Leveraging the Currency of Trust: How Social Commerce Data Can Inform Risk Management and Bring Formal Finance to Women-Led MSMEs

Across emerging markets, millions of women entrepreneurs run successful trust-based economies invisible to general finance. From thoroughfare nutrient vendors successful Kenya to home-based traders successful Bangladesh, these businesses trust connected their societal estimation — customer networks and relationships built done reliability and consistency — to survive.

In Indonesia, these trust-based enterprises are common, and MicroSave Consulting (MSC) assessed their experiences, challenges, and usage of in installments and different financial services successful our caller study “The Landscape and Financial Access of Social Commerce Sellers successful Indonesia.” The study draws connected study information and qualitative interviews pinch 458 sellers crossed 7 provinces, offering grounded insights into really informal women micro-entrepreneurs run and entree finance successful practice.

This article shares quantitative study and in-depth interviews from nan study to analyse nan level journeys, business practices and financing gaps of societal commerce sellers, pinch a typical attraction connected women sellers.

Empowering Trust-Based MSMEs: Government efforts vs. lived realities

One of nan entrepreneurs we interviewed is Suryani, a 45-year-old mother of 2 from Balikpapan. She supports her family by reselling children’s toys and trading homemade snacks. But though she has been engaged successful this business activity for decades, her business remains unregistered, and her only acquisition pinch general in installments has been done a cooperative.

Suryani does not waste her products connected general e-commerce platforms. She relies connected Facebook and WhatsApp to scope customers wrong her community, a shape of societal commerce that remains mostly invisible to general in installments systems. Her acquisition mirrors that of millions of Indonesian women micro-entrepreneurs, who are wide recognized successful argumentation rhetoric yet whose operating conditions and constraints are not afloat reflected successful existing argumentation design.

Indonesia’s committedness to nan empowerment of micro, mini and mean enterprises (MSMEs) has been impressive. Recognizing that nan country’s 65.5 cardinal MSMEs are nan backbone of its economy, nan authorities has deployed a wide scope of policies, financing schemes and public–private partnerships to grow their entree to in installments and markets. Flagship initiatives, specified arsenic nan Kredit Usaha Rakyat (People’s Business Credit) and Ultra-Micro Financing programs, person sought to empower entrepreneurs, peculiarly women, by boosting their entree to finance. More recently, successful June 2025, nan Ministry of MSMEs and nan Ministry of Women Empowerment and Child Protection launched nan Laksmi incubation program for women entrepreneurs, which combines capacity building pinch supervised financing. But though Indonesia’s MSME support ecosystem appears precocious and enabling connected paper, successful practice, this architecture is built chiefly astir general business, arsenic nan eligibility criteria for these programs create barriers for those operating extracurricular accepted structures.

Meanwhile, for entrepreneurs for illustration Suryani, who person operated informally for complete a decade, nan reluctance to activity general in installments persists. MSC’s study connected societal commerce sellers successful Indonesia helps quantify this dynamic: Only 15% of these sellers person accessed general credit, and conscionable 18% clasp a business recognition number. Most of these entrepreneurs run connected WhatsApp, Facebook aliases Instagram, alternatively than general e-commerce platforms.

This shape reflects not a deficiency of a maturation mindset, but nan constraints nether which galore informal businesses operate. Rather than pursuing accelerated description , galore prioritize predictable rate flow, manageable vulnerability and unchangeable customer relationships, peculiarly successful contexts wherever repayment consequence is salient. As 1 seller put it, “I for illustration what is certain.” For these entrepreneurs, formality, some successful financing and successful their broader business structure, does not guarantee stableness — connected nan contrary, it tin disrupt nan trust-based systems that prolong their livelihoods.

In position of credit, these concerns are driven not by an inherent distrust of general finance among women micro-entrepreneurs, but alternatively by nan truth that existing indebtedness products are not well-aligned pinch really they often run successful practice. Many of these sellers activity successful fast-moving aliases seasonal user segments pinch fluctuating input costs and irregular rate flows — while besides juggling important family attraction obligations. Yet general loans thin to presume unchangeable rate flows and fixed repayments, while fewer products are designed astir nan realities of informal women-run businesses. Additionally, this borrowing often takes spot done community-based channels specified arsenic microfinance institutions and cooperatives operating group-based (Grameen-style) models, wherever repayment outcomes are highly visible. As a result, a azygous default tin erode credibility, sever customer ties and dismantle vulnerable information nets. Formalization and in installments frankincense go double-edged swords, promising maturation while threatening nan continuity these businesses person worked difficult to preserve. In a trust-driven ecosystem, estimation is considered some an plus and a liability, truthful for these women entrepreneurs, informality is not guidance to growth: It is simply a strategy for stability.

In Suryani’s case, her first acquisition pinch an informal lender intensified her wariness toward in installments providers. Her indebtedness culminated successful nan nonaccomplishment of her warung (a small, informal, family-run unit aliases nutrient stall that operates astatine nan vicinity level), and triggered rumors astir her indebtedness wrong her community, shaping perceptions of her repayment reliability, business competence and opinionated arsenic a organization member. This raised nan perceived costs of borrowing and reinforced her determination to debar further loans.

Drawing connected our caller study, 74% of societal commerce sellers trust solely connected individual savings — a shape that is seen among different mini enterprises crossed nan nation. Their avoidance of credit, contempt this clear need, shows that galore of these entrepreneurs see self-funding to beryllium a pragmatic consequence to nan trade-off betwixt stableness and consequence that loans represent.

When spot meets consequence guidance and nan gender spread

By contrast, nan general financial strategy is governed by a different logic — 1 centered connected consequence management. Banks lend only erstwhile consequence is documented, verified and priced. Yet this risk-averse attack often clashes pinch nan lived realities of women entrepreneurs whose informal businesses thrive connected relationships, reliability and trust.

Banks successful Indonesia are lending ample volumes to MSMEs: Last year, nan authorities injected Rp 200 trillion (~US 11.9 billion) of authorities costs from Bank Indonesia into 5 state-owned banks to accelerate MSME financing. By July 2025, nan People Business Credit programme had expanded to IDR 300 trillion (~ US 17.9 billion), pinch IDR 131.84 trillion (~ US 7.8 billion) aliases astir 46% disbursed successful nan first six months. Yet this lending has mostly been directed toward general MSMEs that already meet banks’ underwriting requirements, specified arsenic having business registration, financial records and clear operating structures. And moreover for these MSMEs, results stay uneven: Financial strategy statistic recorded an MSME non-performing indebtedness (NPL) ratio of 4.14%, already approaching nan Indonesia Financial Service Authority’s 5% supervisory consequence threshold. Since banks run nether ongoing unit to support NPL ratios and portfolio quality, they person constricted expertise to widen akin consequence tolerance to informal entrepreneurs whose capacity is not arsenic easy documented done accepted indicators.

The halfway issue, therefore, is not that banks garbage to lend, nor that MSMEs irrationally debar loans. The rumor is simply a structural mismatch betwixt prudential, document-based banking logic and trust-based, informal business models.

Banks, nonetheless, stay nan astir trusted financial institutions among MSMEs. Among nan surveyed sellers successful MSC’s study, we recovered that 73% of antheral and 69% of female borrowers for illustration banks to pawnshops, leasing firms aliases cooperatives. Yet this spot is rooted successful perceived legitimacy much than existent accessibility. In this abstraction betwixt anticipation and experience, nan double-edged quality of general finance becomes apparent: When banks’ risk-based logic meets entrepreneurs’ informal realities, removal tin go systemic.

This removal is not conscionable operational, it is besides gendered. Women-owned MSMEs successful Indonesia and different processing economies typically person smaller loans and look stricter collateral requirements. And they often must unafraid spousal consent, creating structural filters that reenforce financial dependency connected family decision-makers — astir often spouses — and limit women’s financial autonomy. Even erstwhile women entrepreneurs show reliability done their integer footprints, specified arsenic dependable societal commerce sales, repetition customers and affirmative testimonials, these signals stay invisible to accepted in installments models. As a result, lenders trust connected narrower indicators specified arsenic collateral and general documentation, pushing women entrepreneurs toward smaller, informal aliases higher-cost financing, and shifting consequence backmost onto borrowers whose reliability is demonstrated done relationships and reputation.

From spot to creditworthiness: Moving toward gender-intelligent and inclusive lending

Since banks and micro-entrepreneurs specified arsenic Suryani trust connected different signals to found spot and creditworthiness, gender-intelligent lending must service arsenic a translator furniture betwixt them. Without specified an approach, existing financial creation risks reinforcing exclusion by overlooking really women really participate successful and prolong economical activity. Research connected platform livelihoods helps explicate this gap, showing that for galore women entrepreneurs, societal media functions arsenic halfway business infrastructure, wherever responsiveness, societal relationships and organization estimation style regular operations. These are truthful not “soft” data, but measurable indicators of credibility and reliability grounded successful lived practice.

Alternative in installments scoring provides a system measurement to incorporated behavioral and transactional information into general consequence appraisal wherever accepted archiving is limited. In practice, these replacement in installments scoring approaches are typically AI-enabled, utilizing automated models to process non-traditional information sources. CGAP’s activity connected gender-intentional in installments scoring shows that incorporating gender-relevant behavioral indicators tin amended nan accuracy and relevance of in installments appraisal for women entrepreneurs by aligning lending models much intimately pinch observed repayment behaviour — including information points that are often not reflected successful existing in installments appraisal standards — without weakening existing prudential standards. As nan Asian Development Bank cautions, nan usage of AI-driven and different automated in installments appraisal systems must beryllium intentionally designed and governed to debar reinforcing existing gender bias. But erstwhile applied pinch transparency, bias monitoring and quality oversight, these approaches tin complement prudential appraisal by taking women-led MSMEs’ reliability into account, alternatively of simply redefining consequence to debar excluding them.

In statement pinch this evolving knowing of consequence and creditworthiness, our study examines really granular behavioral and transactional information tin fortify in installments appraisal for women micro-entrepreneurs successful societal commerce, arsenic summarized successful nan array below:

Across nan 9 indicators identified, we observe that nan signals astir applicable to women sellers tin complement alternatively than substitute for accepted evaluations. These indicators seizure really enterprises are sustained successful mundane practice, including connection responsiveness, transaction consistency, integer costs usage and customer feedback. Together, they bespeak operational commitment, income stableness and business reputation, offering observable signals of reliability and subject that widen beyond general identifiers specified arsenic business registration certificates aliases documented transaction histories. Viewed done a gender lens, these behavior-based signals tin pass lenders’ assessments of entrepreneurs’ reliability and discipline, illustrating really spot is practiced successful women-led enterprises.

The integration of these information points could let lenders to create a much complete image of their imaginable borrowers. Based connected these assessments, financial institutions tin move beyond rigid templates to creation products grounded successful women’s lived realities, pinch nan imaginable to broaden entree while remaining accordant pinch banks’ existing in installments appraisal requirements, including documentation, verification and soul consequence controls.

However, our level study besides reveals a structural visibility gap, whereby businesses that trust much connected backstage messaging and informal practices time off less observable spot signals. This limits data-driven inclusion — unless societal commerce platforms and financial institutions collaborate. Where level information is incomplete, self-reported business accusation whitethorn temporarily amended visibility, but it cannot switch verified transaction information aliases platform-level integration.

Together, these findings constituent to an opportunity for collaboration betwixt integer platforms, replacement in installments scoring providers and financial institutions, wherever each character contributes a chopped function. Platforms would seizure behavioral footprints that bespeak really women transact and build trust, replacement in installments scoring providers would construe these signals into consequence insights, and financial institutions would use them wrong in installments products and prudential frameworks.

AI could amended nan ratio of these efforts and alteration further innovation, but its outcomes would dangle connected nan underlying information and creation choices. When trained connected incomplete information aliases information biased toward general businesses, AI algorithms tin reproduce existing exclusions by disadvantaging borrowers whose businesses run extracurricular general systems. Bias detection, transparency and quality oversight are truthful basal to guarantee that ratio gains do not construe into exclusion, and that inclusion is embedded wrong nan rigor of consequence management.

From consequence guidance to shared value

When utilized responsibly, AI-enabled replacement in installments scoring tin grow nan scope of information considered wrong prudential in installments assessment. For banks, this intends expanding their underwriting framework. For integer platforms, it intends transforming their MSME users’ behavioral information into a root of shared value, alternatively than simply utilizing it for their ain proprietary advantage. For policymakers, it intends enabling data-sharing frameworks that protect users while fostering inclusion. And for women entrepreneurs for illustration Suryani, it intends being recognized arsenic reliable economical actors whose trustworthiness has agelong been established, moreover arsenic it has remained invisible to accepted lenders.

Financial inclusion is not astir relaxing consequence management. It is astir redefining grounds done information points that bespeak nan lived realities of informal women micro-entrepreneurs. If inclusion is treated arsenic a deliberate creation choice, financial systems tin amended nan accuracy and relevance of consequence appraisal without compromising prudential discipline, building an economical infrastructure that supports nan business continuity, resilience and reliable operations of informal micro-enterprises.

Nabilla Prita Fiandini is an Assistant Manager, and Monica Christy is nan Senior Manager for Gender Equality, Disability and Social Inclusion, astatine MSC Southeast Asia.

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