FINCA Forward Case Study: Salutat – Streamlining Communication Workflows and Modernizing the Customer Experience to Improve Retention and Acquisition
FINCA Forward is an innovation and investment advisory platform that facilitates commercial partnerships between early stage fintechs and microfinance institutions (MFIs). We deploy our hypothesis-driven matching service to allow MFIs to evaluate technology solutions designed to address strategic and critical operational challenges and early-stage fintechs to iterate on their product or service with MFI customer feedback. The startups we work with also receive tailored business advisory assistance from our platform partners and are eligible for investment from FINCA Ventures.
The Challenge
In the context of an increasingly competitive financial services market, FINCA Guatemala, like many other microfinance institutions (MFIs), is exploring emerging technologies that promise to reduce operational costs and modernize the customer experience. Specifically, FINCA Guatemala wants to streamline customer communication workflows and introduce digital customer engagement and communications to drive higher rates of retention and acquisition.
Despite the introduction of several internally developed technology solutions, FINCA Guatemala has continued to face challenges with its customer communication workflows that remain uncoordinated, inefficient, and increase both cost and risk. The MFI also lost opportunities to effectively engage current and prospective customers on new and relevant products, increasing both churn and lost sales.
Front-line loan officers, who serve as the primary intermediaries between FINCA Guatemala and its clients, don’t have access to the tools they need to effectively manage their portfolio of existing clients and meet acquisition targets. Branch managers, as the function responsible for managing loan officers, use time-consuming manual systems to manage day-to-day field operations and have little insight into loan officer performance. From the perspective of customers, the engagement approach used by FINCA Guatemala missed an opportunity to deliver a rich and personalized customer experience through which individual needs are known and satisfied.
The Solution
FINCA Forward, in collaboration with FINCA Guatemala and FINCA Impact Finance (FIF), evaluated several solutions and ultimately selected Salutat, a company that created a solution primarily designed around three key stakeholders in the customer communication workflow: branch managers, loan officers, and the customers themselves. The Salutat team was eager to partner with a global financial institution like FINCA Impact Finance to mature its product, processes, and the skillset of its team to position for seed capital raise.
Salutat’s browser-based dashboard, Invisio, provides branch managers with tools to efficiently manage day-to-day loan officer operations. A smartphone application gives loan officers on-the-go access to a 360-degree view of their customers, a set of task management features, and omnichannel communication functionality. For customers, Salutat is designed to ensure that they are contacted through the over-the-top (OTT) communication channel of their choice with personalized transactional and non-transactional content.
The Outcome
FINCA Forward implemented and financed a proof-of-concept (POC) of the Salutat solution in Guatemala for four months from November 2019 to February 2020. We believed that Salutat’s features could improve measurable business outcomes in customer retention and acquisition and demonstrate the potential for an up to 20 percent return on investment (ROI). Notably, this modest target was only a fraction of the ROI that similar solutions have delivered in other sectors. While qualitative insights collected through focus group discussions with participating FINCA Guatemala staff pointed to an improvement in our target business outcomes, we were unable to quantitatively demonstrate the magnitude of impact that would have delivered the expected ROI.
We did however show that communications technology will be vital for advancing FIF’s tech-touch strategy and that rapid loan officer and branch manager adoption of this type of technology is possible. Furthermore, we derived a set of design principles and communications technology features to inform future POCs and planned technology investments in the region, including:
- Automated and templated messaging through OTT channels increased the frequency of communication between FINCA and its customers by 80 percent, allowing the MFI to build more robust relationships with its customers.
- Creating the ability for branch managers to digitally track and manage the performance of loan officers and set customer communication standards and protocols streamlined and strengthened the communications workflow.
- Providing loan officers with features such as an on-the-go 360-degree view of customers, an ability to store qualitative insights from customer interactions, and reminders for when and how to perform specific tasks in the communications workflow increased efficiency in the field.
Next Steps
The POC with Salutat demonstrated the importance of testing products that can either be stand-alone solutions or integrated into core technology investments as features and design principles. For FINCA Guatemala, the POC isolated a set of impactful features and design principles to inform future core technology investments, but did not yield the magnitude of effect on our target business outcomes that could justify investing in a stand-alone solution.
Salutat’s founders came to a similar conclusion. The FINCA Forward POC accelerated product refinement and Salutat’s journey to product-market fit. However, the team realized that the product they had created was a set of fundamental features and design principles, rather than a stand-alone solution, that need to be integrated with core systems and not sit parallel with application programming interfaces (APIs). Based on this finding, Salutat’s founders decided to exit the business through a trade sale to a global microfinance bank rather than pursue a software-as-a-service model as initially planned.
At FINCA Forward, we will continue to explore this emerging insight during our future POCs. If you are an MFI exploring whether your operational challenge can be solved by a set of features and design principles integrated into core technology investments or by a stand-alone technology solution that can interact with your core systems through APIs, please get in touch at [email protected].
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