5 FinTech Trends From DFS Lab’s Design Sprint in Sri Lanka
Eight startup teams joined us for a week to tackle some of the most difficult problems in fintech — here’s what we saw.
We landed in Sri Lanka really excited about the week ahead. Against the background of the country’s western shore, eight incredible entrepreneur teams were about to embark on a design sprint to prototype and test their fintech concepts. The teams were excited to get going — there was the possibility of up to $100,000 in funding and a spot in our next cohort, a 6-month accelerator where startups would gain access to a network of world-class mentors and additional advisory from the DFS Lab team.
DFS Lab’s first bootcamp attracted strong fintech entrepreneurs and now a year into building the Lab, we were lucky enough to garner interest from an even larger pool of talent. Out of hundreds of applicants, eight teams were chosen to hit the ground in Sri Lanka ready to work with the Lab to bring their concepts to life:
- Teller is an artificial intelligence banking assistant that allows customers to communicate with banks through their favorite messaging platforms without needing to download a new app. Teller’s chatbot can answer hundreds of financial questions, as well as provide advice on saving, budgeting, improving one’s credit score, investing, and retirement. It also helps banks to automate the simple, repetitive questions that they receive, providing timely customer service.
- Pezesha is Kenya’s peer-to-person microlending marketplace, using analytics to match lenders with creditworthy individuals, including business owners. The platform gives access to credit while generating great returns to lenders.
- Olly is a smart credit card for India that allows customers to switch it ‘on’ or ‘off’ to give the customer full control over their transactions and to prevent fraud. Olly uses alternative data sources in their underwriting process to reach more customers.
- Bloom Impact is a free online marketplace that matches micro and small businesses with lenders that will best fit their needs. Bloom also matches businesses with the right savings accounts for their business. Bloom’s data-driven approach significantly reduces financial service providers’ acquisition costs and efficiently provides small businesses with access to credit.
- My Oral Village is a not-for-profit organization that creates ‘oral’ financial tools and services to give financial access to the over one billion illiterate and innumerate people in the world. My Oral Village also engages in oral financial numeracy research to find innovative ways towards financial inclusion among the illiterate and innumerate.
- Inclusive is an API that verifies financial identities across Africa. Financial institutions across Africa can plug Inclusive’s API into their digital channels to achieve seamless user onboarding, eliminate redundant identity checks, access quality and secured data sources, and improve fraud detection and investigation all while providing the highest level of security.
- Signzy is a ‘digital trust system’ that provides identification, background checks, forgery detection, and contract management systems that are safe, legal, and convenient. Signzy uses the latest in biometrics and blockchain technology, providing high levels of security and accurate identity verification.
- Pula is an insurance intermediary for small-scale farmers in Africa that safeguards their crops and allows farmers to invest in their farms. Pula offers risk transfer solutions for agriculture, using in-house algorithms and risk assessment methods including satellite-assisted verification of crop yields.
We use a modified Design Sprint methodology for our bootcamps. Teams move rapidly from mapping the problem, to sketching possible solutions, to deciding what to test, to building a prototype, to validating with real customers. They landed in Sri Lanka with a startup problem and leave Sri Lanka with customer feedback on a solution — all in a week’s time.
Our bootcamps is the last step of our selection process prior to our investment committee. Teams are not competing with each other during this phase, but instead are working with us in a mutual due diligence process — we want to know how well they fit with DFS Lab and they want to know what we can offer. Throughout our selection process, we noticed some interesting trends in the sector:
- The rise of digital financial service marketplaces
As more digital financial service providers enter the landscape and offer a larger menu of choice to customers, the need for DFS marketplaces grows. Consumers need marketplace comparison apps to discover, filter, compare, and connect with the myriad of services. We’ve seen a number of such marketplace startups apply, and we invited one of them, Bloom Impact, to join us in Sri Lanka.
2. Insurance startups are becoming more common
We think there is a huge opportunity in insurance startups and insure-tech. This cohort is the first where we’ve seen a rise in promising applicants try to tackle insurance. Offering health insurance through remittance products was a trend. Pula, another one of our bootcamp participants, is revolutionizing crop insurance with their seeds that insured against drought.
3. Ingredient branding matters
More and more, we are seeing startups looking to improve the current DFS experience for low-income users. Some, like Pula mentioned above, hope to define their own brand in an industry where distribution is dominated by global seed giants. Others, like My Oral Village, want to extend existing DFS products to innumerate users, but risk a complete disconnect from their end-users unless they can brand themselves separately from financial institutions and mobile operators. We referenced the “Intel Inside” case study frequently during this bootcamp.
4. Chatbots get attention
It is always interesting to see how our bootcamp startups interact with each other and what they look to learn from each other. We invited Teller, a startup that creates AI banking assistants, to the bootcamp because we wanted to drive innovation around chatbots to developing economies. During the bootcamp, the Teller team was anointed resident messaging platform and chatbot experts by teams and mentors alike. There’s some straightforward value that chatbots bring to DFS providers by alleviating some customer service costs, but they are also a very interesting channel to increase customer engagement through messaging platforms many customers are familiar with and use everyday.
5. The continued explosion of alternative credit
Alternative credit continues to flourish and was the most represented type of startup during our application process. Direct to consumer models, now a bit more mature thanks to the teams like Jumo, Saida, Tala, and Branch have given way to a flood of MSME lending ventures. We’ll continue to experiment with alternative credit models to better understand what works, but are certainly now more cautious than ever about the dangers of such a unchecked expansion of credit.
We’re excited to see our bootcamp startup teams continue to grow and will be announcing the teams joining DFS Lab in its second cohort shortly. You can follow us @theDFSLab on Twitter and at www.dfslab.net for more about our startups, our future bootcamps, and more about our work in fintech for developing economies.