How Accion, MetLife Foundation will improve financial inclusion in LatAm

Originally published on BNamericas by Ulric Rindebro

Global nonprofit Accion and the MetLife Foundation announced a new partnership in Latin America earlier this month to empower underserved consumers and enable financial service providers to better serve low-income people in the region.

MetLife Foundation is providing US$3.9 million in funding to support the three-year initiative, which has a strong focus on Argentina, Chile, and Mexico.

BNamericas conducted an email interview with María Camila Gómez, VP of global advisory solutions at Accion, to find out more details about the partnership and also what to expect in the future in terms of partnerships aimed at improving financial inclusion. The interview also included the participation of Evelyn Stark, assistant VP of financial inclusion at the MetLife Foundation.

BNamericas: Why did Accion decide to team up with MetLife Foundation for this partnership?

Gómez: Throughout Latin America, and especially in this project’s focus countries of Argentina, Chile, and Mexico, we see evidence that many consumers do not have their current financial needs met. For example, nearly half of adults in Latin America do not have an account at a formal financial institution. With MetLife Foundation’s support, we will equip financial service providers with the skills to truly listen to what their customers need, design best-in-class digital products that are easy to use, and help customers build healthy financial habits. This aligns with Accion’s focus on ensuring that the digital transformation of financial services happens in a way that benefits the underserved.

BNamericas: Is this the first regional partnership in Latin America launched together by Accion and MetLife Foundation? If so, why launch it now?

Gómez: This is the first project of its nature between MetLife Foundation and Accion, but the foundation is a longstanding supporter of our work to advance financial inclusion. For example, MetLife Foundation, the Center for Financial Inclusion at Accion, and the Institute of International Finance are currently working together on another project called “Mainstreaming Financial Inclusion: Best Practices” to develop practical guidance for financial institutions to expand quality services to the poor. This latest partnership with the Foundation in Latin America takes advantage of the moment of opportunity presented by today’s digital transformation of financial services. This project will allow us to leverage those technologies to build better products, services and delivery methods that can improve the financial capabilities and health of low-income consumers.

I shared this question with my colleague Evelyn Stark, who leads the financial Inclusion portfolio at MetLife Foundation, as well. She noted that ‘The region is a priority for both Accion and MetLife Foundation and we saw an opportunity to expand our reach by partnering with an experienced actor like Accion to affect low-income communities in Latin America and help people lead healthier financial lives.’

BNamericas: Do you expect similar partnerships to be launched in the coming years where the non-profit sector and the private sector team up to improve financial inclusion?

Gómez: Yes, absolutely. Cross-sector collaboration and private sector support are crucial to improving financial inclusion. We at Accion are seeing that private sector support takes a number of different forms. One is philanthropic partnerships with corporations and foundations, like this one, which are critical to Accion’s ability to pursue our mission of giving people the financial tools they need to improve their lives.

More broadly, Accion sees a tremendous amount of private sector interest and investment in inclusive fintech. For example, we recently launched the Accion Frontier Inclusion Fund — managed by Quona Capital — the first global fintech fund for the underserved. The fund was oversubscribed and represented US$141 million in commitments from an array of leading institutional investors, including MetLife.

BNamericas: Why was Chile selected as one of the three countries when it is known as being one of the nations in Latin America with the highest level of financial inclusion and bank penetration?

Gómez: Accion’s historical roots are deeply embedded in Latin America, where our work first began, and we worked with MetLife Foundation to select our target markets for this project. It’s important to keep in mind that access to a financial account is an important step, but only one of many important measures of financial inclusion.

We are interested in ensuring that people have access to a full suite of quality financial products and services that allow people to manage their day-to-day needs, be prepared to face life’s inevitable challenges, and make it easier to plan for and prepare to achieve their long-term goals. In other words, we’re interested in their financial health. There is still much work to be done to ensure that all Chileans have access to the full range of services they need, and we’re excited to advance that effort through this project with MetLife Foundation.

BNamericas: What kind of financial products will be in focus? Given that MetLife is an insurance company, will micro-insurance products be included?

Gómez: Through this partnership with MetLife Foundation, Accion will convene workshops in Mexico, Chile, and Argentina and select six financial service providers to work with us to design, pilot, test, and roll out new customer-centric digital financial products, services, and delivery channels. We will leverage human-centered design principles and behavioral economics to help ensure providers offer products that truly reflect the needs and interests of their low-income clients, empowering them to improve their financial capabilities. We will consider a wide range of digital financial service products, though insurance products are outside the scope of the project.

For a look at the work Accion and MetLife Foundation have done around inclusive insurance, see the recent report from the Center for Financial Inclusion at Accion and the Institute for International Finance, done with the support of the Foundation, Inclusive Insurance: Closing the Protection Gap for Emerging Consumers. The report identifies the main challenges of providing insurance to lower-income populations, as well as the solutions companies are using to overcome them.

BNamericas: Accion and MetLife Foundation both have vast financial experience from many countries in Latin America and the rest of the world. How easy or difficult is it to ‘transfer’ best practices between countries that are likely to have different kinds of market structures, regulations, and cultures?

Gómez: This project in Latin America is part of a broader partnership between Accion and MetLife Foundation that aims to enhance financial customer engagement by building their capabilities. A major part of this is our effort to synthesize learning and insights — about subjects like product design, financial capabilities, and digital solutions — across our work, and share those insights globally.

We hope that our efforts in Latin America can inform best practices and serve as demonstration models for how to leverage digital technologies to reach underserved consumers. Practitioners can then take these insights and knowledge and apply them to individual markets, taking into account factors such as the regulatory environment, market structures, history and culture, and local client needs.

I asked my colleague Evelyn from MetLife Foundation for her point of view. She shared the following: ‘Best practices that our organizations would promote are those that do transfer between countries quite easily: listen to your customer; design for their needs; make products convenient, fair-priced and easy to understand; ensure that products and services are good for clients, and can be delivered sustainably by the institutions that serve them.

These practices can transfer virtually anywhere. Getting to the details of the environment that may enable digital products, for example, means that you have to be on the ground — you have to understand your customers’ willingness and ability to transact digitally, and you have to understand institutions’ ability to build and deliver products that work seamlessly. Of course, you must know the regulatory environment and maintain good ties with the governments’ goals on financial inclusion and financial health. Accion and MetLife Foundation leverage all of our experience, colleagues, and connections to ensure that we work with safe, sustainable, and customer-centric financial service providers in Mexico, Chile, and Argentina.’

BNamericas: What are the main reasons behind the often slow progress of financial inclusion in Latin America, and globally, when so much effort is made by the private sector, non-profits and governments to speed up this process?

Gómez: With three billion financially underserved people around the world, a lot of work remains before we achieve full financial inclusion. It’s also important to keep in mind that much progress has been made, and today, we stand at a moment of great opportunity. Within the last several years, governments throughout Latin America have indicated their commitment to, and support of, financial inclusion, making it a priority in their national planning.

Additionally, digital transformation offers an unprecedented opportunity to scale efforts to reach the underserved — a process that has typically been a high-cost and labor-intensive effort. With digital technologies, we can improve the quality and lower the cost of financial services, reaching more people than ever before.

My colleague Evelyn at MetLife Foundation noted, ‘According to the Economist Intelligence Unit’s Global Microscope, which both Accion and MetLife Foundation have supported, Latin America continues to rank amongst the leading regions worldwide in providing a conducive policy environment for financial inclusion. Latin America is also home to some of the earliest and most successful microfinance institutions in the world, which have had great success in serving low-income people. While progress may not be as fast as we would all hope for, we believe that Latin America has all the right ingredients in place for the next wave of inclusion and financial health.

We believe digital financial services will be a key driver in the next wave, and Latin America has no shortage of mobile phones, fintech players, and ingenuity and imagination. In this partnership and more broadly, Accion and MetLife Foundation support digital financial services in many ways in Latin America. We’re looking forward to continued success throughout Latin America and to seeing the improved financial health throughout the region.’