The use of data in decision-making has transformed the way businesses engage with consumers. The recent pandemic has been a catalyst in this trend, turning analogue customers into digital customers overnight and transforming the way people make and receive payments, borrow and save. The adoption of these new habits has been critical for financial institutions to remain relevant and competitive in an environment where today's innovations may be obsolete tomorrow. This paradigm shift is not only essential to meet evolving customer demands and improve customer experiences, but also plays a key role in promoting financial inclusion by extending services to the underserved and unbanked.

Data plays a critical role in increasing financial inclusion by providing additional information on individuals without a traditional credit history

According to the World Bank, around 1.4 billion adults worldwide lack access to banking services, many of them women, disadvantaged people, and residents of rural areas. With the digitization of financial services, 71% of people in developing countries now have a bank account, a significant increase from 42% a decade ago. However, Latin America still faces challenges as 41% of the population is still excluded from the financial system. In this region, countries such as Brazil, Argentina and Venezuela show progress, however, others such as Honduras, Peru and Colombia still face challenges in promoting financial inclusion.

In the digital age, data has become the new gold. The key is knowing how to extract value from this data. Through proper analysis and interpretation, companies can uncover valuable information, identify patterns and trends, better understand their customers, and make strategic decisions in order to optimize business performance, offer personalized services and improve their market positioning.

Through their data-driven business models and hyper-personalisation of products and services, companies such as Netflix, Spotify and Instagram have changed the way we consume movies, music and media. Banks are expected to offer a similar level of personalization with tailored services, 24/7 availability and the ease of being just a click away.

Data is not only a catalyst for business, but also plays a critical role in increasing financial inclusion by providing additional information on individuals without a traditional credit history. In emerging markets, a large portion of the market does not have access to basic financial services due to a lack of credit history or collateral. However, these individuales do count on alternative data sources that can be used to assess their creditworthiness, such as their social media, utility payments and online transactions.

The use of alternative data allows financial institutions to assess credit risk more accurately and offer services to people excluded from the traditional financial system. While it is important to ensure ethics and privacy in the use of this data, its use can foster financial inclusion and contribute to economic development by enabling access to loans and other financial services.

In order to stay on the pulse of digital transformation and support its institutions in becoming data-driven, the BBVA Microfinance Foundation (BBVAMF) teamed up with the International Finance Corporation (IFC) for a new edition of DigiLab Data, a programme designed to accelerate data transformation in financial institutions.

This second cohort includes the participation of the five institutions of the BBVAMF: Banco de las Microfinanzas - Bancamia S.A. (Colombia), Financiera Confianza S.A.A. (Peru), Banco Adopem (Dominican Republic), Microserfin (Panama) and Fondo Esperanza (Chile).

In an increasingly digitized world, data is becoming an invaluable asset that can make the difference between business success and failure. It is therefore critical that organizations recognize its importance and become data-driven businesses, as long as they commit to using it ethically and responsibly for the benefit of all.