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Gold Level Contributor
Fintech can help women entrepreneurs thrive through COVID-19

Image source: Photo by RF._.studio from Pexels

Businesses all over the world have taken a hit due to COVID-19 followed by lockdown and social distancing. While some sectors like logistics, ed-tech, pharmaceutical and consumer goods are thriving, most other businesses need to prepare to deal with the long-term economic impact coronavirus will leave on their businesses.  

Due to COVID-19, the International Monetary Fund (IMF) World Economic Outlook projects GDP will fall to negative 6 per cent for five of the Association of South-East Asian Nations (ASEAN) countries: Indonesia, Malaysia, Philippines, Thailand and Vietnam. The Asian Development Bank forecasts ASEAN GDP growth to be just 1 per cent in 2020. 

While entrepreneurs faced many difficulties in raising money and establishing a sense of trust among the customers, it was especially difficult for women entrepreneurs. The struggle to be taken seriously was a reality for them. And this pandemic has added to their difficulties. 

What problems do women face during COVID-19? 

The year 2020 marks 25 years of the adoption of the Beijing Declaration and Platform for Action, which was once declared as the most progressive blueprint for advancing women’s rights. Despite the years that have passed since, this continues to be far from reality for many working women, especially women entrepreneurs, who have had to deal with significant changes in their lifestyles in the wake of the pandemic, both personally and professionally. 

Women face lots of challenges trying to balance work with the increased household responsibilities, including childcare due to school closures. Women bear an unequal share of unpaid care responsibilities, which have increased due to the pandemic. Across the Organisation for Economic Co-operation and Development (OECD) countries, women are also spending two hours more per day on unpaid work at home than men, post COVID-19 pandemic. 

Often women operate businesses with lower levels of capitalization and are more reliant on self-financing. Consequently, a decrease in revenue due to the COVID-19 crisis has immediate implications for entrepreneurs’ incomes and their ability to finance their cost of living. Women entrepreneurs may be at greater risk of having to close for prolonged periods, with substantially reduced or no revenue. 

Women’s entrepreneurship in developing countries is at a greater risk, as women’s anticipated vulnerability through the COVID-19 crisis will likely be exacerbated. The exposure to health risks due to inadequate or underdeveloped health-care infrastructure is of immediate concern. 

What can be done? 

A major problem women entrepreneurs face is accessing finance for their businesses. A new model of lending that is faster, easier, more cost-effective and more transparent is being offered by Fintech lenders for Small and Medium Enterprises (SMEs).

This is done by using advanced analytics platforms and artificial intelligence to assess transactional and alternative data, FinTech lenders are gaining a much deeper understanding of SMEs. They can establish the businesses' creditworthiness, evaluate risk more easily, and issue loans in as little as 24 hours. FinTech lenders are setting up payments infrastructure to facilitate easy payments and sales for SMEs and micro-entrepreneurs, and using such channels to provide them with loans based on payments data. 

Transferring all the existing entrepreneurship training and mentoring to online channels. Business advice and consultancy services can also be given to women entrepreneurs on a digital platform. This can include advising women on how to stabilise businesses that are in difficulty and to help them take their business from offline-to-online (o-2-o). 

Fintech start-ups are leveraging innovative payment technologies such as sound waves to provide contactless payments services for customers with legacy phones or in areas with slow/no internet coverage. This is especially useful for women entrepreneurs in rural areas. 

Going digital helps women entrepreneurs gain customer confidence because this promotes hygienic transactions through contactless transactions. Fintech also makes it easier to track digital transactions. History of transfers, inflow, and disbursements are easily available on their mobile phones. 

Fintech can also help entrepreneurs develop an effective strategy in making a profit by providing rich customer insight. Their transaction logs will indicate consumer patterns so they can know which product is in demand, how much more they can earn, and even the demographics of their target customers. 

How’s fintech helping to level up? 

Xin’An Bank, UNCDF partner association under the i3 Program funded by MetLife Foundation, has launched an AI-based product named as ‘Goddess AI’ in China. This app processes small amounts of loans to women entrepreneurs in under 24 hours. 

CaixaBank and the international organisation Vital Voices, whose mission is to support and invest in women leaders across the globe, have created a virtual mentoring platform to help women entrepreneurs and founders of SMEs and start-ups across Europe, who are currently facing professional challenges due to COVID-19. 

Originally published by
Neha Mehta | Tuesday 15 September 2020
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