Accion and the Power of Digital Technologies

Accion has a commitment to support families and small businesses in the Northern Triangle countries – Guatemala, Honduras, and El Salvador – and help address the root causes of migration. Over the next three years, Accion, a global leader in microfinance and fintech impact investing, will provide advice, guidance and consulting services to the financial institutions that are helping micro and small business owners in the region – ultimately benefitting more than 400,000 people. In making this commitment, Accion is a founding partner in Vice President Kamala Harris’ recent call to action to support economic development in the region. In this episode, Chris Hood is joined by Sam Maule, Google Cloud and special guest Michael Schlein, President and CEO of Accion, to discuss how they are joining forces with the White House to support digital and financial inclusion in Central America.
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Chris Hood: You are listening to That Digital Show, a business podcast presented by Google Cloud to help organizations innovate and grow value in a digital world. Episode 26 Accion and the Power of Digital Technology. In this episode, we're joined by Michael Schlein, President and CEO of Accion to discuss how they are joining forces with the White House to support digital and financial inclusion in Central America.
Chris: Hello everyone. I'm Chris Hood, a digital strategist at Google cloud and I want to thank all of you for listening. If you're a fan of the show or maybe you're new to the show, share the podcast with your network subscribe and we would even love a quick review of the show at the end of today's episode, we're going to have a great announcement to share with everyone. So stick around joining me today to co host. Today's episode is Sam Mall. Hi Sam. Why don't you share a little bit about what you do at google?
Sam Maule: Hey, thanks Chris. So again, my name is Sam Maule, I'm down in our beautiful Jacksonville florida office. I have been with google since december of last year. I'm a key account director on the Google Cloud team. So I manage some of our largest accounts within our financial services space and I can tell you it has been one heck of a fund six month run so far with google.
Chris: Would you mind also introducing our guest for today?
Sam: I would love to and this is actually someone I consider a friend now. How do you like that Michael? Because we've had quite a few conversations both in person and virtually like this. This is Michael Schlein, he's the President and CEO of Accion, Michael, if you don't mind, can you give us a little bit of background on the company and then your role with it. What you focus on.
Michael Schlein: Absolutely thrilled to be here and join you both. Accion, There's a global nonprofit dedicated to creating a financially inclusive world. We started in 1961 in Venezuela largely as a private sector peace corps. And then a decade later, we realized that our clients need more than community development. They need capital. We were leaders and pioneers in the early micro finance movement. We created nonprofits in almost every latin american country to make very small loans to the poor. In 1992 we created the world's first for profit bank focused on the poor, which became the model for the industry worldwide. Back then, it was controversial, but today it's very well accepted. You can harness the capital markets to have a great social impact. We saw that in micro finance institutions across latin America. And then since then, we have expanded through several countries in africa, India china, the Philippines most recently, Myanmar. And then in the last decade, we and the rest of the world have really focused on Fintech for financial inclusion. So where an investor and we're an advisor and we helped to grow companies focused on meeting the financial needs of the poor.
Chris: So one of the things that we do with all of our guest is we asked them what was the last thing you downloaded? So very curious, was there anything that you've recently watched, listen to or downloaded that you would like to share with the audience?
Michael: So I am incredibly excited. I'm going to see the first live music I've seen in 15 months tomorrow night by the legendary Steve Earle, who's a great, great performers performing in Brooklyn. And not only should you download all of his stuff, but in particular, he had an album that he dropped during the pandemic that did not get a lot of attention. So he's a great performer and it's just great to be going to see live music.
Chris: That sounds awesome. So you have an absolutely huge footprint in terms of that region or worldwide, how do you specifically work with different types of tech companies? What's that engagement model look like for you
Michael: over our history? We have helped to build 160 different financial service providers in 55 countries that are now reaching hundreds of millions of clients and their clients who frankly the banks ignore. We're living in a tech revolution. And it used to be that when you were trying to meet the financial needs of the poor, the distances were insurmountable. Today there is no distance that's insurmountable. Used to be the transaction sizes were too small to be commercially viable. Now there's no such thing. It used to be very hard to get to know your customer and know what the appropriate financial products are. But now data and data analytics are allowing us to really know our clients in very remote areas. And so this technological revolution is allowing us to achieve our true vision of making a financially inclusive world we take for granted the financial tools that make our lives much easier but three billion people are left out of or poorly served by the global financial system. Our vision is to really change that.
Sam: So a chance to actually change something like that is really what triggered on this and why I reached out to you Michael because in late May, I think it was around the 27th of May. An announcement came out from the White House around a new partnership that was focused on central America and the Vice president, Kamala Harris. This is a call from action from her and when I was reading the press brief, I saw your name associated with this in your company. And this got me excited. Can you give us a little bit of background on what this new partnership for Central America is?
Michael: So I was very honored a month ago to spend 90 minutes with the vice president as well as the leaders of Mastercard and Microsoft and Shabani and do a lingo and a few others. And the vice president is pulling together something called the Partnership for Central America and it is a group of people really committed in the long run to see if we can tackle the root causes of poverty in one of the poorest regions of the world. And of course the goal is to see if we can stop the migration into this country, frankly, by giving people hope in their own countries. The Vice president talked explicitly about that. If you look at some of the really deep problems of crime and violence and drugs and corruption and of course, enormous poverty, people are hopeless and that's why they choose to make a very, very life threatening journey to the United States. It's all about hope. If we can give them hope at home, we can improve their lives there and stem the migration.
Chris: If we were to focus in on that word, hope, what would be two or three of your overall goals to help you generate that hope that you're talking about?
Michael: This is a big, complicated puzzle and our piece of it actually a piece of it is specifically around financial inclusion for the port. We have several partners in the regions who have been working in Guatemala, Honduras, el Salvador for several decades and they're working with the most vulnerable populations in these countries who are specifically the people who are most likely to migrate. So if we can help them there, give them small loans, provide insurance, help them with Technology, but also it's very agricultural. So help them improve the yield from their farms. We see and support innovation all around the world and we think we can bring a lot of that knowledge and expertise into the region. Guatemala, for example, has 60% of its population living in poverty And 23% living in extreme poverty. These are deeply entrenched issues. I think the vice president said at all, there's no silver bullet here. There's no short term plan, it's a long term commitment and it starts with getting people's trust.
Sam: So, Michael, I think one of the things that really set out to me first when I read the press brief about this partnership being pulled together and then when I looked, you mentioned some of the companies are there but it's even more than the company names. It's the leadership names that stood out to me when I looked across the executive committee for example, would you mind talking about some of the other leaders that are giving their time and their input to this?
Michael: Ajay Banga. He's the executive chairman of Mastercard. He was the CEO for the last decade is really one of the leaders as well as the CEO and founder of DuoLingo and Espresso and Chobani and each of them are bringing different pieces to the puzzle. Master Card has committed to work on digital identification and digital payments in the Northern triangle countries. Also, we're working with governments, the U. S. Agencies are working on corruption. Dual lingo wants to provide english lessons over the phone to improve people's lives on the ground, espresso made some commitments around buying higher quality coffee. And those commitments to be able to sell coffee beans are very very important to farmers as they plan. And frankly the group that she had around the table on the day I was with her were mostly focused on the economic piece of the puzzle. But there's other pieces of this whole agenda to really tackle crime and violence and drugs and corruption, illiteracy as well as the enormous impact of climate change in form of droughts and hurricanes. All of this is concentrated in this region that has had decades of corruption and also decades of poverty. And the question is can we really turn the corner and make that a positive cycle of impact?
Chris: So earlier you were talking about how with technology it basically removes borders and we can access technology just about everywhere, communicate with people across borders. And as you start talking about these different types of businesses and collaborations that are part of this project. It makes me think about just the breath of the different types of innovations that have to happen to ensure a program like this is successful from your point of view. When you start to think about innovation, maybe that's in the fintech space, how do you look at innovation when it comes to a program like this with so many different types of companies and organizations and regions involved
Michael: with it. So this is not only great question about the Northern Triangle region but it's really at the core of accidents mission and strategy of how we're going to impact the world. We have a team Global advisory solutions which are basically 50 consultants think of them as like bain and Mckinsey like consultants who specialize in the digital transformation of existing micro finance institutions and small banks. And generally speaking those institutions are too labor intensive and too paper intensive and are under invested in technology and we specialize in helping them figure out how do you move from cash to digital payments? How do you disperse alone digitally? How do you collect alone digitally? How can you know your customer often not face to face, how do you originate alone how to communicate with all of that? There are technology solutions that can be applied. I talked about three billion people for whom the global financial system fails. But 80% of them have cell phones and increasingly they have smartphones and of course google understands this because most of those smartphones are Androids, it's an enormously powerful tool to not only help know your customer communicate with your customer, but also provide financial services over that platform. That's a lot of the anchor of what we're doing with the existing institutions. Plus we see and invest in early stage fintech around the world and again data data analytics, internet of things, machine to machine technology, artificial intelligence, Blockchain, satellite imagery. We are living in a technology revolution, all of which is changing our lives completely. But it has particular ramifications for how you can meet the financial needs of the poor and we can bring innovation that we're seeing in the rest of the world into this region.
Sam: Michael, I was going to go there in previous conversations. You and I have had you operate all over the world. I'm going to call someone else. I know you've worked with them quite a bit on the African continent. That's Pula just because I loved the story and I know you have a passion for this company to, but it's applicable within the Northern Triangle. Can you talk a little bit about pula? This is a great example of thinking outside the box and using technology.
Michael: I'm so glad you love this company. So do I. Pula is an extraordinary company that started out in kenya and now is in several countries throughout Africa Over 10 in fact, and basically they are using satellite imagery as a source of data to ensure small, single family one acre farms. Now, if you think about single family one acre remote farms, these are among the most difficult small businesses to lend to because their remote, it's so complicated. In the last several years, the quality of satellite imagery has gone up exponentially and the price has plummeted, pulling is using that. They can see if there's been a drought, they can see if there's been a flood. They can also use it to provide agronomic advice to farmers. They can see the quality of the soil, They can see the cloud cover and they can provide all of that over the phone and ensure smallholder farmers literally pula can say 30 days after the farmer has planted segment, the cloud cover isn't good enough. Here's a QR code and now go get yourself a new bag of seed because that first bag is not going to take. That is transformational for a small farmer because without that information they'd probably wait and wait and wait and then have a terrible yield pula can tell them that early on. So I love that and they're growing exponentially.
Sam: So the listeners, I don't know if you could sense it, but you have chris and I have two googlers on this podcast and the second Michael started talking about this. We both started smiling. We both started pulling out our pens and strategizing especially chris because that's his job. But it's inherent to what we do at google. We are naturally curious people, passionately curious people. And Michael, you know
Michael: that google is such an important company in the world, but just think about android phones and the data. You have enormous weather data and predictive analytics and just generally google data analytics. All of this is enormously helpful to know our clients specifically what's called Thin file or no file clients, clients that don't have formal credit histories. You can use all that data to basically make people who have historically been invisible to the global financial system. We can make them visible. So I'm excited. I would love to figure out how to get google more involved in financial inclusion. One specifically thing, if we can move from cash to digital payments, it is not only safer, better, cheaper, but it really makes someone visible. And all of a sudden all those individual payments become part of your credit history and all of a sudden you can borrow cash gets lost, cash gets stolen. Cash is the reason for most crime. Again. This is a region that has enormous crime. If you could eliminate cash or significantly reduce cash, you would eliminate a lot of the incentive around violence and drugs and corruption.
Sam: And we've seen that and we've witnessed that. I mean, you think about what M pesa was able to do, an african continent and the success they saw there. And like you said, not only bringing stability to individuals lives, but the safety factor. Also when we talk about the Northern Triangle, we're talking about Guatemala Honduras and El Salvador where the civic program is focused in on, can you give me three examples and let's really wrap these around technology, If you don't mind, voice technology can improve individuals lives, they don't have to be just some financial services. I know you mentioned education, you talked about Ag Tech, Healthtech and there's plenty of examples. Can you give us three specific examples?
Michael: So one of the people who was incredibly impressive, I got to meet at the White House is the CEO and Founder of DuoLingo and so he's passionate about teaching people english all around and has developed sophisticated apps to do it. At the end of the meeting, the vice president came over and said can you use those apps to teach financial education. And I was standing there and I said, well in fact we have a curriculum that specifically designed for small businesses and micro entrepreneurs and we're going to try to see if we could work with our content on dueling goes platform. But that was the vice president's idea herself. So that would be exciting. Another one is again using that satellite imagery. Everything we just talked about pula applies to the region because it's a very agricultural region. Here's another one. There's a company in India called Toffee which is doing micro insurance and like the name implies, it does bite size insurance. Many of us have insurance, but it's pay a lot for insurance and I don't know what's covered and I probably won't know what's covered until I get rejected for a claim. What Toffee does is spin that on its head and say in dengue fever season, you can get dengue fever insurance for $6 Very specific, very, very transparent for a farmer, you can get crop insurance for a season for $6. You can buy a bicycle and get bicycle insurance and they're all very affordably priced. It's all delivered over your phone. And then of course in the pandemic Toffee switched a little bit and said, if you lose your job will provide you insurance if you have a health care problem, if you go to the hospital will provide you insurance. So technology and insurance specifically for the poor is a whole very very exciting area. And then the third one I would mention is we've seen can fio in Mexico lydia in Nigeria are among the fastest growing small business lenders that are leveraging technology. They work with mom and pop shops who generally work in cash and therefore are invisible to the banks and what they do. There is slightly different models, but basically they digitize these small businesses and that makes them visible. And then all of a sudden you can lend to them and not only can you lend, you can lend faster than any bank Everwood. And of course banks ignore this sector and so can feel today and lydia are among the fastest growing digital small business lenders in Mexico and Nigeria. So all of that technology could be applied in the Northern Triangle
Chris: region. So this is where I start to geek out because you shared a whole bunch of really great ideas and in my head it's exploding. Right? I'm sitting here thinking DuoLingo, artificial intelligence adding in some voice recognition, google assistant financial summaries all in real time. The opportunities are endless, right?
Michael: Yes. And you're reaching huge, huge markets of people that haven't been reached before. Billions of people have been left out of or poorly served by the global financial system. We, and when I say we, I actually mean specifically accident and google can change that.
Chris: I want to dive into that just a little bit though. You've said invisible and inclusion a couple of times during our conversation. So I want the audience to really specifically understand when you talk about inclusion from a financial perspective, what does that
Michael: really look like? A great question. Let me dial it back. Generally speaking. The folks listening to this podcast have credit cards, debit cards ATMs available on every corner. You can get appropriate insurance for your home, for your health, you can get loans to grow your small business, you can get loans to go to school, you can get loans to build a home. There's a lot of financial services and by the way you take for granted easy simple payments that we do over our phone constantly. So all of that is a financially inclusive world now for three billion people. They have none of that. Actually, there's even more to it. We all take for granted a safe place to save. Much of the world doesn't have that. Generally speaking, our bills come in on a monthly basis and our income comes in on a monthly basis. That is so incredibly convenient for much of the world. And again, let's go back to that farmer and Guatemala. She gets paid once a year at the time of the harvest and has to make that money work all year. And yet she doesn't have a safe place to save. She may have to spend hours traveling in dangerous conditions to make a single payment to keep the lights on or a single payment to allow her kids to go to school. Imagine what you could do if you could help her make that payment over the phone. And of course we could do that. Imagine if you could give her crop insurance either through satellite technology or over phone technology or a combination of the So the tools are there. We're seeing the tools but we have to apply them and bring them in a meaningful way. And also I should add, we need to make sure people understand how to use these tools. Well, financial education, increasing the capability of people to use these tools intelligently is critical. But again, there's a lot that you can build into the product development specifically. But also there's also lots of educational materials to make sure people are using credit in particular in a responsible way.
Sam: Michael. Something that strikes me and I wanted to ask you this real quick just because I read this this morning, the U.N. refugee agency just posted a number this morning on Twitter. That absolutely blew me away. And that's they stated that 82.4 million people worldwide have been forcibly displaced as a 2020. That number is one of those things that just kind of shakes you to a core. That is an unbelievable number and a significant portion that is actually refugees from Venezuela. So I'm going to ask you a question I think already know the answer this. How hopeful are you of the impact of this partnership for Central America?
Michael: There's a lot wrapped in that question but fundamentally am I hopeful I have to say and again I had never met her before, but the vice president was enormously impressive, I forgot. But then when you're in the meeting with her you realize, oh yeah, she's a prosecutor. She does not walk into the room without doing her homework. She had read everything, studied everything. She jumped to the 3rd and 4th follow up question. But one of the things she teed it up herself, she said, look, this has been tried by her boss, the former Vice President Joe biden led a task force to try to get on the root causes of the migration crisis in the Northern triangle. This has been tried before what makes us think this will work? And she was very realistic about it all. And I do think there are reasons to think that it can work today in ways that it hasn't worked in the past. And I'll give you one example in the course of the pandemic, we have seen enormous take up of digital technology. If you had the ability to make payments digitally, you did it because you didn't want to deal with anyone face to face. If you had the ability to take out a loan over your phone, you did that you didn't walk into a microfinance institution or a bank. So we've seen great acceleration of digital payments in particular and some higher level financial services as well. So people that have lived in the cash world all of a sudden got comfortable in the digital world. I think that is reason to think that some of these innovations can be more successful today than they've been in the past. I have to say, the whole group starting with the vice president knows that this is not a short term thing. This is a long term commitment from all those ceos of corporations around the table. This partnership for Central America is really a multiyear, probably like a decade at a minimum, because these are deeply, deeply entrenched problems.
Chris: So how can the audience learn more about this program or how to get involved,
Michael: first of all, accion dot org. A C C I O N dot org. Where our website has all of this, it has all this innovation, all these companies and it also features a whole discussion of our specific commitments and what we're trying to do in the Northern Triangle. And then the name of the coalition is called the Partnership for Central America. And it has a website now too. And it shows all of these corporations and their commitments. And I should say we're just getting started and so we're looking to crowd in many other corporations and other partners who want to be part of this coalition of the willing to really make a difference in the region.
Chris: And so we'll have all of that information available on our website at that digital show dot com. And now it's time for our question of the day. Mhm. Okay. Here is our question of the day and for those of you who don't know and for Michael for your purposes. Every week we get asked by our audience a question and here's what it is.
Chris: Hi Chris. Digital transformation is something that we often look at for our organization from the inside. How does digital transformation impact our business outside our organization? Michael, you sort of touched on that a little bit. And I'm really curious because part of being a nonprofit organization is really about the impact on the people you serve from a digital transformation perspective that is often looked at as an internal type of project. How do you look at it?
Michael: So this is actually a really insightful question and I do think it's very, very important because we talk about using our phones and moving to doing transactions digitally and it's all very comfortable but if you think about the client's perspective of how does it feel, how many people have transacted in Bitcoin? If I tell you all of a sudden you're going to be paid your compensation in Bitcoin, you're going to say wait a minute, you know what do I do with it? How do I get it? What can I buy with it? You know, is there a Bitcoin place where I can transfer it into real money? You have a lot a lot of questions about how it would really work. Well if you think about again three billion people who have been left out of it, if you tell them all of a sudden we're going to switch from cash and pay you in mobile money. They have all those same questions. It's like wait how do I trust this thing, how do I know it's going to be there tomorrow? How am I going to actually? Is this going to be acceptable at my local store? What does it mean to me? So all the fear and anxiety, it makes a whole lot of sense. And really the vice president touched on this directly, a lot of this is about building trust and you do and we see this with our clients. You have to do a small transaction and then check to see if that deposit actually got into your account. You start doing that before you start making big transactions. And I do think that analogy to if I told you that you're going to be paid your salary and Bitcoin, you have a lot of concerns, concerns that could be alleviated but you do have to appreciate the fear and anxiety of switching to digital currencies. Now one last point on this again think of that woman the farmer who if I could tell you you could make a utility payment from your phone in the field without spending hours traveling. That would be pretty attractive. Those are ours that no one is paying you for anything. So if if I can cut down that travel time that's worth a great deal. So I think there's a willing population but I do think you have to deal with their fears and anxieties. I
Sam: love the idea of digital transformation from a north american in the U. S. Centric view but flipping that on its head and taking it into regions of the world where the population is still starting to acquire internet access. That's when it gets fascinating. And that's when you leap frog technology. We used in pace as an example of that in africa, they were able to leapfrog existing payment real systems with the introduction of mobile phone and that's when you actually do change lives because you're moving at light speed when you do that. And in all honesty, that's the type of digital transformation that gets folks at google excited
Chris: And so thank you Michael. It has been a true honor and privilege having you here today.
Michael: Great fun, Great to be with you. Let's do it again sometime
Chris: And thank you as well Sam, appreciate your support and co hosting the show.
Sam: It was a lot of fun. Thanks chris
Chris: and thanks to all of you who are listening as the show continues to grow, I wanted to let everyone know about something really exciting that's going to happen in the next couple of episodes. Over the course of the next month, we have a takeover by the google retail team. It's going to feature several interviews with leaders throughout the retail industry and we're going to cover a wide range of topics from the retail stores of the future to ai powering retail experiences. You do not want to miss this. So, head over to that digital show dot com in the top right corner, select your favorite podcast platform and hit subscribe. I promise you you won't be sorry. And then of course share the podcast with your friends, your co workers, colleagues, family, anybody who is interested in growing their business digitally. Also, if you have questions, comments or ideas for the show, you can connect with us throughout social media and join us next week as we explore another business innovation topic on that digital show. Thanks for listening.
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