High tech, high touch: How community lenders use digital tools to stay personal with small businesses

When investing in digital solutions, how do community lenders whose business models center on trusted, direct connections with small businesses preserve their human touch points?

By Araba Sapara-Grant

Maria worked in the flower district in Manhattan for many years, but her dream of opening her own mobile flower shop seemed untenable. That changed in 2011, when a friend and fellow entrepreneur introduced her to Grameen America, a mission-driven Community Development Financial Institution (CDFI) dedicated to helping underserved women build businesses to enable financial mobility.

Despite having no credit history, Maria was able to secure a $1,000 loan through Grameen America’s low-barrier microloan and group-lending program to open her first retail location in New York. She invested in the right mix of merchandise and inventory and realized success quickly. Since then, she’s grown her business steadily with Grameen America by her side every step of the way — receiving 27 loans totaling $200,000 in capital invested in her flower business over the past 14 years.

Grameen America supports entrepreneurs like Maria through a high-touch, high-tech model — an approach they have spent years developing and refining with the goal of supporting the women entrepreneurs most in need.

Importantly, they have not tried to implement multiple digital technology projects all at the same time. Instead, they have taken a phased approach with their digital transformation. For example, pre-pandemic, they identified, implemented, and rolled out a new loan management platform. During the pandemic, Grameen America shifted to digital payments and prepaid cards in partnership with Mastercard in order to better serve their customers. And Grameen America’s most recent technological piece came in the form of its new mobile application, MyGrameen, which helps members manage their loans, apply for new capital, and access account information, while freeing up Grameen America loan officers to invest more time in deepening relationships with their members.

New tech, new opportunities

In a recent national survey of more than 30 senior leaders from the mission-driven lenders and business support organizations that make up the Mastercard Strive USA portfolio, respondents, including Grameen America, emphasized this approach of balancing digital innovation with a personal touch for community leaders to best support their clients, and stressed the need for more resources to identify and implement such technological investments. This insight and consensus on the need to “boost technology investment” — and others from the survey — helped inform Mastercard Strive USA’s broader strategy to strengthen the small business ecosystem by focusing on six key shifts, including capital, technology, data, and trust.

For Grameen America, the new layer of technology has been successful for both the organization and its members. Since its launch, 98% of members are registered, and 85% of loan applications are completed through the app. Further, relationship managers have reduced their time spent on operational responsibilities, saving member-facing staff an average of three or more hours per week. That’s time they can invest into cultivating deeper relationships with members and recruiting new entrepreneurs to tap into their services.

The digital ROI

Other community lenders around the country are also tapping into technology to strike a similar balance, as the need for digital transformation that crystallized during the pandemic continues to be a top priority across the U.S. small business ecosystem. But does investing in technology automatically equate to a sacrifice of personal connection with members?

Grameen America has seen the opposite, with the MyGrameen app allowing managers to spend time on client relationships by pushing administrative tasks toward the app. This experience is backed up by the survey results. While a shift toward better leveraging technology to automate and scale some of their services could be seen as backing away from the tailored one-on-one support that makes community lenders stand out among their larger counterparts, survey responses indicate that finding the right balance between high-tech solutions and high-touch support actually has the opposite effect.

Accessity, a 30-year-old Southern California CDFI that aims to open up financial opportunity to low- and moderate-income entrepreneurs, has seen this play out in real time through a focused technology investment in AI. When leadership realized that 80 percent of the client calls staff members were fielding were only related to 20 percent of their core process or services, Accessity decided to invest in an AI-powered chatbot to help clients quickly get the information they need, while freeing up critical time for their staff to build more meaningful relationships, like supporting clients with financial, business, and credit training through educational webinars, or assisting with credit and budgeting and other financial wellness programs. Mastercard Strive USA supported this work after Accessity applied to, and won, an award through its inaugural Innovation Fund, which focused on finding and supporting early-stage digital- and data-centric solutions with the potential to drive outsized impact for small businesses across the United States. The end result? The implementation of the chatbot resulted in a 50 percent decrease in the number of calls received from its clients — time saved that staff redirected to focus on getting to know their clients better so they can offer more tailored support.

Access to technologies like a mobile app or chatbot — which do not necessarily require a total digital transformation of the organization — can make a real difference. A forthcoming study on community financial institutions leveraging Mastercard Strive USA-funded digital products and services found that 67 percent of surveyed organizations reported an improvement in organizational efficiency, and 75 percent reported improved capabilities in supporting small businesses.

But making these digital investments and realizing their benefits doesn’t come without challenges. Many organizations surveyed reported that they had never before used technology to address their capacity challenges. They often lack the awareness of available technology that could improve their efficiencies, and struggle to identify and evaluate suitable technology alternatives that would be the right fit for their operations. On top of that, they often face resource constraints that create a major barrier to implementation and access, both in terms of technology implementation costs as well as hiring and retaining the talent necessary to support it.

One way forward could come in the form of shared technological infrastructure and industry-wide platforms that can be leveraged across multiple organizations, instead of each organization investing resources into building individual solutions.

Even once an organization identifies the right solution, there will inevitably be hiccups implementing new technology and adapting existing processes to account for the new technology. And once implemented, additional support may be needed as the model shifts to build capacity and reach new clients. There’s also the challenge of change management among staff when new technology changes long-standing policies and procedures — management needs to get buy-in and train staff on new systems.

For Grameen America, the rollout of MyGrameen was intentionally slow and carefully managed, with significant time spent testing and coordinating with third-party vendors. While the process was resource-intensive, Berkowitz and other leaders knew from past experience that launching a glitch-free app was critical — any early missteps could undermine member trust and hinder long-term adoption.

A ticking clock for support

For organizations like Grameen America and Accessity, regardless of whether the technology investments are part of a larger transformation or a more focused initiative, overcoming the challenges to implementation has more than paid off in efficiencies realized, and will directly lead to more small business owners succeeding in their ventures. And that’s the ultimate goal. With the record number of new businesses formed during the pandemic nearing the close of the critical five-year window when nearly half of small businesses fail, according to the U.S. Bureau of Labor Statistics, the clock is ticking on making sure these new entrepreneurs have the necessary support to succeed.

Through its investments in organizations like Grameen America, Accessity, and dozens of other small business support organizations, Mastercard Strive USA is aiming to support community lenders that are exploring innovative solutions to drive efficiency and impact across the small business ecosystem — but more resources will be needed to help more intermediaries take the technological leap and support them through the process, so they can in turn better support their small-business customers, like Maria.

Through her 14-year relationship with Grameen America, Maria has marked many major milestones with their support, like stocking her shop with fresh flowers from different countries, opening up a brick-and-mortar shop, moving to a larger location, and expanding into online sales and a flower delivery service, all while building a savings cushion and supporting her three children. It’s a business success story that Maria wants more women to be able to tell.

This article is part of Mastercard Strive USA’s ‘Six Shifts’ small business support series, which highlights how ecosystem leaders are putting strategy into action to improve small business outcomes — from capital and tech to timing, data, and trust.

Want to learn more or connect directly? Reach out to us at striveusa@mastercard.com.

You can also see a summary of the ‘Six Shifts’ on this fact sheet or learn more about Mastercard Strive USA’s impact in this snapshot about our partners and work.