Empowering entrepreneurial women, with Debbie Watkins

Singapore might not feel like a natural home for a mobile banking app built on a vision to increase access to credit, but the city is not all glass skyscrapers and besuited bankers; and women are the ones most likely to fall through the cracks. That’s why Lucy is here. If you’re an entrepreneur, or a momtrepreneur, or a micropreneur, then it’s like your bank, but better.

In today’s episode, I speak to Lucy’s impressive co-founder, Debbie Watkins, about her globe-spanning career and how a better banking app can empower entrepreneurial women in ways that traditional banks simply can’t.

You can find Lucy at https://welucy.com/ (and while you’re there, check out the Team page with its awesome art, and equally awesome talent https://welucy.com/team-lucy/)

You can learn more about myself, Brendan le Grange, on my LinkedIn page (feel free to connect), my action-adventure novels are on Amazon, some versions even for free, and my work with ConfirmU and our gamified psychometric scores is at https://confirmu.com/ and on episode 24 of this very show https://www.howtolendmoneytostrangers.show/episodes/episode-24

If you have any feedback, questions, or if you would like to participate in the show, please feel free to reach out to me via the contact page on this site.

Regards,

Brendan

The full written transcript, with timestamps, is below:

Debbie Watkins 0:00

Lucy came about, really, because we wanted from the very beginning to sound like the anti bank, we also felt that we wanted it to be a personal thing, recognising that particularly now with a lot of mobile delivery, it's kind of removed that personal touch. And so we wanted Lucy to feel very personal. And we felt the best way was to give it a name, a persona, in product development speak. And Lucia, in several different languages means light. And so we wanted something simple, unpretentious, easy to remember, and that had a personality.

Brendan Le Grange 0:41

I know this is a business podcast, but I've had a look at the data and it turns out that paranormal stories bring in far greater audiences - so here's a little mystery for you all. Angkor Wat in Cambodia is about 500 miles south of Luang Prabang, and the flight between the two cities should take 1 hour and 44 minutes... So then why did my wife and I, and only my wife and I on our flight, take 25 hours and 44 minutes to complete that connection? Did we go missing in time? Where we abducted by aliens?

Well, no, as it turned out we had arrived so early at the airport that the desk agent hadn't had his first coffee yet and had forgotten to roll over the date stamp. Meaning it just looked like we'd left Laos a day before our compatriots. I used to think that made for a memorable trip to Cambodia but Debbie Watkins, today's guest, used her trip to build a microfinance social enterprise.

And she's done so much more since. Welcome to How to Lend Money to Strangers with Brendan Le Grange.

Debbie Watkins, welcome to the show. Ostensibly, we're here to talk about Lucy, the mobile banking app for women in Singapore. But you have far too rich a story to skip over quickly, so let's spend some time first exploring the path that brought you to where you are today. You didn't start your career, by the looks of it, in emerging market financial services, or indeed in financial services. So what was your first calling?

Debbie Watkins 2:21

Thanks, Brendan, for having me on. And, actually, I did start out at the very, very beginning in a high street provincial bank in England, quite different to what things are now. But during my time in the UK, I focused a lot on tech, which evolved into ERP systems until the last role I had, which was in e-cash. Bear in mind, this was the late 90s so e-cash was pretty leading edge.

But then, early in the new millennium, things took a different turn. And it was a combination of a redundancy and realising that if I didn't go out and see the world at that time, I may never do. So I decided to take some time off and go backpacking.

As these things do, I never went back.

It wasn't really a particular plan. But when I actually started travelling, I met up with some friends, just by coincidence, they were going to be in Cambodia, I had no clue where Cambodia was, I went to the travel agent to book a ticket, they had no clue where Cambodia was... I think it's fair to say that what I saw and experienced completely changed my perspective of the world. And I decided that I would stay for longer and actually see what I could do to help people in Cambodia, who were at the time emerging from genocide and a very, very long civil war. And so it started out really by getting involved in voluntary projects, but then evolved into setting up to social enterprises.

And the reason that that came about was because I'd really recognise that if you wanted to drive positive social impact in a lasting way that you needed to have a sound business model underneath them. And because donors, of course, are sort of very much a finite type of thing. Once the donor money's finished, it's finished, I recognised that we needed to do something that was more longer term. And that's kind of really how things started in emerging economies. Bear in mind, this was sort of 2001 2002 social enterprise was not yet a phrase, which meant ultimately I was having to take about five sentences to explain what we were doing. And no one really got it and things went on from that.

Brendan Le Grange 4:35

Yeah, because looking at your rather extensive CV there, you were doing Microfinance in Cambodia, but as you said, things went from there, you expanded across the whole developing world working with various microfinance organisations - consulting in Africa and Asia. How did that spark that started in Cambodia grow to be as big as it did?

Debbie Watkins 4:55

Well, it was seeing the same patterns, I think, pretty much everywhere I was going.

So what I actually did was, I saw this potential for people who were underserved in a multitude of different ways to actually be empowered and take control of their own future through social impact businesses, which I think microfinance really comes under. And so what I started doing is leveraging my background in ERP solutions and tech platforms, and got involved in microfinance or banking tech platforms. And so it was really combining the two.

But what was really interesting was that, everywhere I went, despite the fact that countries were so different geographically and demographically, that I saw this underlying resilience and determination amongst people who just didn't have opportunities presented to them on a plate, and that given the right support, and the right tools at the right time that they could actually then forge their own futures, pretty much everywhere I was going, which was from Sierra Leone to Pakistan to Vietnam.

Brendan Le Grange 6:03

And if we think about your career, starting phase one in tech/ in ERP, then phase two working in microfinance, and then another phase back with Fern Software in Singapore back in the tech space for a bit. So really that fin, then tech and then really exploring what tech and financial services together can achieve.

You've also taken that FinTech mentoring role or advisory roll forward in terms of mentorship to new founders, and scholars working with the Singapore University of Social Science and the UN Capital Development Fund - so you're clearly passionate about building this as a as a skill set as well, among others, not just rolling out your own organisations.

Debbie Watkins 6:48

Well, a lot of that is actually focused on customer centric product design. And that really had come about from a lot of work that I did with various financial institutions in different countries, which was born from recognising that tech by itself isn't enough to actually reach underserved populations or new market segments, you need to have the products that are underlying and being delivered through that tech channel to have a clear value proposition and solve pain points for customers. And one thing I'd seen was that this was something that most people found really difficult to do, to start with the customer.

Because the normal approach of anybody with a business is that you have an idea and then in many cases, you try to retrofit research to prove yourself right.

And that just happens so much, right? And it's very, very difficult for many people to see the world through other people's eyes and recognise the challenges that they're facing, that are very different from their own. But also, then recognising that the solutions that they have available to them are very different to yours.

And so I've conducted workshops on customer centric product design, literally all over the world. And when people actually got it, it was such a massive revelation on how to actually take this approach that I evolved from providing this as consulting services to financial institutions, into consulting services for small businesses. And that was partly as a bit of a test to say, well, the materials that I've developed, can I actually adapt these to a range of different businesses? And will it be as useful and as much of a revelation to all different kinds of businesses?

And I found out very conclusively that it was, and so what I've been doing with a lot of the universities is helping entrepreneurs and students to actually adopt this pain point first approach to designing products and services.

Brendan Le Grange 8:55

Now, you're also obviously walking the talk, as it were, with Lucy, the main reason that we're here today talking. You co-founded Lucy as the mobile banking app for women in Singapore, what was the inspiration behind taking that leap back into entrepreneurship? And how's it been bringing that idea to life?

Debbie Watkins 9:14

Well, it initially came from a number of different directions with myself and my co-founders. From my perspective, everywhere that I had been working with financial institutions, I've often seen that their appetite to serve new segments was limited, their appetite to develop new products that actually really serve pain points of individual customer segments, as well as somewhat limited - and I think complacency is probably the best way to describe it.

When it comes to banks. It's like, well, we've got this product, we don't really care if it actually really solves people's problems, but this is what we're offering Take it or leave it and you know what happens with most consumers that they don't have a choice, it's that or nothing, so they take it.

What I did see as well was, wherever I was working was, that pretty much all of the bank management was male. Everywhere I went. And yet, you know, you go out into the streets, and you're seeing at least 50% of the small businesses out there are run by women. And so I was seeing that women were disproportionately being underserved by financial institutions, they were being actually actively, in some cases discriminated against, in other cases, just not being made to feel welcome. But when I spoke to the banks about this, they're like, oh, yeah, well, you know, that group, too risky, too difficult, don't want to get involved.

At the same time, in parallel, my two co founders had been seeing similar things in a different direction. Luke had built an app development company that became pretty large and global, had been working with some banks who were like super tankers that were not renowned for their innovation, shall we say. Hal, my other co-founder, had spent 10 years with World Bank and was CEO of a bank in Myanmar, and had seen that the women who came to his bank to borrow were actually disproportionately better payers than the men. And yet, there weren't very many women coming in. And so we all got introduced to each other at various stages, spent a few meetings complaining about what was wrong with the world, and then decided to do something about it.

So it was very much driven by recognising that there was, first of all, a big problem. Secondly, that there was a big opportunity for somebody who could actually meet those needs and solve that problem. And that that would be, firstly, a good business. But secondly, could actually create a really positive social impact. I think the other important thing here as well, as a lot of people said, 'oh, why Singapore? Because surely Singapore, it's like middle upper income, everybody's banked, etc. Right?'

Brendan Le Grange 11:50

Yeah. The sort of Crazy Rich Asians view of the market...

Debbie Watkins 11:53

Yeah. And but it's not the case, right? There are segments in Singapore that are really underserved by formal financial institutions, and certainly micro entrepreneurs, or solopreneurs, or mompreneurs, homepreneurs very much fall into this gap. And I think particularly now, where you've got a lot of people who have been retrenched or have decided to start a side hustle and really are not getting access to tailored services that can really help them to grow and thrive. And so we'd recognise that Singapore had this gap, despite the popular misconception that everybody has access to all the financial services that they need.

Brendan Le Grange 12:33

Yeah, I'm glad you call that out, because I worked in Hong Kong. And there is a friendly rivalry between the two markets. But we share very rich economies, lots of people who've done incredibly well, very sophisticated and developed banking networks, but not necessarily fully encompassing the whole population, because they've grown so quickly, because they've developed these big, rich networks, the bits that have been left behind, the banks can look and say, 'well, I can either serve a handful of really wealthy clients, or I can sit down and work very hard to build a new product and serve the lower end... I'm going to take the easy money'.

So even in these economies, the sectors exist. And so, if people look around their own home markets, wherever they're listening here, there's probably the exact same segments and micro entrepreneurs are very likely to be underserved if they're also looking to make their own impact.

I was so glad you called out the team, because that was one thing that I noticed when I went on your website, just how impressive the direct team and indirect team you've pulled together at Lucy is, as well as I think the best graphic design I've seen on an 'about us' page.

So you talked about serving this population of micro entrepreneurs, what are your customers looking for? What sort of products are you providing to this customer segment? And how are you seeing them interact with your business?

Debbie Watkins 13:51

We're starting in phases. So with our phase one launch, we focused on fee free business banking, and actually, I guess you'd call it fee free life banking. Because one thing, again, that we've recognised is that for many women who are running a small business, it's often part time, it's from home, and for them getting a corporate bank account is pretty much impossible. There are minimum fees, they expect to see history of bank statements, there are transaction fees, etc, etc, etc. So what often happens is that women who have a small business will actually do all of their banking through their personal account.

Of course, the inevitable happens: all the personal business money gets mixed up together. We're all guilty of that, right? I've been just as bad when I had my first small businesses years ago. And so keeping track of your profit and loss of course becomes really, really difficult if you're not segregating your revenue and expenses.

So one thing that we decided to start out with was creating fee free, easy to set up digital first business bank accouns with a Debit MasterCard. And what this enables these micro entrepreneurs to do, is to have an account for their business and a separate one for their personal expenses. But recognising as well that a lot of women are juggling 50,000 things at the same time, they can also have a separate account for their groceries and give that card to their helper to go and do the shopping. They can have separate cards for their tweens and teens and give those cards to their kids to help them with effective financial management as well.

And so we've built that, first of all, together with what we're calling savings pockets, which are like little savings accounts. Again, you can create more on the fly, give them names of what you're saving towards, put a goal against them and monitor your progress. It's all dynamic. It's all like five minutes click, click click to set a new account up, unlike it is with a bank. And this was again recognising all these different things that people have to juggle business insurance, or your annual fees for X, Y, and Z or I'd like to save up to get a new laptop, for example. So you can have as many as you like for different purposes.

So that was our step one, but in steps two and three, what we're focusing on is more non-financial services. So this is what we call sort of business management and business growth tools. So this includes things like integrated accounting for non-accountants, ie training, peer forums, and a whole range of other things that we're working on. Ultimately, what we're aiming to do is to move into lending because again, micro enterprises find it pretty much impossible to borrow from banks here because you need to have a minimum annual salary. And it needs to be proven with payslips, etc, etc, which, of course, is something that most solopreneurs wouldn't have. But it doesn't mean that they're a bad credit risk.

Brendan Le Grange 16:41

Exactly. And I think what's also important is how that feeds back to this idea of the separated bank accounts. Because even if we look at the world now, okay, well, we've got open banking, someone's going to offer loans to micro businesses based on the how the finances of the business have performed...but when you've got that merged in with your own personal bank account, that's impossible to do. So even that simple splitting of accounts - and I say even that simple splitting, I've just opened an account for my daughter this weekend here in the UK, and I had to go to a separate bank because I wanted to be free, she's eight years old, she doesn't want to pay £2 a month in banking fees, which is the standard here, so I had to open an account with Revolut, myself, and then open an account in her name at Revolut so that we could get fee free banking, and that's separate to the app that I use for my business banking, which is separate to the app I use for my personal banking, it is a mess, but yeah - having the ability to keep that there where people can manage it also means that they can use their profit and loss behaviour to evidence, good financial performance to evidence good steady habits in payments or in incomes.

They're all this sort of information that you can use later on to make credit available to these consumers. So it all nicely ties together, as well as obviously that community you talk about to help to reduce unnecessary risks from mistakes been made that could have been avoided. So it really sounds like you are building that nice ecosystem.

Debbie Watkins 18:03

Yeah, and certainly what we're what we're aiming for this to be is very holistic. Because it's one thing I've seen in various countries that I've worked in as well, that just providing a line of credit, for example, in isolation doesn't actually necessarily help the business to grow, right? If they don't have the ability to keep track of their accounting, or to do a cash flow projection, or to know how to affect if you didn't do their marketing, they may pay the loan, right, but their business may not have move forward.

And typically, you know, your regular bank would say, well, we don't really care whether their businesses moved forward or not, right? We just want that they've paid the loan. And we're kind of looking at it more broadly than that and saying no, what we want to know is that actually what we're doing here and the tools that we're providing the right tools at the right time in somebody's business growth trajectory, and that by providing the whole suite of the financial and then non financial tools at the same time, we can actually help that business to grow with you.

Brendan Le Grange 18:58

Because often, you know, banks will - or lenders in general will - talk about providing credit to small businesses, 'because that's what powers our economy'. And it will be on the advertising on the billboards and such, because that's the message that really makes us believe in the power of credit and the power of banks, but you're right, for most of the time, they don't actually work that hard to make sure that's been achieved.

They might want to see will they make enough money to repay me, and that's about it. Whereas you talk about actually empowering these businesses and credit is one tool and where that's necessary, and where that's useful. You're looking to provide that but other times credit's not what is needed and you're looking to provide those other solutions as well, to genuinely bring about growth in small businesses and medium sized businesses because they need those are the businesses that power the economy. So really good to hear.

And sorry, I interrupted you a bit earlier when you were talking about credit. Singapore is a market that you know, as we said earlier from the outside can seem very developed very corporate and quite well. of the nature. And when I think of it, from my experience, they're working with the the big retail banks, excessively low risk, banks are expecting almost zero defaults, some of your customers are going to be fully visible on that traditional financial ecosystem, they're going to be there on the credit bureau, but others may not be. So when you're looking at opening your accounts, and particularly in the future, when we think about lending, how are you incorporating alternative data sources, alternative methods?

Debbie Watkins 20:33

Well, the approach that we're really going to be taking is largely driven by my experience, which has been a lot in emerging economies where everybody is a thin file client. And so the question there, of course, has always been 'how do you actually assess people for credit when they've got erratic incomes, they've got no presence on the credit bureau, etc, etc?'

And certainly, yes, this is definitely the case with micro entrepreneurs. You know, there has been a lot of talk and implementation now of alternative data, credit scoring, this is something that I personally got quite a lot of background in, we will be in the pleasant situation of actually having a lot of data about our customers from both the financial but also the non financial services that we're offering.

And so, I'm sure you're aware, but the key aspects, really, of doing credit scoring based upon alternative data is accessibility and timeliness. So can I access this data and is it up to date, and often there can be a challenge with that, if someone's relying on data that comes from another source, but what will have the advantage of is that this data will actually be with us in the first place, or one of the things that I've also seen as well from the work that I've done in the past is that if you look at the five C's of credit, one of the single biggest indicators of somebody's propensity to pay their loan is character.

And there's been a lot of work done around this in various countries now, which have also shown that if you're able to determine somebody's character, this can have quite a significant weighting on whether they're likely to repay. And so we're going to be very much looking at that aspect, general character, but also something that I call entrepreneurial savviness, which is their approach to managing and growing their business.

And, you know, with the beauty of all the machine learning and stuff, algorithms that are coming up nowadays that mean essentially, that we can feed all of our data into a machine learning model. And actually, it will kind of continue learning as it goes over time. But we suddenly see that leveraging all these data sources, together with the assessment of character, together with the added advantage that women are statistically, globally proven to be a much lower credit risk than men, I think kind of puts us in a good position.

Brendan Le Grange 22:59

What's really interesting there, as well, as you're describing it, is the next wave of machine learning, or certainly an interesting take on machine learning where the first machine learning models really just tried to replace the traditional credit model, but with more accuracy. So they still took that approach of let's take all your historic credit data, and let's build a model that predicts the future. And we will use machine learning because it can find patterns in the history that the traditional regression models didn't see. Whereas what you're saying is, let's scrap that whole, 'I need two years of credit history to predict the future' mindset and instead, say, 'because we have machine learning, we can get more towards character, we can look at things completely differently and use the power of the technology to rethink what we're doing and why we're doing it'. And I think that's really exciting.

I've seen you also talk about making non awkward salary advances. I think that's also an aspect that, particularly in a small business, I guess it's a very connected situation where you know, your employee very well, and there's sort of privacy and the discussions about making an advance on the salary or providing a little bit of credit to your employees can feel much more personal than if you're working in say 50,000 employee corporate. So things like this become very important. And if we're making discussions around credit, awkward employees might turn to the loan sharks or that sort of payday lending side of the world. But what do you mean when you're talking about fighting non awkward salary advances and loan management tools?

Debbie Watkins 24:31

One thing that we're offering is and wage access. And this works on the proviso that if you have worked a certain number of days, this month, you're actually entitled to receive that money. So we're not talking about advances. They are often called advances, but technically it's not an advance, right? Like today, it's the sixth, right? So I've earned six days of money. If I left today, I'm entitled to six days of money. So I should be able to access six days of money if I need it.

But what often often happens is that you know, you get towards the end of the month, perhaps something, an emergency has come up or something that you really need to sort out like right now. And then you feel uncomfortable going and asking because it's always couched as being an advance. And actually, it's not really. And so the way that earned wage access works is that we know because it's been declared by the employer, how much an employee gets paid, and when their pay day is, and so it will keep track of like their daily salary accumulation will enable them to actually draw down up to the number of days they've worked so far, without paying any interest because they've earned it.

Brendan Le Grange 25:45

Yeah, and it's an interesting side of the market, because obviously, we had a world where that never used to be available at all. And people would turn towards payday loans with 100% APR and get caught in these debt traps - when they really were the first time, just after a couple of days or maybe two weeks worth of income, which they had earned!

Well, it's quite interesting because it thinks about two days, I'm interviewing Smart Wage where they take the data from the HR systems, and they use that to give earned wage access to allow employees to avoid payday lending.

On that if people are listening, and they're also excited to hear and to watch what Lucy is doing, where can they keep an eye on the happenings? Where can they go to look at the app if they're in Singapore? Or where can they go to just keep track of the news and the progress you're making?

Debbie Watkins 26:35

Yep. So first of all, first stop is our website, www.welucy.com There are links there to download the app from the App Store as well. We also have a LinkedIn page and Instagram page, now a tick tock page as well. And people of course, are always welcome to connect with me directly through LinkedIn

Brendan Le Grange 26:52

So what's next for Lucy, obviously, you've got experience across the entire region and across many parts of the developing world, am I allowed to ask if you've got regional ambitions for Lucy?

Debbie Watkins 27:03

I would say that we've actually got global ambitions rather than just regional. I mean, we have to think big right. It's also been largely driven by the fact that when I first posted on LinkedIn that we were setting up Lucy, I had people from pretty much everywhere like that I knew saying, Debbie, you really need to bring this to Ethiopia, to England. And I think that's a key thing here is that this kind of gap between what women entrepreneurs need and what they're getting is a universal gap. It's not just regionally it's not just developed or developing countries, right? It's pretty much everywhere.

But that said, of course, like we do need to be realistic and so our focus is initially looking at regional expansion within the next year. And so I think it's very much watch this space. But yes, Singapore is our first proving ground if you like, we do still have work to do here. But we are looking at other countries in parallel.

Brendan Le Grange 27:57

Exciting times, indeed. So certainly, www.welucy.com and I'll put the links in the show notes as well, but lots of reasons to check in for consumers. And as you said, if they're interested in contacting you, they can do that as well, but certainly exciting times. Debbie, thank you again for your time. It's been wonderful catching up.

Debbie Watkins 28:15

Thanks so much, Brendan.

Brendan Le Grange 28:16

And thank you all for listening. If you enjoyed that, please do rate and review on your preferred podcast platform and share widely including on LinkedIn. And while you're there, send me a connection request. The show is written and recorded by myself Brendan Le Grange in Brighton, England and edited with assistance by Kane Hunter. Show Music is by Iam_Wake and you can find full written transcripts, show notes and more content at www.HowtoLendMoneytoStrangers.show

And I'll see you again next Thursday.