Industry Thought Leadership

Borderless Innovation and Sustainability to Pave the Way for the Most Vulnerable Entrepreneurs

December, 2023
Gabriela Eguidazu Villota
Innovation for Inclusive Growth Director


Innovation and sustainability in today's world are at the top of the agenda in all regions of the world. In the Middle East, for example, these issues are particularly relevant because, according to the United Nations, the region has the highest youth unemployment rate in the world and many countries in the region are considered to be among the most water-stressed in the world. Aware that climate change and water scarcity are closely related to unemployment and migration patterns, the model and its consequences are easily extrapolated to other regions such as Latin America where, as in other parts of the world, there has been little widespread innovation in the water and sanitation technology sector.

In view of this panorama, the BBVA Microfinance Foundation has made a series of innovations available to the 3 million entrepreneurs it supports in Latin America, such as insurance that assess compensation in the event of natural disasters from a satellite, facial and voice identification and a mobile banking service in chat format. These technologies allow BBVAMF's financial and non-financial solutions to support the progress of the entrepreneurs to be taken to any corner of the five countries in which it is present, while at the same time reducing the digital divide.

"For the BBVA Microfinance Foundation (BBVAMF), innovation is a lever for economic, social and digital inclusion. Technology helps us to serve more vulnerable entrepreneurs and facilitate their day-to-day management," explains Gabriela Eguidazu, director of Innovation and Inclusive Growth at BBVAMF.

Today, the entrepreneurs served by the Foundation can choose how they want to operate with their institution, in person or virtually, from onboarding - which can be 100% digital thanks to facial and voice biometrics - to carrying out any transaction or signing digitally.

This path began years ago, when the Foundation began to digitalise the tools used by advisors (employees of the BBVAMF' microfinance institutions) to assist entrepreneurs. The first step was to create an app, which also works offline, so that they could carry out all operations from their tablets and thus avoid the need for entrepreneurs to travel to the bank branch.

This app has become the essential working tool for advisors. So much so that today more than 90% of loans are granted using the advisor's app. Moreover, thanks to its geolocation capacity, advisors can locate entrepreneurs who live in remote and difficult-to-access areas.

Since then, the Foundation has continued to innovate with advances such as facial recognition and the Voice Fingerprint tool recently launched by Financiera Confianza, BBVAMF's Peruvian microfinance institution, which allows the identity of customers to be authenticated very easily and quickly in the various channels available.

The voiceprint allows entrepreneurs to use the language of their choice (it can be an indigenous language) for voice validation while maintaining high security standards, thus boosting inclusion.

Another of the most successful functionalities is the mobile banking application, designed in an intuitive format, similar to WhatsApp, which all microfinance institutions of the BBVAMF use to communicate with their customers. The aim was to find a simple and easy-to-use system for these populations, who are familiar with this type of chat but not so familiar with financial transactions. Today, more than 800,000 entrepreneurs already use it.

These efforts, in addition to trying to facilitate their day-to-day management, have been a way of boosting digitalisation in remote and vulnerable places, and reflect the Foundation's commitment to contributing to closing the digital divide. Small neighborhood shops act as BBVAMF Institution’s banking correspondents and more than 80 if them, in remote villages have been equipped with satellite (and other) connections to bring internet, banking services and training. In these establishments, customers can withdraw money, make deposits or complete a credit application.

The Foundation, aware of the importance of digitalisation for the progress of its entrepreneurs' businesses, also works to improve their inclusion in the digital economy by organising free courses both in person and through its open digital platforms.

Satellites to speed up insurance payouts for natural disasters
Environmental sustainability is another strategic priority for BBVAMF, which relies on technology to create climate vulnerability maps. The information provided by these maps is cross-referenced with geolocation data and complements the information on the economic and social situation of entrepreneurs, in order to design and offer solutions tailored to their needs (frost, floods caused by El Niño, droughts, etc.).

Another example of how these technologies are used is parametric insurance, which covers businesses against natural disasters associated with climate change and whose payment is automatic and varies according to the level of force of the climate event monitored by satellite (the more serious the phenomenon, the higher the payment). In this way, compensation is recognised without the insured having to make a claim, notify of the loss, or provide proof of the loss.

This insurance provides entrepreneurs with coverage that protects them against possible damages or losses that could affect their agricultural, livestock, forestry, aquaculture or fishing production, against risks such as excessive rain, drought or earthquakes that occur in the place of their business, according to predefined parameters or levels of force.

In the event of any of the insured risks exceeding the established minimums, they will be paid according to the level of force they have had, which is determined through scientifically predefined indices or parameters based on measurements made by international experts (geological and climatological reporting agencies).

Supporting entrepreneurs in any corner of the planet, especially the most vulnerable ones, and accompanying them on their way to a more hopeful future deserves the full effort of the public and private sectors; it is essential to continue our efforts to design joint strategies to implement initiatives capable of at least beginning to change the forecasts and, of course, the facts of a reality that gives no respite and that invites us to continue working together, for the good of all.