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Jelmer Griepink
Fintech Consultant
Jelmer Griepink
Fintech Consultant

Project Arequipa: Lessons Learned

by | May 6, 2018 | Blog |

Project Arequipa is completed. The learning curve in the project was steep. These are the lessons I learned.

1. More than just credit

Fondesurco is a financial institution, but it is not just that. Next to credit, clients receive education on agricultural subjects such as organic farming, bee holding and responsible livestock farming. Traders and shop owners can join business education classes on subjects such as inventory management and bookkeeping. General workshops help families with cashflow management in the household.

Also, a growing part of Fondesurco’s portfolio consists of green loans, which are loans handed out with the purpose of financing solar panels, sustainable cooking tools or isolation material: Everything that helps to combat climate change. These loans are actively promoted among clients, and Fondesurco partners up with providers to install and maintain the equipment.

These examples show how a financial institution can make a social and sustainable impact, and thus be more than merely a financial partner.

2. It’s not the technology, it’s the people

The use of technology depends on social habits. When introducing new financial technology making sure that everything functions properly is only part 1 of the work. The hard part is yet to come: Convincing clients and employees to actively use it. In Peru, for example, most of the monetary transactions are still performed using cash. In rural areas many people don’t have cards, not because these are not available to them but because they don’t trust them. This commercial of BCP, a peruvian bank, to promote the use of ATMs shows how perception can influence the use of technology.

Another example in which the technology is fine but the people reluctant to use it, is the earlier attempt by Fondesurco to introduce a mobile app for analysts in the field. The application had some teething problems at the start and hence didn’t work as it should. Although these issues were quickly fixed, analysts thought the app was a failure and thus didn’t bother to use it.

To make sure technology is used a large part of the work should be dedicated to educating its users. Within an organization, making (a representative of) the end user part of the project team helps to identify potential problems in usage early on. The end user may perceive different problems than the IT team can possibly think of.

Second, being part of the team makes the end user partly responsible for the success of the innovation. This incentivizes use of the technology, even when learning to use it requires some effort. When the end user is not within the organization, focus groups are a good way to make sure the developed product is acceptable for the client.

Lastly, although it may seem an open door ALWAYS conduct a small-scale pilot before introducing a new technology (or indeed, any innovation that requires a change from what is considered normal). This allows to detect potential deficiencies. Moreover, you manage expectations: pilot users are more tolerant to bugs and provide valuable feedback.

3. Together is better than alone

Some FinTech solutions are rather easy to implement and require little investment. Linking the internal system with a public register is relatively easy (although complications might occur) and little economies of scale are achieved when executing the project with other financial institutions

However, some technologies require a larger upfront investment. Think of an automated Callcenter or psychometric analysis. In this case, working together with other financial institutions can either lower the cost of acquiring certain technologies through a stronger bargaining position towards suppliers, or lower costs by sharing development and/or maintenance cost.

Another example in which economies of scale are achieved is the aggregation of (anonymized) data. Machine learning algorithms are more effective the larger and cleaner the amount of data available. Especially not-for-profit microfinance institutions serving unbanked customers with a specific and high-risk profile this can work together to reduce credit risk and lower the cost of serving this segment.

Not only collaboration between financial institutions but also collaboration between actors in the ecosystem as a whole is necessary. This has much to do with lesson 4.

4. Infrastructure is essential

Mobile money, client portals and applications suited for analysts in the field all can greatly reduce costs and increase impact. But, without the proper infrastructure in place it is hard to imagine any of these innovations becoming reality. For mobile money, having access to a mobile network and service points to change cash to digital money are essential. For mobile applications access to internet is a sine-qua-non. And even more fundamental, without electricity owning a mobile phone wouldn’t make much sense in the first place.

A proper digital infrastructure is key for the development of FinTech solutions. Without it, no impact will ever come from mobile or digital. Governments realize this, and initiate public-private partnerships to develop telecommunication networks that cover wide areas to serve users even in thinly populated areas.

In the future, internet access will become ever more important. Public and private institutions should try to avoid the emergence of a digital gap, in which the (rich) part of the world population advances fast, while another (poorer) part lags behind due to lack of access to digital opportunities.

5. The time to act is now

The emergence of the internet has brought much prosperity to the world. The latest developments in data science and mobile technology allow for financial institutions to serve ever more people ever better. Now, people living at the bottom of the pyramid increasingly own smartphones and get to know the benefits of a digitally connected world. This is happening now. Both the business case and the social necessity to act push towards a more inclusive world.

With the hardware and infrastructure in place, it is time to provide to everyone the opportunity to develop and grow. Whether it is a restaurant owner in Lima or a Llama herder high up in the Andes, both deserve access to financial services and the chance to grow their business. With mobile technology allowing for this to happen, it is almost a financially and socially imperative not to develop services which meet their needs.

To manage this digital transformation, the people working in the field need to be connected with the digital world: new users need to be educated, products that serve their specific needs need to be developed and data needs to be digitalized. Far too often tech firms are out of touch with the field, and the people in the field are not aware of the possibilities technology brings, or even fearful it might replace them. This needs to change. Technology is not replacing people, it is enhancing their capabilities and opportunities in a way not achievable before.

Fondesurco is adapting to the digital reality. Are you?

Want to know more about this project? Or interested in working together? Let me know! Send an e-mail to

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