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Every day, millions of underserved individuals are left behind by the financial system, not due to lack of will, but because fintechs and other financial service providers (FSPs) lack the tools to harness the power of data. In today’s data-rich digital economy, this isn’t just a missed opportunity: It can become a structural barrier to inclusion, growth and innovation.

In the digital finance landscape, data is one of the most valuable assets. Yet across the sector, data remains siloed, fragmented and underutilized. This challenge is particularly acute in emerging markets, where infrastructure limitations and capacity gaps make it difficult to extract value from data.

According to McKinsey, one of the main factors distinguishing profitable from unprofitable fintechs is the strength of their cost discipline. Its research revealed that controlling operational expenses and maintaining efficiency are essential for achieving sustainable growth. Data plays a central role in both, powering automation, streamlining decision-making and enabling precision in customer acquisition and retention strategies.

McKinsey also found that profitable fintechs tailor their value propositions to their markets and prioritize consumer segments and products with higher profitability potential. However, without the right data and tools, these insights remain out of reach, leaving fintechs and other FSPs unable to make informed decisions about what products to build, who to serve or how to innovate in ways that meet real customer needs.

Without accessible, practical tools to leverage the power of data, these businesses struggle to understand their customers and improve operations, hindering innovation, limiting growth and excluding those who most need financial services.

Why Financial Service Providers Struggle to Use Data Effectively

Despite its value, many FSPs and fintechs face persistent barriers:

• Limited access to quality data: Incomplete or fragmented data sources yield unreliable insights.
• Data overload: An excess of data makes it difficult to identify which points are most relevant.
• Lack of behavioral data: Demographics alone don’t capture financial habits, preferences and pain points.
• Capacity and skill gaps: Without in-house expertise in data science, valuable insights go untapped.
• Regulatory complexity: Navigating privacy, localization and security regulations adds additional burdens.

A Strategic Collaboration to Close the Data Gap

To address these challenges, DataKind and the Alliance of Digital Finance and Fintech Associations (AllianceDFA) have joined forces, bringing together deep technical expertise and global industry reach.

DataKind is a global nonprofit product innovator at the forefront of data science and AI for social impact, with a focus on building open-access, modular products that help mission-driven organizations make smarter, faster, more equitable decisions. AllianceDFA is the global network of national digital finance and fintech associations founded to help foster inclusive, responsible fintech ecosystems. Its goal is to harness these associations’ collective strength by offering deep market insights, convening power and access to local networks to shape enabling policy, drive cross-border collaboration, set industry standards, and scale capacity and impact across emerging markets.

Together, our organizations are leveraging DataKind’s Data Insights for Financial Inclusion Toolkit (DIFIT), a free, open-access learning platform designed to help fintechs and other FSPs turn data into action, guiding them on what data to collect, how to analyze it and how to interpret and apply insights to fuel customer growth and retention.

With catalytic support from the Mastercard Center for Inclusive Growth, DIFIT launched in late 2024 and is already gaining traction. The Center’s investment not only validated the concept, it has also accelerated the product’s development and positioned it for global scale. As a strategic thought partner, the Center brings global insight, intellectual rigor and a proven commitment to advancing inclusive growth through data and technology.

AllianceDFA’s powerful network of associations will now help bring DIFIT to market, testing, adapting and expanding the toolkit across diverse regions and regulatory environments.

Partnering to Transform How Fintechs and FSPs Leverage Data

By combining DataKind’s technical expertise and product innovation with AllianceDFA’s expansive network and convening power and the Center’s visionary support, this partnership is positioned to transform how inclusive fintechs and FSPs leverage data. By utilizing this product, these stakeholders can:

• Improve Customer Segmentation: DIFIT enables fintechs to refine customer segmentation beyond income and demographics, incorporating behavioral and psychographic insights. This allows for more targeted product development and marketing strategies, improving customer engagement and usage.
• Optimize Customer Acquisition and Retention: Using DIFIT, FSPs and fintechs can analyze data to fine-tune their acquisition strategies and personalize their engagement efforts. Understanding customer behavior enables stakeholders to develop tailored financial products and outreach campaigns, increasing retention.
• Reduce Churn and Strengthen Risk Management: Identify at-risk customers and improve segmentation to reduce default rates, build trust and proactively respond to customer needs.
• Drive Sustainable Business Growth: Data-driven segmentation support can help stakeholders reach the right consumer, thereby reducing the cost of customer acquisition and retention, and improving customer loyalty and lifetime value.
• Enhance Financial Inclusion: By harnessing DIFIT’s capabilities, FSPs and fintechs can identify underserved segments and tailor financial services to meet their needs. Data-driven insights lead to a better product fit, expanding access to and usage of financial products for those traditionally excluded from formal financial systems.

DIFIT is more than a toolkit. It’s an invitation to collaborate. As we scale this innovation, we’re actively seeking:

• Fintechs, FSPs and industry associations interested in adopting DIFIT
• Funders and partners who believe in data-driven innovation for inclusion
• Collaborators who want to co-create the future of inclusive digital finance

Interested in learning more? Access DIFIT here or connect with us to bring DIFIT to your fintech association or business.

Together, we can ensure that fintechs and other FSPs don’t just collect data, but that they actually use it to grow, innovate and reach those who need financial services the most.

Sarah Corley is CEO of the Alliance of Digital Finance and Fintech Associations (AllianceDFA), and Mallory Sheff is Director, Product and Programs at DataKind.

Photo credit: Flyfin