Emerging Entrepreneurs

This is the Golden Age of fintech inclusion: Accion’s Michael Schlein

N Ramakrishnan | Updated on January 22, 2018

MICHAEL SCHLEIN, President and CEO, Accion

The international non-profit organisation invests in and helps grow ventures in the fintech and inclusion space

“India, in the world of financial inclusion, is the centre of the world,” says Michael Schlein, President and CEO, Accion, an international organisation that invests in financial inclusion and fintech ventures across the world.

The Indian government, according to him, has taken a lot of smart decisions and created an infrastructure and ecosystem that is helping companies in the financial inclusion and fintech sectors. “That is how we can build a financially inclusive world.” From an outside perspective, the Jan Dhan accounts and Aadhaar have contributed immensely to financial inclusion. The whole India stack and the set of initiatives, they are building the rails that many of these companies will ride on, he says and adds that the leadership in India needs to be lauded for these measures.

Michael says “there is a lot that we learn in India that we can export to the world.”

He says Accion partners with the Economist Intelligence Unit to annually rank 65 countries on what they do to promote financial inclusion. In the last couple of years, according to him, India is the most improved player. “They have jumped to the top of the list.” More importantly, he points out, a regulator in this area can look around and see who is regulating the best and adapt those practices.

Accion, a non-profit organisation, works towards financial inclusion and invests in start-ups in the financial technology space. It invests in and helps grow seed-stage start-ups that meet the needs of the under-served. It invests through Accion Venture Lab, a seed-stage impact investment initiative, providing capital to start-ups that are innovating for financial inclusion. It helps established and innovative enterprise maximise their impact through the Accion Frontier Inclusion Fund, in which Accion is the anchor investor, general partner and sponsor. This fund is managed by Quona Capital and invests in fintech innovation. Through the Centre for Financial Inclusion, a think tank it has created, Accion involved in advocacy and research on policy issues.

India investment

In India, Accion has invested in Shubham Housing Development Finance Company, NeoGrowth Credit Pvt Ltd, IndiaMart, CreditMantri, Varthana, Aye Finance, Artoo, SME Corner, Saija Finance Pvt Ltd, Vindhya e-Infomedia, IFMR Holdings and MeraDoctor.

Accion, according to Michael, invests from the seed stage to Series A and Series B stages. That is, it writes cheques starting from $100,000 to a few million dollars, in one or more rounds, and stays invested in the companies 5-7 years. In some companies, it may exit after about 8-10 years.

Accion’s journey started off with helping microfinance institutions across the world – in Latin America, Africa, India. “We have helped build 65 microfinance institutions in 34 countries that today serve millions,” says Michael.

“One of the things we do is, we see innovation and we see what is working in different parts of the world and we can spread that. We are probably the largest seed investor in fintech for inclusion in the world,” he adds. “This,” asserts Michael, “is the Golden Age of fintech for inclusion.”

Digital era

The digital revolution that is happening around the world and the developments on smartphones will help spur more innovations in financial technology and financial inclusion. Accion, with its global network, can help ventures in different parts of the world learn from one another. One of the companies in India that Accion has invested in, Artoo, is exploring partnerships with Accion portfolio companies in Latin America and Africa. Likewise, Accion is opening doors for Vindhya, another company in which Accion has put in money, to companies in Latin America and Africa. “We can help and we are uniquely set up to help,” says Michael, an alumnus of Massachusetts Institute of Technology and who has over three decades of international banking experience prior to joining Accion.

“We see innovation all around the world and we invest in innovation regardless of the country. I think the people who are going to solve the real problems in the emerging markets are going to be in the emerging markets. We prefer to invest in companies where the entrepreneurs are in the markets they operate in,” says Michael.

Michael feels that it is inevitable that large non-banking finance companies and banks will partner with fintech start-ups; some of the start-ups may even be taken over by these large institutions. “We are trying to innovate and then get partners to take it to scale. If you figure how to get the innovation of these start-ups with the scale of these large institutions, that is really valuable. That will accelerate the future,” he adds.

Published on January 22, 2018

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