" target="_blank" rel="noreferrer noopener">Inclusive Fintech 50</a> competition will open Monday, June 27, and inclusive fintech startups – especially those at the frontier – are strongly encouraged to apply. The 2022 theme is “Making Digitalization Count.” IF50 is sponsored by Visa, MetLife Foundation, and Jersey Overseas Aid &amp; Comic Relief.

Driving Inclusivity on the Fintech Frontier: Let’s Make It Count

The <a href="https://www.inclusivefintech50.com" target="_blank" rel="noopener noreferrer">Inclusive Fintech 50</a> application data from the third year signals continued progress on innovations to onboard low-income customers, despite the challenges posed by the pandemic:
<ul>
 	<li>Inclusive fintechs are using creative approaches to serve new customers. From retail partnerships that help drive customer acquisition, to insurance platforms offering micro-coverage, to native language chatbots, to enhanced biometric identity verification solutions, early-stage inclusive fintechs are pursuing outside-the-box solutions to reach un/underbanked people around the world.</li>
</ul>
Nevertheless, there are two areas of concern:
<ul>
 	<li>Funding concentration persists. While fintech investments across emerging markets have been increasing, early-stage inclusive fintechs continue to face disparities based on geography, funding status, and gender.</li>
 	<li>Potential customer risks persist around data usage. Although data is central to the business models of inclusive fintechs, some applicants require customer consent related to data, and some still do not.</li>
</ul>

Insights from the 2021 Inclusive Fintech 50 Applicant Pool

WASHINGTON, D.C., USA, June 28, 2021 - The Center for Financial Inclusion (CFI) has launched the third year of Inclusive Fintech 50 (IF50), a competition to recognize the most promising inclusive fintech startups pushing the frontiers of innovation. This year, the competition seeks to recognize early-stage fintechs that are helping low-income customers and micro- and small enterprises not just respond to the pandemic, but rebound, rebuild, and recover after the past year’s devastation.

IF50 is sponsored by Visa, MetLife Foundation, and Jersey Overseas Aid &amp; Comic Relief, with support from Accion and IFC. In its first two years, IF50 attracted applications from over 700 startups across 162 countries, cumulatively reaching almost 175 million customers. Each year, an independent judging panel of global fintech experts reviews the applicants to select 50 winners based on four criteria: inclusivity, innovation, scale potential, and traction.

Participation in the competition provides startups with visibility and credibility among investors as well as media and partnership exposure; 19 winners from the 2019 cohort have since raised a collective $182.5 million in investment. In addition, this year’s winners will be featured in early November during Financial Inclusion Week, an annual virtual event organized by CFI for the inclusive finance community to discuss the latest developments and key issues facing the sector. Winners will also be featured in this year’s research findings and media coverage. For example, <a href="https://www.inclusivefintech50.com/briefs" target="_blank" rel="noopener noreferrer">several publications from the past two years</a> prominently featured IF50 winners.

For the 2021 competition, new benefits to IF50 winners include access to <a href="https://www.practicalbusinessskills.com/" target="_blank" rel="noopener noreferrer">Practical Business Skills</a>, a global digital platform created by Visa to deliver free educational resources to help small and micro business owners make confident, informed decisions to grow their businesses. Winners will be able to customize and co-brand this turn-key solution to support the local recovery efforts of the small and micro businesses they serve. Eligible winners will automatically pre-qualify for <a href="https://partner.visa.com/site/programs/fintech-program.html" target="_blank" rel="noopener noreferrer">Visa Fintech Fast Track</a>, a program that aims to speed up the process of integrating with Visa and its ecosystem partners and helps fintechs enhance and introduce new and innovative payment experiences. These tools, together with the networking and platform that IF50 provides, serve as an invaluable platform for startups at the earliest stages of their journey.

As the COVID pandemic continues to rage in many parts of the world, fintech startups and services have proven to be an invaluable lifeline for vulnerable people, facilitating remittances, digital payments, and payments associated with government safety nets. Higher rates of fintech acceptance present new opportunities for startups to go beyond traditional offerings to deliver valuable financial services that will ensure the financial health and resilience of underserved people.

Expert judges include a diverse group of independent fintech experts, investors, and founders, including:
<ul>
 	<li>Nejoud Al Mulaik, Director, Fintech Saudi</li>
 	<li>Tarek Assad, Managing Partner, Algebra Ventures</li>
 	<li>Sarah Austrin-Willis, Senior Director, Financial Solutions Lab, Financial Health Network</li>
 	<li>Ginger Baker, Head of Financial Access, Plaid</li>
 	<li>Anne-Marie Chidzero, Chief Investment Officer, FSD Africa Investments</li>
 	<li>Bernhard Eikenberg, Managing Partner, Emerging Markets, Community Investment Management</li>
 	<li>Brad Jones, CEO, Wave Money</li>
 	<li>Buhle Goslar, Africa CEO, Jumo</li>
 	<li>Jojo Malolos, CEO, JG Digital Equity Ventures and Data Analytics Ventures</li>
 	<li>Kunal Upadhyay, Advisor, ADB Ventures</li>
 	<li>Shwetank Verma, Co-Founder and General Partner, Leo Capital</li>
 	<li>Gabriela Zapata Alvarez, Independent Consultant (Financial Inclusion)</li>
</ul>
The application window opens today, and interested startups are encouraged to apply by July 23 via the <a href="https://www.inclusivefintech50.com/apply">IF50 website</a>.

# # #

Key quotes:
<ul>
 	<li>Managing Director of CFI, <a href="https://centerforfinancialinclusion.org/people/mayada-el-zoghbi/" target="_blank" rel="noopener noreferrer">Mayada El-Zoghbi</a>, highlighted the timeliness of the theme noting, “As the world continues to wrestle with the challenges presented by the pandemic, fintechs can play an important role in helping those most impacted move towards recovery. For example, by supporting micro- and small enterprises, which have been devastated by the pandemic but will be ground zero for eventual economic recoveries across the developing world. As difficult as this crisis has been, it has prompted a surge in fintech innovation and an openness to new ideas, the benefits of which could be applied to other challenges beyond the pandemic. We need to be intentional about how we can use this as a springboard for making advances elsewhere, such as with women’s financial inclusion, the responsible use of data, and in navigating the impacts of climate change.”</li>
 	<li>Beth Hurvitz, Global Head of Social Impact, Visa Inc. noted, “Digital payments are an onramp for financial inclusion, helping people and businesses meet their needs and stay afloat in the current context. Fintechs are key to enhancing access and the benefits of digital adoption for the underserved. Visa is committed to work with the payments ecosystem on initiatives such as Inclusive Fintech 50, to support SMB owners to become digitally enabled and rebuild stronger, more competitive and resilient businesses for the recovery of our communities.”</li>
 	<li>Krishna Thacker, Director, MetLife Foundation, noted, “At MetLife Foundation, we recognize the ability of tech to reach low-income people further and faster, but we’re also focused on engaging the customer and changing their financial outcomes. Through Inclusive Fintech 50, we want to identify, recognize and support organizations that are going beyond inclusion to build resilience and financial health for low-income customers – a need highlighted by the pandemic.”</li>
</ul>
# # #
<h3>About IF50</h3>
Inclusive Fintech 50 identifies promising early-stage fintechs driving financial inclusion around the globe through a competitive process led by an independent panel of judges from venture capital, technology, and financial services. Applicants are assessed on the degree to which their target market includes underserved people or businesses, and whether their innovation offers a new value proposition, shows early-stage traction, and can have a noticeable impact on the more than 3 billion financially underserved people globally. Inclusive Fintech 50 is sponsored by Visa, MetLife Foundation, and Jersey Overseas Aid &amp; Comic Relief, with support from Accion and IFC. The initiative is managed by the Center for Financial Inclusion (CFI). Learn more at <a href="https://www.inclusivefintech50.com/" target="_blank" rel="noopener noreferrer">www.inclusivefintech50.com</a>.
<h3>About The Center for Financial Inclusion</h3>
The Center for Financial Inclusion (CFI) works to advance inclusive financial services for the billions of people who currently lack the financial tools needed to improve their lives and prosper. We leverage partnerships to conduct rigorous research and test promising solutions, and then advocate for evidence-based change. CFI was founded by Accion in 2008 to serve as an independent think tank on inclusive finance.
<h3>About Visa</h3>
Visa Inc. (NYSE: V) is the world’s leader in digital payments. Our mission is to connect the world through the most innovative, reliable and secure payment network – enabling individuals, businesses and economies to thrive. Our advanced global processing network, VisaNet, provides secure and reliable payments around the world, and is capable of handling more than 65,000 transaction messages a second. The company’s relentless focus on innovation is a catalyst for the rapid growth of connected commerce on any device, and a driving force behind the dream of a cashless future for everyone, everywhere. As the world moves from analog to digital, Visa is applying our brand, products, people, network and scale to reshape the future of commerce. For more information visit About Visa and @VisaNews.
<h3>About MetLife Foundation</h3>
At MetLife Foundation, we are committed to expanding opportunities for low- and moderate-income people around the world. We partner with nonprofit organizations and social enterprises to create financial health solutions and build stronger communities, while engaging MetLife employee volunteers to help drive impact. MetLife Foundation was established in 1976 to continue MetLife’s long tradition of corporate contributions and community involvement. From its founding through the end of 2019, MetLife Foundation provided more than $900 million in grants and $87 million in program-related investments to make a positive impact in the communities where MetLife operates. Our financial health work has reached more than 17.3 million low- and moderate-income individuals in 42 countries. To learn more about MetLife Foundation, visit metlife.org.
<h3>About Jersey Overseas Aid &amp; Comic Relief</h3>
In 2018, Comic Relief and Jersey Overseas Aid announced a four-year £8 million partnership called ‘Branching Out: Financial Inclusion at the Margins’ to improve access to affordable financial services for those at the margins of society in Sierra Leone, Rwanda, and Zambia. Comic Relief and Jersey Overseas Aid believe that one of the best ways to do this is by transferring knowledge to build responsible and inclusive financial systems, incubating FinTech, and focusing on service delivery to increase bottom-of-the-pyramid access to financial services including bank accounts, savings, insurance and credit, providing low-income households with the means to plan for the future as well as unexpected events. The partnership grants support a diverse set of organizations, made up of international and local NGOs, with each grantee delivering programs designed to meet different community and national needs in addressing financial inclusion.
<h3>About Accion</h3>
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 60 years, Accion has helped tens of millions of people through our work with more than 160 partners in 55 countries. More at http://www.accion.org.
<h3>About IFC</h3>
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2020, we invested $22 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org.

Media contacts: Lauren Braniff, Vice President, Strategy and Communications
Center for Financial Inclusion: lbraniff@accion.org

Inclusive Fintech 50 Launches 2021 Competition to Recognize Early-Stage Fintechs Driving Innovation in an Era of Uncertainty

<h1>Why Benchmarking Matters</h1>
<h5>HOW DO WE KNOW WE'RE BEING EFFECTIVE?</h5>
Achieving financial inclusion requires continuously evaluating how well the industry is progressing and how far we still have to go. Benchmarking activities help us measure progress and identify priorities for research and action. To reach 3 billion people who are left out of or poorly served by the financial sector, a full understanding of progress and setbacks is essential.

&nbsp;
<h1>Approach</h1>
<h5>INDEPENDENT AND CRITICAL PERSPECTIVE</h5>
We are committed to keeping the industry focused on financial inclusion that benefits consumers. CFI assesses public industry data, like the <a href="https://globalfindex.worldbank.org/">Global Findex</a> and the <a href="https://news.gallup.com/reports/233399/gallup-global-financial-health-study-2018.aspx">Gallup Global Financial Health Study</a> with an independent and critical eye, shining a spotlight on where action is most needed. We also participate in joint benchmarking exercises with partners to examine specific aspects of the sector, like the regulatory environment or risk perceptions. In all our benchmarking and research endeavors, we are keen to reality test prevailing narratives, ask tough questions and shine a light on overlooked trends.

&nbsp;
<h1>Results</h1>
<h5>WHAT HAVE WE ACHIEVED?</h5>
<h2>Benchmarking the Enabling Environment</h2>
Together with partners, CFI sponsors and contributes to the Global Microscope—a project led by the Economist Intelligence Unit. Intended to benchmark the enabling environment for promoting financial inclusion, the Microscope assesses the institutional and regulatory ecosystem based on selected indicators across over 50 developing economies. We have helped the Microscope evolve from a study of microfinance in Latin America and the Caribbean into a global study of the broader financial inclusion ecosystem. Additionally, we also look at new indicators on the enabling environment for digital financial services.

With 2018 marking its eleventh edition, the Microscope is one of the few benchmarking tools in the financial inclusion sector that spans a decade or more. Regulators across the world use its scoring and rankings as yardsticks for their own performance. Investors also consult the study when considering investment strategies. Many countries are cognizant of where they stand in the global rankings and are motivated to improve.

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Insights from the 2022 Inclusive Fintech 50 Applicant Pool

Driving Inclusivity on the Fintech Frontier: Let’s Make It Count

Insights from the 2021 Inclusive Fintech 50 Applicant Pool

Inclusive Fintech 50 Launches 2021 Competition to Recognize Early-Stage Fintechs Driving Innovation in an Era of Uncertainty

Benchmarking Financial Inclusion Progress