#ItsHerEconomyToo Interview Series: How One Indian Fintech Company is Advancing Women’s Digital Equity

September 9, 2022

In this series we dive into the work happening around the world with Women’s Digital Financial Inclusion Advocacy Hub partners, and explore how they are driving women’s digital financial inclusion.

As evidenced by this year’s Global Findex Report, digital financial inclusion isn’t just an urgent moral imperative, but an economic one as well. While around 250 million more women in developing countries finally have some form of financial access, three times that many – roughly three quarters of a billion women – are still excluded from the mainstream economy.

To address this gap, Women’s World Banking and the United Nations Capital Development Fund (UNCDF) recently launched the Women’s Digital Financial Inclusion Advocacy Hub, a catalyst for collective action to increase digital financial inclusion for women.

The Hub convenes diverse stakeholders, including financial service providers, fintechs, civil society, and bi- and multi-lateral organizations, with established coalitions on the ground in Ethiopia and Indonesia. Here’s how Advocacy Hub member Kaleidofin is working to advance women’s digital equity in India.

Tell us about your business.

Kaleidofin is a multi-product fintech company whose mission is to propel customers towards their real life goals by providing intuitive and tailored financial solutions. Our target segments are customers working in the informal sector who typically have little to no documentation of income or assets. As  a result, most of our target customers are unable to access critical financial services that could help meet working capital challenges and realize their business as well as life goals. We offer simple, well designed financial solutions, focused on dramatically increasing access and usage of formal financial services in a way that can have a positive impact on customer’s lives. Over 98% of our customers are women. We offer four key products: KiCash  a goal based savings solutions, KiScore, a supervised machine learning based automated credit health check for informal sector customers, KiCredit, a credit as a platform service for tailored lending, co-lending and debt capital markets use cases and KiPay, a suite of inclusive digital payment solutions. Across product lines, Kaleidofin has over 1.3 million active transacting customers across India.

What actions or initiatives are you implementing to help women MSMEs and drive digital financial inclusion?

As I mentioned, 98% of our customers are women. Our primary target segments are micro-entrepreneurs (particularly women microfinance clients) and those who operate informal sector businesses. Catering to the needs of this target demographic is central to our design philosophy.

We leverage extensive research and field level engagements to identify gaps in market offerings. For instance, we realized there’s a huge gap in the market when it comes to availability of high quality savings products and access to seamless working capital finance,  due to the rigid design of existing savings and credit products that do not cater to the high income and expense volatility that characterizes our target customer segment.

The product design process then focuses on building customer personas, which enable us to offer customized savings led or credit led financial solutions based on each customer’s need. When designing the savings platform, we realized that although most customers have a very clear idea of their real-life goals, such as saving to send their kids to college or saving for retirement, they often struggle to determine the best financial plan for them. To address this discrepancy, we ask a few questions about our customers’ goals, the nature of their work, income levels, spending patterns as well as standard of living. The platform then curates an individualized solution for each customer that stitches together a savings target, investment plan and insurance for “goal protection.” By reframing the discussion to focus on goals, we make savings, investment into mutual funds and insurance products more accessible to our customer, thus lowering the barriers to entry.

Further, the Kicash solution is also layered with a credit facility that can be used by our customers either to meet working capital requirements or to meet other cashflow mismatches that happen frequently in their financial lives, as and when required.

To reach potential customers and expand our impact, we leverage our network of  partners like NBFCs, MFIs, Banks and Banking Correspondents by offering these field partners technology-led financial service products that enable them to offer better designed financial solutions to their customers.

 Why do you believe the work that you’re doing is so critical?

From our field research and surveys, we’ve been able to identify some of the key barriers to universal financial inclusion:

  • Lack of familiarity with full suite financial solutions, compounded by the fact that most of the financial services sector offers products that have significant fine print. There is also an implicit expectation that customers can understand the risk and implications of this fine print.
  • Given the low digital and financial literacy of this customer base, this lack of familiarity results in mis-selling and diminishes trust in formal financing.
  • High cost of customer acquisition, driven by remoteness.
  • Low value, high volume transactions, which are largely paper-based and operations heavy.

Kaleidofin has tackled each of these issues intentionally and deliberately, building diverse product teams with expertise in technology, management, data science and the design and delivery of financial services to the bottom of the pyramid. Kaleidofin prioritizes the customer-first approach, ensuring products are intuitively designed and conceptually accessible to our target demographic. We’ve overcome the roadblocks to last mile delivery by creating a suite of digital products, which automate operation heavy processes to deliver these financial solutions to the target market at scale.

Currently, we’re one of only a handful of fintechs in India that caters to this target segment and are the only ones that is  exclusively focussed on the bottom of the pyramid. This makes our work extremely critical, considering the potential it can unlock in India.

Can you share any specific outcomes for women MSMEs that you’ve achieved so far? What are the proof points?

We currently have 4 product offerings that have reached a wide customer base of nearly 1.37 million transacting customers via partnerships.

Our partners have dispersed INR 67 billion in credit using our credit underwriting tool, KiScore. 1.78 million KiScore (customer credit health check) reports have been generated.

INR 418 million payments for micro-entrepreneur loans have been processed digitally using our KiPay solution.

Lastly, via our goal based savings solution, KiCash, INR 587 million of customer life goals stand protected against Life, Accident and Disability risk while contributing to their financial goals.

Why did you decide to join the Advocacy Hub?

As one of the first companies in India that cater to our target segment, a lot of our work requires “market making.” We have to educate the customer about insurance products, inform them about the benefits of saving via formal channels, build confidence in going “digital” and work consistently across the board to build trust.

We are uniquely placed to identify several of the eco-system challenges affecting the BoP, including issues around customer protection, the entrenched patterns in traditional financial services that disenfranchises large portions of this population and the onerous cost of access that this demographic often has to bear.

Overcoming some of these roadblocks require concerted efforts from industry, academia, regulators, and governments alike, which is why advocacy is a huge part of our mission. Joining the Advocacy Hub will provide us a broader platform, as well as the ability to synchronize our message with like-minded institutions that are working on these some of these issues across the globe.

From your perspective, what do you hope to see the Hub collectively achieve for women MSMEs and digital financial inclusion?

We hope to amplify the research and learnings from countries across the globe that are working on digital financial inclusion and women’s empowerment so we can adopt best practices from across the developing world, and coordinate messaging for a broader impact.

The Hub will enable us to pool our resources to support organizations working on fixing and improving the financial ecosystem. Through our collective voice, we hope to reach the relevant policy makers and institutional stakeholders that can take action for women’s digital financial inclusion.

Learn more and join the WDFI Advocacy Hub.