Financial Inclusion

Financial Inclusion, FinTech, FinTech Trends, Open Banking

Digital Banking: The Talk of the Town

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Digital Banking is all about the transformation, where the consumer rather than the technology, is in the driver’s seat, and this MATTERS. It’s about digital money deposits, withdrawals and transfer of money from one account to another. It’s also about Account Management to loan management to paying all your bills digitally. Digital Banking essentially entails the leveraging of technology, where banking services are delivered over the internet, by involving high levels of process automation and web-based services. What Is Digital Banking? Digital banking, in simple words, is emulating 90% of the services provided by a conventional bank branch digitally, via a mobile app or through net banking in your computer browser. Welcome ‘Digital Banking’. Welcome to the virtual world of  banking services! Channels of Digital Banking Just as the word “virtual” is put up, you might wonder about the channels existent to avail such services. Let’s take a look at a few. Today, the main channels of digital banking are the Android and iOS apps of the respective banks and their browser-based websites. These apps are easily available in different app stores like Amazon Appstore, SlideME, Samsung Galaxy Apps, Mobile9 and so on. For example, SBI has SBI Yono, SBI Anywhere; ICICI Bank has iMobile. HDFC has HDFC Mobile and Pay Zapp. Kotak Mahindra’s Banking app is Kotak 811, while Axis Mobile provides Axis Mobile. We also have Payment Banks committed to the inclusion and service to the last mile like PayTM, Vodafone m Pesa, Airtel, Fino, Indian Post, Jio and so on. Babies on the block: Neo banks & Challenger banks In this race, we are also joined by Neo banks and Challenger banks (Read ‘Tomorrow’s Bank’)  like Revolut, N26, Monzo, Atom, Yolt, WeBank, Moven, Fidor, and MYBank to name a few. These banks are an important part of the emerging cohort of  FinTechs which puts customers at the center of everything. They are the banks which are reinventing the practices and processes associated with the traditional banking. A new type of digital bank (often working solely through a mobile app) which exists without branches. These are 100% digital banks. Neo banks don’t have the license and they rely on a partner bank to operate. On the other hand, Challenger banks have the full banking license and offer full suite of banking products. They compete independently and on equal terms with traditional banks or digitally manifested traditional banks.  They offer: Reduced costs Advanced features User friendly interfaces Customized reports Fast account openings ( between 3 to 10 minutes) International ‘Multi Currency’ Payments Instant ‘Multi Currency’ Payments 24/7 support Vaults and Expenses Analytics All these to ensure simple, secured and seamless transactions! Digital Banking Features Listing some of its many features: You can apply online for opening a savings or current account from your desktop or mobile. A manual call from a bank representative follows, who then completes verification from a remote branch.  OTP, video authentication and upload of scanned documents are proceeded with. This enables low cost zero balance account. 24/7 query solutions by chatbots are available in your app or net banking facility. Provides a highly secured, encrypted money transfer. Enables 24/7 money transfers at minimum or no extra fees, and displays their records whenever necessary. Electronic payment of bills to the pre-registered payees. Offering customized pre-approved all-purpose loans to the customer via a digital channel. Advantages of Banking Digitally Some of its many advantages will surely help you in forming a fair view of digital banking and its multi-faceted applications: Visiting a branch and spending precious work time is eliminated. Paying your bills online, keeping track of your transactions and tab on your spending has become easier. Customized approval for a loan via Artificial Intelligence using CIBIL in minutes for a customer. Avail discounts on your favorite activities right there from your banking app. Digital Banking provides with a virtual debit card, whenever you wish to generate one. Without a permanent CVV and duration of 24-48 hours, these are much safer. Real-time interbank payment is now the norm through IMPS while BHIM (Bharat Interface for Money) and UPI (United Payment Interface) enhance the interbank payment security. Multiple money applications can be synced together. Online budgeting was never so easy. Real-time figures, anytime, anywhere. Multiple sources of revenue for the bank. Cost of providing digital banking services is a fraction of branch bank services. Cons of Digital Banking Like any other novelty, digital banking also comes with its own set of disadvantages: Not possible without a stable internet connection. With scraping of Aadhaar for authentication, the model of digital verification that’s the cornerstone of digital banks is at risk. Chatbots and Robo advisors are not always the best option for the query. Unless they have the algorithm to learn from new questions, sometimes they loop back to the same answer for different queries. When products like FD, which are linked to the performance assessment of a bank employee, are done online, no particular back employee gets its credit. This leads to disinterest in that product in the bank employees of that branch where it’s registered. Few Dos and Don’ts in Digital Banking (Source: TribuneIndia.com) While banks and FinTechs take all precautions to ensure security, it’s always advisable to know the dos and don’ts of digital and online banking. Here are some of them: Always keep them password protected. Change your passwords and security settings regularly. Always visit your bank’s secure Internet Banking site directly. Always verify your domain name. Log out of your Internet Banking account the minute you complete transactions. Use dedicated/secured  WI-FI networks only. Always use, and update Antivirus software to keep your information safe. Safety tips while using a mobile app for banking transactions: Never save your mobile banking log-in and password on the phone. Never leave your handset unattended. Always lock your phone to prevent unauthorized use. Notify your bank as soon as your mobile is lost or stolen. Update the apps regularly. Keep an eye on your account balance and transaction history regularly. How FinTech

Financial Inclusion is the key
Agency Banking, Digital Financial Services Platform, Financial Inclusion, FinTech, FinTech Trends, Inclusive Banking, Open Banking, Rural Banking Solutions and Financial Inclusion

Financial Inclusion: What will it be like for years to come?

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Financial Inclusion helps lift people out of poverty and can help speed economic development. It can draw more women into the mainstream of economic activity, harnessing their contributions to society. – Sri Mulyani Indrawati, Indonesian economist, Minister of Finance of Indonesia since 2016 Economic growth of a country depends on factors like national income, per capita income & per capita consumption, technological advancement and even its political structure. An equilibrium between savings and consumptions is another factor which decides economic growth. Walter Bagehot, the famous classical economist, stated long ago that a strong financial system is crucial for economic growth and that the lending should be “quickly, freely and readily”. Translated to suit modern day scenario, to strengthen financial systems you need to encourage economic activities like Financial Inclusion, Digital Banking & Fintech. Let’s explore what and how Financial Inclusion can do and what it holds in the future for developing countries like India, Nepal, Bangladesh, and other African and Asian economies. Defining Financial Inclusion Financial inclusion can be broadly defined as the process of making financial services available to people, especially the weaker sections and low-income groups of the society. It includes the timely and adequate availability of a wide range of financial products and services like:   Bank accounts for saving & transactional purpose   Equity products   Insurance   Saving products   Loans For economic growth in developing countries, this aim is furthermore towards ensuring financial inclusion to the unbanked and the underprivileged community who are either unaware of or unable to affordable financial services and products. Penetration of financial services to all sections of society at a swift pace can be achieved through Digital Banking and FinTech. Goals to achieve Financial Inclusion are: To maximize the use of the latest technologies to transform the existing traditional financial or banking service models. To better the existing products or services of the financial sector. Financial Inclusion – Impacting Economies of Developing Countries Impact of Financial Inclusion, especially via Digital Banking or FinTech, can be exponential. A survey report by McKinsey Global Institute, which has been endorsed by the World Economic Forum also, states that there are more than 2 billion individuals and 200 million businesses (small, medium and micro) with no formal access to financial services like savings or credit. Those who have access are often required to pay heavy fees or charges. It goes on to state that if through Digital Banking, financial inclusion is ensured then the following impacts are expected:   GDPs of developing countries like, India, Ethiopia, Nigeria, and similar Asian economies will increase by 6%. The absolute value of such increase may reach a whopping $3.7trillion by 2025.   This incremental GDP thus created will generate an additional 95 million new jobs across industries.   Addition of 1.6 billion unbanked individuals will create a big pool of loan borrowers. Around $2.1 trillion of the loan amount to these individuals or small sized businesses is expected.   Governments can bring down tax collection leakages and gain up to $110 billion per year.   Governments stand to gain up to $400billion every year when they convert traditional accounts to digital accounts as they can now save 80-90% of cost on managing traditional accounts.   Increase in customer base will result in an incremental revenue generation of $4.2 trillion. All these predictions sound exciting, right? Read on to know some of the many concrete benefits of financial inclusion. Concrete Benefits of Financial Inclusion The few of the many,  main benefits of financial inclusion are:   Better Penetration of Services With financial inclusion in place, reaching the rural populace will be made possible providing them easy access to bank accounts, cash payments, cash receipts, and account statements. The authentication and fulfillment of services can be done by fingerprint and online receipts respectively.   Boosting Economic Growth The banking ecosystem will be strengthened as the cash economy will be reduced and the habit of saving will be inculcated in rural masses.   Direct Subsidy Transfer The government subsidies will be directly deposited to the bank accounts of beneficiaries. The funds will thus reach the intended recipients instead of middlemen forestalling leakages and corruption.   Encourages Entrepreneurship Financial inclusion will motivate formal banking and transparent credit availability which will release people from the clutches of unofficial money lenders. Adequate credit will prompt entrepreneur initiatives which will further enhance economic outputs and prosperity of the country. Financial Inclusion – Headway The progress of financial inclusion in the context of emerging economies like India has been substantial. The same has been highlighted in the Department of Financial Services GOI reports as:   35.5% of households availed banking services in 2001 which grew to 58.7% in 2011. This growth is significant in rural India –from 30.1% in 2001 to 54.4% in 2011.   The CRISIL- Inclusix which includes branch penetration, deposit penetration, and credit penetration was 35.4 in 2009 and has grown to 40.1 in 2011 to 58.0 in 2016.   IMF ‘Financial Access Survey 2018’ reported the following- Low-income countries like- Bangladesh, Myanmar, Guyana and many African countries have successfully used mobile payments for Financial Inclusion. These countries have more than twice the number of bank accounts per 1000 adults than the developed economies. What a sky-high improvement! Additionally, the IMF Financial Access Survey 2018 also reported an increase in the number of ATMs per 100,000 adults, branches of commercial banks per 100,000 adults, deposit and loan accounts with commercial banks per 1000 adults. Mobile money transactions number per 1000 adults was the most attention-gainer with a significant rise! Financial Inclusion does not mean only access to services but how those services are useful for the user. One of the parameters which are considered by various organizations while mapping FI is the safety and convenience of the financial service or product. A survey done by the World Bank Group, measuring the Financial Inclusion and Fintech revolution, reported that globally the percentage of adults using digital payments for receiving and making payments increased by 11% between 2014-2017. In developing countries, it is higher by 1% i.e. 12%.

Open Banking Enabling Financial Inclusion
Financial Inclusion, Open Banking, Open Banking API

How Open Banking can Help in Financial Inclusion

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Jonathan a villager who supplies vegetables to the branded supermarket in the city needs to submit monthly invoices [physical copy] to get the payment.He has a bank account but still has to maintain a physical copy of the number of vegetables supplied with the offer price. Recently he got to know about a software that could do the maths, generate an invoice and submit it to the concerned vendor. Vendor on receiving the invoice can release the payment directly to his bank account, that is accessible to Jonathan on the software/app via open banking. Welcome to the World of Open Banking that is enabling Financial Inclusion. How Open Banking can Enable Financial Inclusion Financial inclusion a concept that ensures all households and businesses, irrespective of income level, have access to and can efficiently use the suitable financial services they need to enhance their living. On the other hand, Open Banking initiative assures customers get a secure, agile and rich customer experience. The two initiatives are to benefit “THE CUSTOMER” then why not let them collaborate and access manifold advantages. The Problems Faced by Individuals/Businesses in rural/remote areas Access to Banks and Banking is tough and costly Even though individuals have a bank account, they are not in an operational state or dormant as operating the bank account is like traveling to a distant town. Lack of Financial Education High-interest rates for businesses who are in need of loans Lack of transparency leads to broker/dealers conning individuals and enterprises The absence of proper banking services limits their capability while collaborating with urban clients.   Could Open Banking Help in Solving the problems? Let’s pick each case and analyze if Open Banking could resolve these problems. Accessing Banks and avoiding DORMANT status Fintech, Banking technology and government initiatives are helping individuals to open a bank account with the help of technology. With banks now equipped with digital channels, opening a bank account could be done via Bank Agents or Agent Banking. These foot soldiers’ are authenticated by respective banks to be the middlemen between the bank and the customer. With the digitization and availability of smartphone, banking apps are installed on the phone and all the services availed by the customer have a track record providing transparency to the process. Open Banking helps users to access the bank account via authorized third-party apps, assist in bill payments, funds transfer thereby keeping the account in ACTIVE status. Access to Financial Literacy Thanks to innovative fintech models and open API that you can download an app on your mobile hook it to your bank account and learn about different terminologies like what is savings account? What interest rates mean? How are interest rates calculated? Etc. All of this could be accessed in your native languages, thanks again to open API and open data. Interest Rates Offered as per Regulatory Orders If an individual applies for a personal loan to the bank, with digitization in a place, he would be offered the interest rates as approved by the regulatory authority of the country. In cases where an individual is served by different banks, he/she can use a third party app using Open API model to compare which bank/fintech firms offer the lowest interest rate? Access to Growth and Opportunity The same example of Jonathan would be the most apt here as with Open API module, and Open Banking concept applied, Jonathan now could reach out to more urban clients without the need to leave his native place. Teknospire enabling Financial Inclusion with Open Banking Teknospire growth has been a structured one, each module evolving in a planned manner, approaching digitization one at a time. With an Open API design, the salary automation platform designed for civil servants of Zimbabwe was seamlessly connected to government payrolls and corporate ERPs. Next move was to offer a platform that helps the customer to pay bills, recharge and funds transfer and Bill Automation platform or micropayments digitization birthed. Next module was to help solopreneurs or banking agents and we launched Agency and Payment Module for individuals to access the digital platform and help in last mile banking. With a stable ecosystem, rich customer base, and tested platform the small and cooperative banks saw an advantage to extend their reach. With a lean banking layer or Agent Banking solution as a new addition to our offerings. Banks trusted us as the technology provider, and started collaborating with us where they get Merchant Banking, Agent Banking, Automatic Reconciliation, Micropayments as solutions. The beauty of all these modules has been the standalone working, enabled with Open API architecture. The Banks or NBFCs or microfinance firms could either sign in for all modules as one suite or could get one module of their choice. With Open API it helps firms to integrate with their systems smoothly.

Open Banking
Digital Banking, Financial Inclusion, FinTech Trends, Open Banking, Open Banking API

Open Banking: End of Card Payments?

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Any new technology or innovation always opens up the debate about the relevance of such models in the first place. When it comes to the Open Banking APIs (Application Programming Interfaces), the newest offering of FinTech, there are ongoing discussions on how it can bring about a revolutionary banking experience which is beneficial to the end users. The basic idea behind all these innovations remain to offer a better experience to consumers and leverage the choice of integrated systems that are widely available today. However, one of the most intriguing questions around the Open Banking model is about the potential it holds to change the payment ecosystem entirely. How Open Banking works? Taking one of its many applications, to provide assistance to you, so that you get the best of the deals available and can manage your finances efficiently, Open Banking will enable companies to give more accurate personal financial guidance, tailored to your particular circumstances and delivered securely and confidentially. To provide tailored advice, companies need to know how you use your account. At the moment, to get personal financial guidance, you have to hand over your confidential banking information to price comparison websites. Open Banking will use APIs (Application Programming Interfaces) to share customer information securely. Companies will be able to use open banking APIs to see your transaction information to tell you what you might save when considering the current account best suited to you. Or if you run a small business you could find the best deals for your business accounts and loans. No in-betweens, no interruptions, just pure and simple direct customer-to-service relations. Open Banking: End of Card Payments in Future? That’s certainly a possibility! Fundamentally, Open Banking is a concept that is all about the free flow of data. It allows third-party service providers to access financial information of the customers securely (with their consent) and in real time. An excellent example of this could be the banking payment mechanism which requires each transaction to be done manually using the payment cards. However, in an Open Banking platform, the API/app could download consumers’ transaction data directly from their accounts to process payments thus enabling cardless transactions. Although the concept is still in its nascent stage and will take some time to shape up, it will allow the third party organizations to initiate payments between the bank accounts of customers. What will probably happen, as a result, is this: Banks will no longer be required for processing the transactions/ card payments. An authorized third-party organization will be able to make payments on behalf of its customers. Customers won’t have to wait in long queues to make purchases using physical cards at stores. They will be able to easily make payments using digital wallets on their SmartPhones or Smart watches using emerging technologies such as Samsung Pay, Apple Pay, etc. Can Open Banking Change The Entire Payment Ecosystem? To be able to understand this significant shift towards cardless payments powered by Open Banking, it is important to have clarity on the working of the payment cards first. The payment card, essentially, is a token backed with a unique PIN or customer’s signature as authentication, which helps in identifying both the payer and the source to process any payment. Enter Open Banking into the picture! Open Banking replaces the payment card with the actual bank details of the customer without requiring any physical validation. By ensuring a robust authentication system in place (such as phone verification), the model can be easily used to process transactions directly. There are several benefits of saying ‘Bye-Bye’ to the cards and using Open Banking APIs to process payments. Benefits of Using Open Banking APIs for Transactions Over Cards a. Cost Saving This is perhaps one of the primary benefits of using Open Banking APIs to process payments instead of using cards. The open banking model is such that it requires no physical token leading to cost savings for card processors and savings on the infrastructure cost for managing expired/fraudulent cards. b. Ease of Setting Up The ease in setting up Open Banking products as compared to the card payment mode is another reason that makes the possibility of this phenomenal shift stronger. The open banking services are designed thoughtfully to offer solutions collaboratively with payment transfers such as allowing easy linking of the credit cards or bank details of the end-users. c. Convenience Convenience and ease of doing transactions is another attraction of the Open Banking model as a whole. Furthermore, storing bank details of customers is much easier as compared to the cumbersome credit card data, considering security & compliance as essential factors while making payment transactions. Instant purchase history, remote deactivation, and biometrics enabled virtual card provisioning are just a few of the features of cardless payments worth mentioning. Open APIs just make it easier for bank customers to transfer their bank accounts, manage payments, and perform transactions through third parties: both banks and non-banks. The concept creates new opportunities for Service Aggregators to offer better customer service from multiple service providers on a single platform. Does Open Banking Model Translate To the Cardless Payments? If you are still wondering about the Pros of moving to Cardless Payments, here is a list of some of the pros of this new way to pay for your everyday purchases using Open Banking API’s: Convenient as you don’t need your card for making payments and can do transactions without keying in a PIN or signing a receipt. Lessens the threat of hacking where the card might be scanned for stealing valuable information. Cardless payment means no reading of magnetic data strip. The verification token (OTP) is for single use only, making it perfectly safe for ‘Use and Forget’. Convenient and quick payments, which mean no hassle of queues and lining up. Cost and time-efficient without any worrying about remembering multiple cards and account details. Taking Stock of Future Possibilities As rightly said by Kristin Moyer, Vice President of Research and Distinguished Analyst at Gartner and I quote, “Open

open banking
Digital Banking, Financial Inclusion, FinTech, Open Banking, Open Banking API

Open Banking: Who will really get benefitted?

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Banking, as a domain, has always been a competitive one. To keep up with the pace of the dynamic nature of this sector, banks & financial institutions are gradually making the shift to experiment with newer technologies, like Open Banking and innovative concepts like FinTech, designed specifically for the banking sector. The basic idea behind all these innovations remain to offer a better experience to consumers and leverage the choice of integrated systems that are widely available today. Are you OPEN to Open Banking? The impact of technology in making our lives better and smoother can’t be overemphasized enough. FinTech (an excellent combination of finance and technology!) is one such area making the traditional banking system seem redundant with each passing day. The rise of Fintech sector has been exponential in the last few years with Fintech adoption seeing a sharp rise globally from 16% in 2015 to 33% in 2017 on an average. Open Banking API (Exclusively covered as Open Banking API: A Journey, 1st part of this series of 3) is the newest offering of FinTech that holds immense potential to bring about a transformational banking experience to its end users. However, before making the switch to Open Banking, it is essential to understand what the concept is trying to achieve and who will it really benefit? So What’s the Buzz called ‘Open Banking’ All About? With Open Banking, banks are moving to Agile technologies, building strong partner networks, and creating robust mobile platforms which cater to consumer’s needs, thus enabling direct financial transactions between customers and businesses and making cross-platform payments a reality. It works as a systematically designed collaborative model. Here the customer’s banking and other financial information/data is shared to trusted third parties (with the customers’ consent, of course!) through APIs with the aim of offering enhanced capabilities to the users. Thus, Open Banking is a financial services term as part of the financial technology that refers to: The use of Open APIs that enable third-party developers to build applications and services around the financial institution. Greater financial transparency options for account holders ranging from Open Data to private data. The use of Open Source technology to achieve the above. In short, “Open Banking is the possibility of creating new digital business and ecosystems through APIs provided by the banks. This allows customers: To have a greater control over their data Have a better experience in a secure, agile, and future-proof method To generate new revenue streams, and to create a long-term sustainable service model for the industry as a whole. Who will ‘Open Banking’ Really Benefit? The benefits of an Open Banking model aren’t just limited to consumers but extend to service providers as well. It benefits, one and all, associated with it. Benefitting Consumers Among the many benefits of Open Banking to consumers, the most important include:Giving the Benefit of Choice to Customers As a service provider, banks generally offer limited options and the same services to all their customers. Open banking, on the other hand,  gives the benefit of choice to customers as they now have the freedom to select from multiple service providers available. It also empowers customers to take charge of their finances and make informed decisions to manage their accounts. Easing Payments with Smart Devices With Open Banking APIs, customers won’t have to wait in long queues to make purchases using physical wallets at stores. The concept will allow emerging technology applications such as Google Pay, Samsung Pay, Apple Pay, PayTM etc. to make payments using digital wallets using your Smartphone or smartwatch. Ease of Remittance and Currency Exchange Increased number of migrants across the globe for better economic opportunities means an increased amount of money to be sent back to their families. Banks have always found international money transfer and remittances to be a painful and expensive process.Instead of paying a large transfer fee to the ‘money transfer businesses’ or facing the lack of proper setup, especially in rural areas, FinTech companies like NDASENDA, have made this entire process extremely simple, smooth, less expensive, and much faster. Thanks to Open API, the money can be transferred, services can be bought and bills can be paid seamlessly by using one single mobile App at the comfort of your home. Various service providers such as We Swap, World Remit, mPesa etc. are offering ‘currency exchange services’, by using Open Banking, in a very secure and seamless way to transfer even minuscule amounts of money overseas. Customized Product Offerings Open banking holds the potential to offer customized and relevant product & service options to the consumers which most banking apps fail to do. Open banking APIs introduce the concept of service personalization in banking to benefit customers immensely. Customers can now have access to multiple accounts in one place. The customers will be able to enjoy the best deals available with greater transparency. An opportunity is here to see your current financial position in a single application on your Smartphone. It is just a matter of ‘single click’. All the financial data at one place gives the consumer the leverage to take quick credit decisions and avail the best deals possible. Open to better offers by credit providers and instant credit and remittance of the same. With all the accounts linked together by an app and available on a single platform, the consumer is ‘all-powerful’ to make a choice in how to pay. This will also bring in some innovative offers by the banks and the financial institutions to make new customers and retain the old ones. It’s raining Profits! Benefitting Banks and Financial Institutions Collaborative Advantage Open Banking gives an opportunity for banks to stay ahead of the competition by letting them explore data-sharing agreements with fintech and other non-financial service institutions. Allows Banks to Be Futuristic The model allows banks to be futuristic by letting them understand both data privacy mandates that exist as well as the likely changes they need to adapt for a better customer experience. Thus making decision-making foresighted and insightful.

Financial Inclusion

Agents Enabling Financial Inclusion

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Agents are the face of change to people’s financial security and independence. What is an Agent? What is a Business Correspondent?     Why We Need an Agent?   Modes Of Operation Of Agent   Come and signup for Teknospire Agent Banking Solution, and help in enabling financial and social inclusion. Stay Tuned as our next post would talk about various Banking services that could be availed by a rural customer via Agent Banking. Subscribe to our posts now. Also, if you would like to work as Agent, please sign up now here with NDASENDA. Teknospire is a technology partner for NDASENDA.

Corporate Social Responsibility
Financial Inclusion, FinTech, Industry Observation, Social Cause

Corporate Social Responsibility and The Impact of FinTech

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Creating a strong business and building a better world are not conflicting goals – they are both essential ingredients for long-term success”. – William Clay Ford Jr., Executive Chairman, Ford Motor Company. With corporations becoming more responsible towards the society, this concept has evolved into what we today know as Corporate Social Responsibility (CSR). CSR has been increasingly recognized as a means for businesses to serve communities in the best possible manner. It has also made the consumers feel a sense of attachment with the business entity. What is Corporate Social Responsibility? Corporate Social Responsibility can be understood as a business model that is aimed at Corporates to become socially responsible and answerable to its stakeholders and to the public at large. Corporate Social Responsibility, on one hand, has helped businesses with better interaction with consumers and on the other hand, has had stakeholders develop loyalty towards the business. It also has enhanced overall reputation – a powerful statement of what they stand for, in an often cynical business world. Jason Potts, a senior associate with the International Institute for Sustainable Development (IISD), who is taking care of  sustainable markets and responsible trade initiative, says: “CSR is fundamentally about ensuring that companies forward broader public objectives as an integral part of their daily activities and this can only be ensured with the appropriate communication channels with stakeholders.” “CSR policies need to be considered as a core and inseparable component of the overall service or product offering”, he further adds. Importance of CSR to Corporates Companies that display their concern towards various social causes are surely better off than those that don’t. CSR has the ability to change dynamics for any given corporate. For  Klara Kozlov, head of corporate clients at the Charities Aid Foundation, “CSR allows businesses to demonstrate their values, engage their employees and communicate with the public about how they operate and the choices they make, to ensure a sustainable future. CSR helps pave the way for partnerships between businesses and civil society that are based on common goals and shared actions to deliver impact-driven outcomes.” Few of  its benefits include: Public Image Social responsibility not only improves an entity’s public image but also helps it become a consumer-favorite in no time. Enhances Engagement of Employees Companies, which show their interest in improving the society’s well being, attract and retain hardworking as well as valuable employees. Not only this, those hired demonstrate better productivity and strive for better profit margins. Retention of Stakeholders Investment in Corporate Social Responsibility indicates a company’s strong ethics and high standards. Such outlay, in the eyes of investors, prove that the company does not solely care about profits but also has a sense of duty towards citizens. Such a display of sound business policies certainly attracts and retains investors. Reduction in Operational Costs The concept of CSR also helps a business reduce its operational costs to a great extent by opting for business practices that do not affect the public adversely. For instance, by option for green technologies and reducing emissions & waste, companies save a great deal of cost. It can be said that CSR has a dual positive effect on both, the consumers as well as the business. Problems Companies Face with CSR Corporate Social Responsibility has become a complex phenomenon with companies developing holistic policies to address the demands of the public. As such, there come several problems related to the execution of initiatives such as disbursal and tracking of funds, cost-benefit issues, etc. We try to highlight the major problems that companies, the world over, face with respect to CSR. Disbursement of Money Every company indulging in CSR has an exclusive monetary account through which the company disburses money for various causes. However, due to lack of digitization, such money is disbursed in the most haphazard manner, making it practically difficult to keep track of the amount. Accountability of Money: Once disbursed, there is hardly any check on how such grants are being deployed and utilized by those concerned. This makes it almost impossible for an entity to recognize the cost benefit of their contribution. Sans any digitization of money movement, amount once paid out is nowhere to be accounted for, indicating lack of answerability and utter pecuniary wastage. Sustainability of CSR activities: More often than not, the amount spent with huge fanfare falls short of giving estimated returns to the business over time due to lack of diligence and monitoring. Initiatives become difficult to sustain owing to a deficiency in digital regularization.   Role of FinTech Companies in CSR Over time, FinTech companies have been recognized as an imperative element of business operations, especially with respect to CSR activities. FinTech companies or simply put, companies designing and developing technological and digital programs to aid financial or banking operations and services help businesses immensely in regulating the financial approach. Employing a FinTech company to CSR activities can contribute greatly to any business. Digital Payments Mobile wallets and app-regulated payment disbursal portals have made the transfer of money as smooth as ever. Corporate entities save on crucial time and money spent on such disbursal while opting for digital methods. Bridging the Gap: The core area of all CSR activity for a majority of companies are the rural and underdeveloped areas where financial exclusion is a major problem. However, FinTech companies are bridging the gap between the lender and borrower and even reaching people who do not own a bank account. They are further helping the customers by providing assistance before, during and after the financial transaction by extending the ecosystem of the banking system. Countries that have a majority of the population thriving in rural areas have finally had access to banking, thanks to the inception of FinTech. For instance, Bangladesh has about 70 % of people living in the rural areas where not even half of them own a bank account. To cover the deficiency, ‘bKash’, a FinTech initiative, allows such people to receive as well as send money through mobile phones. Crowdfunding: FinTech’s

Finance, Financial Inclusion, FinTech Trends, Payment Banks

How wallet Helps in Last Mile Banking?

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You might have been using your ATM card as an easy substitute for checkbook, but did you know then, that it was just the start of an era? As more time passed, more and more alternatives for traditional banking arose, changing the scenario forever. Not to mention the lack of traditional banking infrastructure which also promoted the growth of digital banking methods. As per the official data, even as of today, only 27% of villages in India have a bank in 5 km radius. A large mass of India’s population lives on the environs of the formal economy. Living in far-flung corners of the country, Illiteracy, lack of financial education, not being aware of the availability and/or value of financial services and lack of connectivity are few of the many reasons why consumers in these areas remain unbanked. Moreover, banks in rural areas are few and far in-between, making the reach difficult for many during working hours. To address these obstacles and to broaden financial inclusion, Indian government came up with solutions to help in reach built out for last mile banking which aimed to give every household access to banking facilities by offering them zero-balance accounts across all commercial banks. After the prime minister of India launched Jan Dhan Yojna, we saw a world record number of bank accounts opening in a single day and things seemed promising. But, a study done 3 months after the scheme was launched, revealed more than 75% of accounts to be dormant. Neither banks nor ATMs are located within reach of all. Opening an account was way easier than to actually keep it rolling on regular basis and encouraging them to have some savings too. People living in remote areas and the people at the base of the economic pyramid, the ones who are underbanked and unbanked, are in true need to be financially included. But then did JDY, despite having the genuine concern and the intention of solving it, actually served its purpose? The answer is NO, well not completely. This was further trodden by the demonetization move and the impact it had on traditional currency and transactional methods. In an interview with CNN two weeks after demonetization move, India’s key player in digital wallet industry Paytm CEO Vijay Shekhar Sharma said and I quote, “I Don’t Need to Sleep, I am Living a Dream.” Paytm saw an increase in traffic as much as 4x times, app downloads increasing by 200%  and an overall increase in transactions by 250%. Mobile-wallets-adoption-in-India The Indian government is emphasizing on making India digital, a major example of which is roping e-wallets to digitize rural economy. With the government realizing the potential of digital wallets in helping built out for last mile banking and taking major official steps for it, India is a promising hub. Treading along with the Government are the entrepreneurs and VC backed FinTech companies who have come up with solutions to help in reach built out for last mile banking, thanks to the feasibility and accessibility of digital wallets through the country. At present just about 300 million Indians have a Smartphone and 66% of Indian population still don’t have access to the internet. FYI:  (On a lighter note) India has nearly as many Smartphone users as the U.S. has people, and it’s about to get many millions more. This, however, is bound to change after the Digital India initiative of the Indian government with India being a sweet spot in terms of Smartphone market growth in the upcoming years. Another example of how digital wallets are helping make last mile banking a feasible reality is that of Zimbabwe, located in the African continent. Zimbabwe has shown tremendous growth in terms of mobile banking. In the year 2017, almost 96% of total banking transactions which amounted to a total of 98$ billion were carried out via digital methods such as e-wallets, net banking etc. Further data shows that out of around 18 million people of Zimbabwe, 6 million of them are registered on the leading digital wallet in their country i.e. EcoCash and about 1.5 million being highly active on it, total transactions carried out via this app reaches to 30 million per month. Oracle Statistics_Customer Paying Behaviour The above statistics clearly depict the changing scenario in ‘customer’s paying behavior’, as people are preferring to become cashless. In the UK, cash withdrawals reached the lowest number of transactions in 2016 after 2010 (which was after the economic depression). In the same year, plastic transactions overtook cash-based transactions. Supporting this ongoing ‘cashless’ trend less than half of the population (about 43%) thinks cash still will be used in 2022 about 54% think they will be using cash very less in the upcoming years 47% expect to use more mobile payments and digital wallets. The emerging and developing economies are successfully making the last mile banking a reality with the help of digital wallets due to the benefits and feasibility of it which allows even the poorest and scarcely located people to avail banking benefits. First, it was the plastic money that slowly started to banish cash from transactions, now it is the turn of digital wallets. With ATM’s further making banking within everyone’s reach, it’s still not possible to open an ATM within walking distance of everyone. Digital wallets solve this problem by being accessible to each and everyone at a whim. However, it’s not all apples and oranges, they have their own sets of downsides and challenges like: Fear of adoption among users due to transacting online Unearned Interest on money sitting in the wallet as opposed to a bank a/c Lack ‘brand recall’ among the rural population Inadequate merchant tie-ups As per the new upcoming scenario, mobile penetration is very high in urban as well as in rural areas. This tremendous penetration of the mobiles could be used to bring financial inclusion to the last mile. With almost every mobile carrier in India now offering its own digital wallet, you need not even

Finance, Financial Inclusion, FinTech, TechFin, Technical Updates

TechFin or FinTech

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Sometimes you need to look at things….from another point of view. This is exactly what you need to do when you have to decide between Fintech and TechFin as there is a very thin line which differentiates them from each other. It’s your pick between the innovator v/s the reigning. While, the Innovator is ‘Taking process to technology’, coined as term FinTech, the Incumbent is ‘Taking technology to process’, coined as term TechFin.   So, What’s so technical about FinTech and TechFin? Technically speaking, Fintech is a space where financial services are delivered through a better user experience using cutting edge technology. TechFin on the other hand is where a firm that has been delivering technology solutions, launches a new way to deliver Financial services. You need to comprehend  both to decide on your pick. The technology and finance are common between the two; the difference lays in the way you apply it.   This difference is much higher than just spelling them or writing them in two different ways: Fin-Tech or Tech-Fin   TechFin When the banks plan on utilizing technology to improvise or enhance existing financial processes and operations, their focus remains on how to use technology to bring superior efficiency and productivity from existing financial processes and operations. The same is done with the objective to magnify the existing experience and capabilities in financial services domain. The aspirations of transformation or disrupting the process are eliminated. The reason behind TechFin companies not looking towards disruption is the fact that their customers demand- Safety Reliability Stability Legacy No risk and minimal change Therefore, large retail commercial banks seldom make changes in their mobile apps, as a slight change in the app invites customer complaints and inconvenience. For their customer, change implies exposure to risk and any change is interpreted as offensive. Such banks avoid changes to skip the negative publicity from these incidents.         TechFin companies, therefore, stick to what Jack Ma coined them as – “Rebuilding system with technology”.         Jack Ma during the China Conference organized by the South China Morning Post emphasized and I quote, “Fintech takes the original financial system and improves its technology, TechFin is to rebuild the system with technology. What we want to do is to solve the problem of a lack of inclusiveness.” The best example of a TechFin company Ant Financial Services Group, an Alibaba affiliate company, in June 2017, launched “Fortune Accounts”, a new feature on its wealth management app- Ant Fortune. The platform which allows consumers to buy a huge range of investment products will now allow third-party financial institutions to set up an “Account Page” of their own. By doing so, they will directly reach consumers without the traditional way of competing on online supermarket format, and help customers get financial advice or promote their products. This is a classic case where the process of investing in financial products has been improvised using technology, helping financial institutions receive backend data of users to receive traffic on their company’s stores. Firms like Amazon (US), Apple (US), Facebook (US), Google (US), Microsoft (US), Samsung (Korea), Baidu and Tencent (China), Vodafone (UK, India and Africa), and Uber (US) all offer various forms of payment, lending and/or other financial services. The entry of these firms signals a shift from financial intermediary (FinTech) to data intermediary (TechFin). FinTech  FinTech, on the other hand, takes the financial process and transforms it utilizing technology to make its mark. Generally, start-ups use FinTech to create Apps, APIs, and analytics, grab diversity, to disrupt and evolve. For example, the existing products or services like – loans, savings, investments, payments or trading are redefined to profitability, speed, and prudence. They prefer transforming the process using technology, usually eliminating the middleman and intermediaries.     Taking the example of traditional and P2P lending, traditional lending will allow an investor to deposit funds and earn interest. A borrower can borrow money from banks, following a cumbersome documentation and approval process, which takes time and at times may face rejections. The approvals are based on pre-historic financial transactions.           A FinTech P2P platform allows the lender to directly lend money to the borrower and earn interest, while the borrower uses an online platform to receive instant approval and funds.   FinTech Vs TechFin FinTechs take the risk and have been welcomed by millennial and customers who are ready to explore and experience innovation. People who are ‘on the go’ and use the mobile platform embrace transformation. FinTechs are ready to disrupt existing processes and financial services ecosystems with use of emerging technology. The limitations of FinTechs are different as compared to TechFins. Unlike TechFins, who have the limitation of huge credit risk, FinTechs face the challenge of regulators. The global economic ecosystem has still not completely accepted the way FinTechs work. There are rules and regulations which they need to adhere to remain operational. Another most critical hazard which they are greatly exposed to is Safety. The chances of privacy risk and hacking always haunt them. To summarize the difference between the two, checkpoints are: TechFin Process first approach. The incumbent, usually large banks participate. Improvise the existing process Do not take the risk Customers prefer legacy and trust Enhance the proficiency of staff for the betterment of process using technology Huge credit risks   FinTech Technology first is the approach. Start-ups, usually participate Follow transformation in the process Do not hesitate in disrupting the existing process. Youngsters, millennial and professionals appreciate them. Eliminate the middleman for faster and superior experience. Limitations of privacy, safety, and regulators.   Closure There is no better way to summarize, the difference between the two, by quoting Jack Ma, the father who coined the term TechFin: “There are two big opportunities in the future financial industry. One is online banking, where all the financial institutions go online; the other is internet finance, which is purely led by outsiders.”   Though a lot of

Governance and Financial Inclusion
Financial Inclusion

HOW GOOD GOVERNANCE COULD HELP IN FINANCIAL INCLUSION

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Could adequate governance enhance access to financial services? While the short answer is yes, the long-form answer is the review of standards, processes, and act of governance, that could bring in a more profound level of financial inclusion.  We all know how growth and financial inclusion are directly proportional to each other, specifically in emerging economies both at macro and micro levels. Laying of concrete legal structures, managing social performance, responsible exits and managing risk crisis are few of the areas where good governance could help in enabling inclusion at all levels. Why Is Good Governance a Prerequisite to Financial Inclusion? Governance or decision makers are responsible for monitoring the policies, framework, processes and the entire structure of financial inclusion programmes. And to achieve that the policymakers need to plan carefully in detail that supports the long-term vision of inclusion. Just to envision a role of governance imagine yourself architecting a house for your family that consists of your elderly parents, teenage children, and spouse. All might have different needs – like your parents might not like high rise buildings and an adolescent boy wants his room to be spacious enough to play cricket and girl want her room to be painted in pink. How do you take care of each of the stuff? Now broaden your imagination and think this small house as big as the country like India, would it be possible for you to know the needs of each person? How vast is the effort, to build a structure, to implement policies, communicating with subsidiaries or correspondents, deploying solutions, collecting feedback and then reworking on failures. That’s the hardest part of governance, and to create a robust governance structure – one need to carefully pick the ingredients to integrate it with the framework and employ solutions that support the vision. Only well-functioning and proficiently governed financial institutions can deliver financial services to meet the rising needs of the economy. As mentioned by Deputy governor of RBI Dr. K.C. Chakrabarty, – through various measures initiated by the regulator/Government in the post-independent period resulted in impressive gains in rural outreach and volume of credit, the structure suffered from inherently weak governance. The achievements were ‘quantitatively impressive, but qualitatively weak.’ Due to the target-driven approach to social banking, the initiatives were not part of the business strategy of banks. The effort on the part of the banks was always aimed at somehow meeting the lending targets, mostly at subsidized rates of interest, or with the subsidy from the Government under various government directed schemes. Good Governance Approach to Financial Inclusion Financial Inclusion a process that ensures banking services to all individuals in a fair and transparent manner by regulated players. With good governance in place, new methods and means could be executed, regulation and authorized players would be dealing with people’s money. It would also lead to empowering individuals with financial literacy and knowledge, tailored services and products could be offered, and most importantly technology could be used to approach the remote areas. BANK LEADING THE WAY When a firm appointed/approved by governance serves different financial offerings and products, it helps in enabling financial inclusion. In most of the cases, Banks are those trusted entities that are recognized at the global level and have the power to facilitate inclusion. Banks can cross-subsidize across various product/services and offer the FI products most efficiently and cost-effectively. Just for example as per RBI – Banks have been advised to make available Basic Savings Bank Deposit Accounts (BSBDAs) for all individuals with zero minimum balance and facility of ATM card/ Debit card or self-certification of documents helping in relaxed KYC norms. All these are possible because of governance pushing and allowing the regulated players to approach individuals and access banking.  In fact, there is also a push for Banks to increase their brick and mortar presence and also adapt to modes such as Kiosks, off-site Rural ATMs, mobile vans, etc. IMPARTING KNOWLEDGE Inclusion and Banking are not just about opening a bank account, but “knowing the benefits banking offers.” For all of this governance takes up extra steps to educate people about finance and banking. Initiatives and programs are running by recognized institutions and RBI; just, for example, RBI has a booklet FAME (Financial Awareness Messages) that is available in 13 different languages for banks and other stakeholders to use. Another firm Ujjivan along with Parinaam Foundation has conducted classroom training teaching its participants about its participants on cash flow, income and expenditure budgeting, savings and savings options and debt management. Another initiative has been taken up by NSE [ National Stock Exchange]and SEBI[Securities and Exchange Board of India]  to impart financial knowledge to children with its programme. The resource covers sessions on Money matters, Budgeting, Investments, and Stock market. SUPPORTING WITH HARD GOVERNMENT STRUCTURES While planning to enable financial inclusion in a country like India, policies and execution need to handled at ground level. So how does the governance takes care of these? At Zero level we have Business correspondents, Agent bankers or Nonprofit organization, volunteers and most importantly banks that make the execution possible. With representation at panchayat, tehsil, village, district level, next level is the state level. The infrastructure at state level also known as the State Level Bankers Committee (SLBC) helps in resolving issues at zero level and even passing the policies, obligation, and laws from Apex/State to lower levels. Lastly, we have The Financial Stability and Development Council (FSDC) that has subgroup headed by RBI governor and RBI deputy governor that exclusively focus on financial inclusion and financial literacy. The group has a representation from other regulator groups to make policies and decision in favor of each segment of the society. Apart from this, there is another group headed by RBI Deputy Governor Financial Inclusion Advisory Committee (FIAC) that’s in place to gauge the performance of banks and to continuously review the various models adopted under Financial Inclusion OFFERING CUSTOMIZED RANGE OF PRODUCTS Better governance not only ensures

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