Introduction Micro, small, and medium-sized enterprises (MSMEs) are one of the main drivers of economic development and growth. In Asia and the Pacific, they make up approximately 95% of businesses and contribute between 20% and 50% of the gross domestic product (GDP) in the region. However, they face various challenges in accessing financing. Women-led MSMEs (WMSMEs) encounter several barriers in securing funding to support their businesses: the finance gap for women in MSMEs is estimated to be worth $1.7 trillion, which is equivalent to 6% of total GDP, according to the World Bank. Approximately 1 billion women are underserved by financial institutions. This is detrimental to the latter in the long run as they lose about $700 billion yearly by not serving women customers. Context COVID-19 exacerbated the challenges faced by MSMEs and women, but it also highlighted the importance of leveraging technology to find solutions. The digital acceleration shift triggered by the pandemic resulted in improved financial inclusion as more investments were poured into digital infrastructure and tools. This led to the rise of industries and opened up more livelihood opportunities, thereby empowering entrepreneurs, including women. Crowdsourcing Initiatives ADB’s Women’s Finance Exchange (gWFX) supports financial institutions by helping them identify, select, and embed various technological solutions, enabling them to enhance access to finance for women-led SMEs. Using a collaborative One ADB approach between ADB’s Information Technology Department, gWFX, and investment teams, we set out to leverage crowdsourcing through ADB Challenges competitions to identify and select innovative solutions to empower MSMEs, including WSMEs. We have completed three challenges in Nepal, Pakistan, and Thailand. We collaborated with financial institutions in these countries to seek out creative technology solutions through a series of innovation challenges. The winning solutions were chosen by a jury of experts and financial institution stakeholders following a multi-stage selection process. The selected financial technology companies received funding toward evolving their solutions to the bank’s needs. The Fintech Innovation Challenge in Nepal aimed “to identify and select a solution that enables a financial institution to i) analyze alternative data points more efficiently, ii) view real time insights seamlessly, and iii) improve existing or establish an alternative credit scoring model with the objective to expand lending to… [WSMEs in the country]. Similarly, the Technology Innovation Challenge in Pakistan highlighted that “increased visibility of alternative data points would enable financial institutions [FIs] to have better visibility and understanding of the [financial position of WSMEs] to enable FIs to score them better and [more fairly].” The challenges in Nepal in 2024 and Pakistan in 2023 successfully identified tech-enabled credit scoring models to help financial institutions analyze alternative data points and make gender-considerate lending considerations. Meanwhile, the most recent challenge in Thailand focused on leveraging artificial intelligence (AI) and real time data insights to better serve MSMEs. The AI-powered toolbox “would cover data captured from MSMEs and leverage AI to provide actionable, yet simplified insights for MSMEs, specifically focusing on cash flow forecasting, financial reporting, and other related financial metrics.” Lessons Here are three lessons that we have learned in crowdsourcing digital solutions to support MSMEs’ and WMSMEs’ access to financing: Employ a bottom-up and top-down, collaborative approach. Effective crowdsourcing requires a deep understanding of the problem. Therefore, various stakeholders, including government and non-governmental institutions, (W)MSMEs, financial institutions, and technology service providers, were consulted to learn more about the situation on the ground to better frame and flesh out the challenges. The collaborative approach used by ADB’s IT Department, gWFX, the Private Sector Financial Institutions Division of ADB’s Private Sector Operations Department, and the Finance Sector Office ensured that the challenges were relevant and actionable. In addition, collaboration generated lessons for broader engagement with various groups. Design problem statements tailored to match the unique needs of Developing Member Countries (DMCs). The intent behind these challenges is to obtain proposals that are no longer at the ideation stage. Instead, these should be actionable, relevant, and responsive to the specific context in the DMC covered by the challenge. Prioritizing local experience in the evaluation process also helped in shortlisting proposals that were socio-culturally and economically appropriate. Furthermore, we used local experience as one of the criteria for evaluating submissions to ensure that the shortlisted teams were familiar with the context. Taking these criteria into consideration enabled the team to filter out which of the submitted solutions would best fit the context and needs of the respective DMCs. This was also to ensure that any solution would not leave out the women’s market segment but would instead look at technology through a gender lens and provide tools to help women access the financing they need to thrive. Ensure the right solution is selected through validation. Beyond identifying and selecting a solution that addresses a specific challenge faced by financial institutions, it is equally crucial to validate the solution through a “test-and-learn” approach. By stress testing the solution during both the proof of concept and pilot stages, teams can assess its viability and scalability, ensuring that it meets the needs of the financial institutions and the entrepreneurs it aims to support. For example, in Pakistan, the AI-leveraged solution for financial statement analytics underwent testing to ensure that the solution met the financial institution’s objectives of scoring WMSMEs more effectively. The team gathered business and technical requirements of the institution, prioritized features and functionalities, and worked with the IT and Operations teams to create and implement an integration roadmap. Next, the solution will be deployed in a test environment to lend to a sample size of WMSMEs for validation. Conclusion Crowdsourcing through platforms such as ADB Challenges can be a powerful strategy for driving innovation in financial inclusion. By carefully designing challenges and engaging with stakeholders, we can effectively harness the collective intelligence to address the financing needs of MSMEs, including women-led businesses. Resources Asian Development Bank. ADB Challenges website. ADB. 2024. Leveraging Fintech for Women Entrepreneurs in Indonesia, the Philippines and Viet Nam. ADB. 2022. One ADB: An Evaluation of ADB’s Approach to Delivering Strategy 2030. ADB. Women’s Finance Exchange website. Ask the Experts Ozzeir Khan Director, ADB Digital Innovation and Architecture, Information Technology Department, Asian Development Bank Ozzeir Khan is the Director of the Digital Innovation and Architecture Division and heads the Digital Innovation Sandbox Program. He is currently developing strategies and initiatives on artificial intelligence, robotic process automation and other emerging technologies in support of ADB’s Strategy 2030. Prior to joining ADB, he was Chief of Digital Innovation Labs for the United Nations and worked in the global financial services sector in Asia, Europe, and the USA. Sabine Spohn Principal Investment Specialist, Private Sector Operations Department, Asian Development Bank Sabine Spohn is responsible for managing the Women’s Finance Exchange of ADB’s Private Sector Operations Department (PSOD). She also remains active in the implementation of PSOD’s Microfinance Program, expanding it in the Caucasus and Central West Asia region. Prior to ADB, she worked as Deputy Head in Frankfurt School of Finance and Management and was responsible for its Asian project portfolio. She has a commercial banking background and holds a PhD in Development Studies from the University of Melbourne. Asian Development Bank (ADB) The Asian Development Bank is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 69 members—49 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance. Follow Asian Development Bank (ADB) on Leave your question or comment in the section below: View the discussion thread.