Accion, a leading non-profit organization focused on financial inclusion, announced today the launch of the Accion Digital Transformation Fund. This $152.5 million initiative will provide growth capital and strategic support to financial institutions, including microfinance lenders, seeking to digitally transform their operations and better serve small businesses currently excluded from the traditional financial system.
Accion has a long history of supporting financial inclusion efforts. Over the past six decades, the organization has been instrumental in developing and scaling financial solutions for underserved populations, including small business owners, smallholder farmers, and women. Accion has also provided critical investments and advisory services to traditional financial institutions and microfinance companies, enabling them to create more accessible financial products. These efforts have helped build a network of 230 financial service providers reaching low-income consumers and businesses across 75 countries.
Recognizing the growing importance of digital technologies in financial inclusion, Accion established the Accion Venture Lab in 2019. This $23 million initiative focuses on early-stage fintech investments, having supported over 65 seed and Series A companies in Latin America, Southeast Asia, and Africa. These investments have enabled promising fintech startups to leverage technology to expand reach, reduce costs, and enhance customer engagement, a critical area where Accion believes traditional financial institutions are lagging behind.
“We’ve observed that people in rural areas and those who haven’t been well-served by traditional financial institutions are often left behind by the digital revolution,” said Abhishek Agrawal, managing partner at the Accion Digital Transformation Fund. “The challenge is twofold. First, there’s a lack of trust in digital technology among these customer segments. Second, traditional financial institutions often lack the internal expertise or resources to invest in real digital customer engagement.”
The COVID-19 pandemic further highlighted the urgency of addressing the digital inclusion gap. Accion believes that by empowering traditional financial institutions to embrace digital transformation, they can better serve their customers and remain competitive in an evolving financial landscape.
The Accion Digital Transformation Fund will focus on companies serving micro, small, and medium enterprises (MSMEs) across South and Southeast Asia, Latin America, and Africa. Managed by Accion Impact Management, the fund will invest in these institutions through equity stakes ranging from $12 million to $15 million, along with contributions from limited partners. This approach aims to support companies in their digital transformation journey and equip them with the tools to enhance customer engagement.
“Our ideal partners are traditional microfinance institutions, affordable housing companies, and microfinance institutions transitioning to banks,” explained Agrawal. “We’re not interested in simply digitizing processes or implementing core banking systems. Our focus is on helping these institutions develop strategies to engage with their customers more effectively through digital channels, empowering them to offer more choices and remain competitive in the future.”
The Accion Digital Transformation Fund will prioritize new investments in traditional financial institutions, complementing the Venture Lab’s focus on early-stage fintech companies. The fund expects to make between 10 and 12 investments with a flexible allocation of capital across the target regions. Accion aims to build a balanced portfolio, with investments distributed across Asia, Africa, and Latin America.
The fund’s portfolio will also encompass a variety of financial service models. For example, in India, the fund has already invested in Annapurna Finance, which provides small, unsecured loans to women entrepreneurs, and IKF Finance, a company specializing in secured asset financing. Accion believes that by showcasing successful digital transformation examples across diverse models, the fund can serve as a valuable resource for financial institutions globally.
Limited partners in the Accion Digital Transformation Fund include prominent development finance institutions and impact investors such as British International Investment (BII), FMO, IDB Invest, International Finance Corporation (IFC), Mastercard, OeEB, and Swedfund.
This initiative by Accion represents a significant step forward in bridging the digital inclusion gap and empowering traditional financial institutions to better serve underserved populations. By leveraging technology and strategic partnerships, Accion aims to unlock a new era of financial inclusion for millions around the world.