What Mastercard Strive is learning about digital solutions to improve access to finance for small businesses worldwide
Barbra Safar, an entrepreneur from Rawalpindi, Pakistan, has skillfully navigated the challenges of running two businesses. When the COVID-19 pandemic brought unforeseen challenges, Barbra temporarily closed her small tailoring shop, but undeterred, she pivoted to a new venture: mealworm farming, a unique business in Pakistan.
“We started a new setup called Urban Meal Worms,” she says, describing her second business, which involves raising beetles to produce worms sold as protein meal for birds and fish. Barbra, who had received digital and social media training through Strive Women, self-funded this new venture by selling some of her jewelry. Now, she is looking for additional capital to expand her operations. “I have not yet taken any financial help, loans, or grants for my businesses,” she says, “But I would like to have a setup for Urban Meal Worms because we cannot expand without it.”
Across the globe, Mastercard Strive is supporting millions of small business owners and entrepreneurs like Barbra to build their resilience and grow, through greater access to funding and digital financial services. This includes initiatives focused on digitally-enabled loans, credit assessment tools, and other digital and data-driven solutions supporting small businesses along their financial journey.
Over the course of three years of working to enable greater access to capital and digital financial services for small businesses, several insights on designing and delivering digital and data-first solutions have emerged for Mastercard Strive:
- Relevant digital finance solutions drive small business adoption: Solutions must intentionally ‘meet small businesses where they are’ by matching small businesses’ current needs and abilities. For example, through Strive Women, implementation partner CARE, using a women-centered design process, works with partners to disaggregate data by gender, conduct in-depth interviews and focus groups, and test concepts with women entrepreneurs to ensure that products and services remain relevant and meet small business needs.
- Bundled and embedded digital solutions lead to greater small business use, provided they add value: Pairing digital solutions with upskilling can increase small business engagement by putting their knowledge into practice right away. Embedded digital solutions must enhance or add value to the services they are built into. Without added value, small businesses struggle to engage with solutions.
- Small businesses tend to be less trusting of financial (and digital) solutions: This trust (or lack thereof) impacts whether small businesses adopt digital finance solutions. For instance, Mastercard Strive partner Boost Technology observed that micro-retailers often needed to receive multiple messages or confirm the legitimacy of the messages with in-person sales representatives before they were willing to trust them. Mastercard Strive has found success in establishing small business trust by working with partners (and brands) already trusted by small businesses, building human ‘touch’ support into programming, and using local champions and peer network groups.
- Communities and peer networks (both digital and in-person) can enable digital finance adoption: They help ‘get the word out’ about programs, build financial capacity, troubleshoot solutions, and actualize behavior change. For example, Mastercard Strive partner Hoob Marketing in Brazil found that Facebook communities can be ideal platforms for strengthening entrepreneurs’ knowledge and skills, thanks to several factors. They provide an environment for real-time interaction and mutual support, where entrepreneurs exchange experiences, challenges, and solutions. Mastercard Strive in India has observed that social capital within a peer network is powerful for women, and women are far more likely to actualize behavior change through peer networks.
- Human support remains necessary for small businesses to build trust and drive use: Some form of ‘high-touch’ human support (either in-person or digital) is required. For instance, Mastercard Strive program manager Accion found that despite an increase in digital usage, fear and distrust of information found online is still high amongst micro and small business owners, highlighting that a certain level of human touch remains essential. Finding a balance between high-touch interaction and longer-term sustainability ensures solutions remain practical and successful over time.
- Behavioral science is showing promise in encouraging positive financial outcomes: Mastercard Strive is increasingly experimenting with behavioral science, such as game-like features, to drive positive outcomes for small businesses. In Bolivia, Accion partnered with BancoSol to develop GanaSol, a gamification-based platform to encourage savings, on-time loan repayments, and use of digital channels. The platform saw 10,000 new users within the first four weeks after launch and observed a 30% increase in users who reported on-time loan repayments. Similarly, Mastercard Strive partner Flourish FI has found that rewards must be valued by small businesses to motivate positive financial behaviors.
These insights and lessons have been invaluable for Mastercard Strive as we explore new programming and initiatives to better support small businesses and the persistent funding gap they face around the globe. As Mastercard Strive continues to support small businesses in building their resilience and growing through digital and data-first solutions, we are prioritizing working more intensely with small businesses to trial and use more advanced digital financial tools, complemented by upskilling, to further adoption.
