Over the past few months UNCDF Malaysia has worked with 18 start-ups that are creating and refining products and services that help low- and moderate- income people improve their financial health.

To be financially healthy people need to be able to manage their spending, save for the future, borrow when they need without becoming over-indebted, and plan for goals and unexpected costs. All 18 start-ups worked on solutions that address one of these four components of financial health; spend, borrow, save and plan. Funding Societies is one of the start-ups focusing primarily on helping people to borrow. In this blog, Funding Societies recounts its experience of the B40 Challenge that took place over three and a half months and was concluded by the announcement of the winners during the MyFintech Week’19.

Funding Societies support SME owners in starting or growing their businesses by providing access to funding from individual as well as institutional investors. We make it easier for SMEs to borrow the funds they need using technology. We assess SMEs through a combination of human expertise and proprietary algorithms. We make things easier for investors too, they can sign up via our website or the mobile app and start investing with as low as MYR 100.

We entered the B40 Challenge as we knew we wanted to reach customers we weren’t currently reaching: micro-enterprises. We had a couple of hurdles to overcome. Reaching these customers is difficult as they may not know that we can offer them funding, and even when they hear about Funding Societies they might require assistance in gathering the information needed to access funding through our platform. There are also regulatory barriers; to be able to offer funding we need an enterprise to be registered with a business account.

As a company we were already using an iterative design process and carrying out primary research. However, the B40 Challenge pushed us to focus our energy on how we could best serve this hard-to-reach group of people.

We had previously gone through a similar bootcamp in Indonesia, so we originally planned to adapt the product we developed to the Malaysian market. Through the human centric design process used in this bootcamp we realized we had to change our approach. We were originally relying on an agent network but our user research revealed a low level of trust in unknown third-party agents in this population. We therefore changed our focus to partnerships with organizations already working with low- and moderate-income customers. We also realized we needed to further segment the low- and moderate- income customer groups and focus on who we could serve meaningfully. We therefore began looking at micro online sellers, food and beverage businesses, and traditional creators (such as handicraft makers) and how we would approach them.

After we changed our approach to focus on partnerships we identified three potential partners through the mentoring offered as a part of the Challenge. We were lucky enough to be mentored by Jo Lyn Low from Dialog Group, who connected us to MyKasih. MyKasih is a non-profit organization that provides financial literacy courses and skills training as well as welfare to lower-income Malaysians for a period of one year. We identified a potentially mutually beneficial partnership. MyKasih wanted to find a way to help their beneficiaries set up businesses after their training period was over. Funding Societies can step in at the end of the training to help these micro-businesses borrow the capital they need to grow.

The Malaysian Digital Economy Corporation, one of the B40 Challenge partners, runs a program called eUsahawan. This platform helps teach the digital skills entrepreneurs need to grow their businesses. eUsahawan recently launched MyBazar, an e-commerce platform designed to encourage micro-entrepreneurs from non-urban areas to sell locally produced crafts and foods online. These platforms help sellers to register as sole proprietors, which means that we could then work with the entrepreneurs to raise funding. The data drawn from the e-commerce platform could also be used to establish credit worthiness.

We’re aiming to reach 35,000 micro-enterprises by 2025. We therefore need partners and funding to help us scale quickly but sustainably. In the short term we want to connect with partners to launch a pilot, and to improve credit risk assessment models using our partners data. By helping these businesses borrow the funds they need to set-up or expand we expect to have an impact on the lives of tens of thousands of Malaysians. The B40 Challenge was a great networking opportunity and helped us identify new partners that will impact the development of our products and market outreach.

Read our other blogs in this series to learn about the experience of other start-ups that are helping people to save, spend and plan.