FINCA - Building tomorrow together

Last week I visited London and was proud to attend the launch of .COMmunity, an initiative organized by our good friends at Skimlinks to promote corporate responsibility within the burgeoning community of Technology Start Ups.  Skimlinks is an industry leader in affiliate marketing solutions for publishers, merchants and agencies.  Six months ago, Skimlinks chose FINCA to be their ‘charity of the year’. FINCA was discovered by Tamas, a long-term Skimlinks employee who came across a Youtube featuring Natalie Portman visiting our program in Mexico and was fascinated by the simplicity and power of our business model that puts capital in the hands of entrepreneurs in emerging markets so they can start or grow businesses.

Skimlinks CEO, Alicia Naravo, a visionary leader whose ambition to create a better world is already taking her beyond the walls of London Tech start up and into the wider entrepreneurial community.  Her idea is to persuade other start-ups to emulate Skimlinks example by supporting causes that connect the staff members to the larger world, increasing their awareness of the problems others face in their daily lives.

In the West, millennials are set to be the first generation that will make less money than their parents did. As a result, graduates are increasingly looking to work in companies that offer employee benefits and have a fair and comfortable working environment rather than big pay checks.  Socially-conscious and carbon-neutral companies now have a competitive advantage over companies that push their CSR down the agenda.

The introduction of a social responsibility program at any start-up has another purpose: it signals to the market and any potential employees an intention to build a sustainable and enduring organization. Senior executives at these start-ups are showing that they don’t want to make a quick buck and then jump ship to work at Google or Facebook. They prefer to stay and build a legacy.

Companies which don’t put social responsibility high on their agenda in the first place risk allowing an unsustainable corporate culture to set in. Uber, having gone from strength to strength since they burst onto the scene in 2009, in recent years has developed fissures that have allowed competitors like Lyft, to gain ground.  Uber’s CEO, Travis Kalanick, finally resigned after a raft of newspaper-worthy scandals (including allegations of widespread sexism by a former employee) became too much for his investors.   As one who has been left on a street corner in midtown Manhattan after being dumped by three different drivers, I can attest to Uber’s lack of customer centricity.

When I walk into the Skimlinks offices, I’m taken back to the early days of FINCA, when there was palpable excitement for the unknown and a belief that something new and inspiring was taking place. Social responsibility is no longer a luxury that a select few organizations can take on. It can be the difference between attracting the best talent in the industry or being left behind. The world is changing, and non-profits and governments can’t solve the increasing problems of the world single-handed. Non-profits need to develop relationships with companies during these early start-up stages, both to benefit from the technologies they are launching but also to help them benefit from the knowledge we have acquired around building ethically value-driven companies.  And who knows? One of them might be the next Google, Amazon or Microsoft and will be set to change the corporate landscape as we know it.

As our relationship with Skimlinks evolves, I hope that more companies in the start-up space can take inspiration and spend some time thinking about what sort of company they want to be and what sort of world they want to live in.

It was a proud day for me on the 26th June as the Microfinance CEO Working Group released its first annual report. The MCWG, which was formed in early 2011, represents a collaborative effort by the leaders of ten international organizations to promote microfinance around the world and the institutions that make up the wider industry. From the very beginning we have committed to supporting our members and bringing financial services to those who have traditionally been excluded from accessing them. So far, the work of the group has affected the lives of 89 million people in 87 different countries.

I was a founding member of the MCWG and an early champion of its activities and objectives. I helped to establish female empowerment as a core principle of the group and, having seen the exploitation of the poor in many parts of the world, the idea of “client protection” and responsible microfinance. It’s my firm belief that by bringing microfinance organizations together in this way, we can ensure we provide financial help to those who need it the most.

Today, the MCWG is a marketplace for ideas, and a forum for the exchange and study of information between pioneering international organizations. As a group, we communicate with key influencers and the media to generate support for, and interest in, the microfinance industry, and we champion the solutions that microfinance can provide. At the same time, we encourage the development of industry standards for performance in order to ensure the delivery of high-quality financial services to the poor. Because of this, and our ongoing dedication to best practices and the constant search for improvement, we look to become the standard-bearers for responsible and innovative microfinance.

I’m deeply proud to be the Chairman of the MCWG and I look forward to many successful, collaborative years to come.

Read the full report here >

In 1992, FINCA was working exclusively in Latin America and I had not given much thought about expanding to other parts of the world. Then, out of the blue, came a call from a woman named Shelley Franz from Minneapolis.

“I have a friend from Uganda who heard about FINCA’s work in Latin America and he says FINCA is exactly what his little village in Uganda needs,” she told me. “What would it take to get FINCA to Africa?”

I had been to Uganda before, as a consultant to the UN Capital Development Fund, a few years earlier. I loved the country and would have gone if someone paid half my airfare. But, no, I thought I better ask for some real money so I could fund the loans.

“I would need $100,000,” I told her.

“Oh, my!” she responded. “Well, let me see what I can do.” A month later, she called me back. “Okay, I’ve got the hundred grand. When can you go?”

Although I didn’t think in these terms back then, this was the power of the FINCA brand (Warmth, Trust, Responsible Banking) in action. It turned out that Uganda was the perfect place to replicate the success FINCA had in Latin America.

A quarter of a century later, our FINCA Uganda clients have surpassed our wildest expectations by building thriving businesses that help to improve their lives. During my latest visit, to mark the 25th anniversary of our work in the country, I met with a number of them, including 15 women from the village of Kimanto, Iganga, who formed the first village bank 25 years ago. They spoke of their accomplishments, including successfully putting their children through the education system, expanding their crops and livestock herds, and improving their homes and local school.

We also met with Annet Kintu, a FINCA client in rural Jinja, who had purchased a solar-powered lantern and a fuel-efficient, clean-burning cookstove from our company BrightLife, which sells affordable products that greatly enhance the standard of living of the very poor. Annet testified to the enormous difference these two low-cost products, had made in the quality of her life, and to the way they were also saving her hundreds of dollars a year in fuel costs.

Back in Kampala, we met with a long-time FINCA client Elizabeth Kiyimba who took us into her impressive home, which she had built with the help of a series of loans over the course of several years. Pictures of her six children in their graduation caps and gowns adorned the walls. She had a piggery as well, and several acres of crops.

“We took our time building this house and expanding our crops,” she told us. “We never wanted to borrow too much and have problems with the payments.”

Towards the end of our visit, one of her sons showed up with his two young children. He said he was an artist. I asked him where he sold his paintings. He shook his head. “I don’t sell them,” he said. “I give them away to the poor people, and they sell them.”

The strength of the relationships FINCA Uganda has created with our clients was evident in these encounters, embodying our values of Warmth, Trust and Responsible Banking. Seeing first-hand the transformational change that 25 years of support has had in these communities reminds me that we are on the right track.

I recently had the pleasure of speaking to journalist Elizabeth Matsangou from World Finance, on a topic close to my heart – female empowerment. An excellent outcome of this conversation was an insightful article from Elizabeth, detailing the benefits and challenges facing the microfinance community, and the role women can play in driving it forward.

Microfinance products can be truly life changing. When targeted at women, it can empower them by providing them with personal income. The ripple effect of this empowerment can also benefit communities from the bottom up, by promoting increased employment and productivity.  Microfinance now stands as an ideal way to grow the economies of developing states.

No one said it was going to be easy. Elizabeth’s article raises important questions about the obstacles to this development, most notably that a lack of education can impede the effectiveness of microfinance.  Financial literacy lies at the heart of effective microfinance, and at FINCA, we are taking great strides to ensure that education and investment is at the core of our future strategy.

Microfinance is one piece of a much larger puzzle. But it has proven itself, time and time again, to be an effective method to foster equality and growth in the world’s most impoverished communities.

Read the full article from Elizabeth here

FinTech – shorthand for Financial technology –  is disrupting traditional banking services across the globe. It began with payments but is now knocking on the doors of every other service a traditional bank provides, including credit and savings.  Silicon Valley is pouring money into Fintech, even as investors recognize only a handful of the thousands of new companies springing up will be around three years from now.  The financial institutions targeted for disruption by FinTechs are, of course, wary of the huge risks inherent in exposing their clients’ personal and business assets and information to the dark side of the internet where cyber criminals always seem to be one step ahead of the security systems.

Despite this reality, the digital revolution is here to stay and cannot be ignored if a financial institution is to retain its existing customers and attract new ones.  Properly deployed, digital technology can allow for the processing of loans that used to take weeks or even months in a matter of hours.   It can make possible the creation of more flexible products and services that make customers lives easier and more productive.   At FINCA, we are mobilizing all the resources at our disposal to take advantage the exciting new possibilities FinTech represents.

One of the big challenges any “legacy” financial institution faces in entering this space is to identify which investments will offer a longer term payoff and which will be obsolete before the paint dries.  In the Democratic Republic of the Congo, FINCA was an early adopter of Point of Sale (POS) devices to empower a network of over 800 agents to disburse loans and collect repayments and savings deposits, obviating the need for our clients to travel to our branches.  The uptake of this innovation was faster than we had ever imagined, and today 70% of our transactions are on this network.  In addition to saving our clients time and money, it also means they don’t have to walk home at the end of each work day with large amounts of cash in their pockets, exposing them to assaults and muggings.   In Pakistan, we are about to roll out a mobile wallet which we hope will make transactions faster and easier for our existing customers as well as attract new ones.   In the Congo, the IFC and Mastercard Foundation were valuable partners in enabling the agent innovation.  In Pakistan, a FinTech called – appropriately – Finja, is partnering with us to launch the wallet.   But even as we put these new technologies to work, we keep looking over our shoulders to see what new disruptors are on the horizon.

To help FINCA navigate through ever-changing landscape, FINCA UK and the Rainmaker Foundation, a collection of UK philanthropists, hosted the FinTech for Good Summit, convening some of the brightest FinTech minds in London to explore how the products they’re building today can benefit the world tomorrow.  To “lay the table”, I opened my remarks by noting the myriad challenges the younger generation faces today, as custodians of the future:  climate change, regional conflicts, shortages of food and water, scary epidemics, and a rapidly growing population for whom job prospects are melting away in the face of new technology.  To my surprise, several of the participants contested this view, saying that they felt there was much to be positive about, things like the halving of world poverty between 1990 and 2015, and, of course, advances in technology which made products and services at once more efficient and affordable.  Served me right for not realizing that entrepreneurs are by nature the most optimistic people on earth.

The discussion ranged from venture capital, blockchain, the latest developments in the mobile banking system and lots more.  One big problem identified was the difficulty entrepreneurs from regions like Africa have in attracting capital.  Conversely, funders constantly complain about the difficulty of finding good investments for their surfeit of liquidity.  I learned that there are new models of venture capital emerging, including what is effectively an outsourcing of management for groups of investees to high-powered teams of experienced CEOs, CFOs and COOs.  I think it’s fair to say every participant came away from the gathering with at least one new idea and several valuable new contacts.  Let’s do it again soon!

We prepared this video below to showcase our discussion.   Thank you to all who attended!

Cosmina Popa, Executive Director, The Rainmaker Foundation

Richard Brass, Head of Private Banking, Berenberg UK

Marcus Exhall, serial tech entrepreneur

Martin Bjergegaard, serial tech entrepreneur; co-founder of Rainmaking, Rainmaking Innovation, Startupbootcamp, Better Now

Patricia Hamzahee, Founder of Integri Capital

John Goodall, Founder and CEO of Landbay

Marc Warner, Founder and CEO of asi

Tim Groot , Founder and CEO of Intros

Federico Pirzio-Biroli, Founder of Playfair Capital

Will Reynolds, The FinTech Times

Georgia Hanias, Head of Global Communications and Diversity Lead at Innovate Finance

Victoria van Lennep, COO at Lendable

The Summit will provide a forum to discuss how financial technology can be leveraged to improve the lives of people across the developing world.

Dec
7

When you’re sitting in the audience and someone steps up to the lectern to deliver their remarks, how often do you find yourself thinking “God, I hope this guy isn’t going to bore the hell out of us and waste our time.”  When I’m speaking to any group, be it inside FINCA or the outside world, I put myself in my audience’s place and do my best not to speak, but to entertain.  (Admittedly, I have been known to take this to the extreme, especially if there is a microphone handy, breaking into song to shock my audience into a state of full wakefulness.)  My favorite teachers in High School were the ones whom we could count on to keep us entertained, like my Chemistry teacher, Mr. Reggio, who regaled us with tales from “the old neighborhood” in the Bronx where he grew up.

There is nothing like a good story to bring the work FINCA does to life.  The challenging part is that you’ll probably tell the best stories again and again, like the actor who has to get up and play The Dane five times a week. How do you “make it new” and make the audience feel this is the first time you’ve ever told this story? One trick I use is I tailor or “customize” the stories, adding new details that I think would hold special appeal or interest for my audience.  But I am also fortunate in that, with over 1.6 million clients to choose from, FINCA affords me with an inexhaustible source of new stories, which can be “refreshed” each time I go to the field and speak to our clients. Would that I had the time and means to hear them all!   Our clients’ journeys, in their own words, are the fuel that keeps me inspired and determined to do everything I can to help them succeed.

Some of my more quantitative colleagues dislike our use of stories, arguing that they don’t provide statistical evidence of impact, or that they represent the outliers and not the norm for the client experience. While FINCA conducts its own social impact research, based on a methodology validated by the World Bank, we remain convinced that our success in attracting and retaining customers owes to our culture of listening and ensuring that the clients have a strong and clear voice in shaping our products and services.  In short, nothing speaks to the impact of FINCA’s work better than the voices of the clients themselves. So take a minute to hear about Cissy.

Updates by email
Updates by email
Receive an email every time something new is posted on my blog
Welcome
Welcome
Welcome to my blog, where I invite you to share in my experience fighting global poverty and working with some of the greatest minds in global economic development. Join me in discovering how we can use social enterprise to create a more equitable, just, and prosperous society.
Listen to my podcast: The Social Enterprise Podcast
Get in touch
Get in touch
Email  Twitter  Linkedin  You Tube