The Big Picture
India has the world’s second largest number of mobile subscriptions of over 929million (second after China with above 1 million subscribers).Though mobile telephony had accelerated our coming out of the dark ages of communication making it much more accessible in the sub-continent, lamentable is the fact that mobile phones, have not yet heralded the long awaited ICT revolution. Present day, less than 1% of its mobile subscribers are using their mobile phones for carrying out banking activities (though mobile banking began in 2002 in India). Even with nearly 330 million rural subscribers, even with the evident lack of banking outreach in rural circles, there is still a large void that needs to be filled. While non-replication of vernacular services on the mobile platform and lack of properly co-ordinated outreach programmes to accelerate adoption are among the top reasons seen as responsible for low adaptation rate, the limitations of mobile banking is not really too far behind.
A Few Realities Back Home!
While working for the UN, Shivani Siroya had the chance to interview micro-borrowers to check the impact of micro-loans in terms of the quality of life indicators like health, clean water etc. There were a few prominent issues that caught Shivani’s attention from her interviews. Like, small loans weren’t making enough impacts in the life of the micro-borrowers. Also, none of them had maintained any sort of account on their income or expenses. There was no sortof accounting that was being maintained. This proved to be a problem, for even when these small business owners were eligible for larger loans,they had no proof of their cash flows and revenue required by the banks to grant them loans.
Shivani who was also an investment banker in the US, clearly saw that this data could be used to leverage the formal financial sector, especially in the emerging markets. Shivani, who also worked with Rapid SMS (phew!), started InVenture in April 2011, aiming to unlock financial access for all. On further collaboration with Into It, an accounting software company, InSight, a mobile credit scoring system for financial institutions was born.
How does InSight Work?
It is a simple tool that requires the micro-borrowers (also small business owners) to send one SMS at the end of the day with their income and expenses for the day. This data collected over a period of 30 days, along with demographic and verifiable data is then consolidated to produce a credit score for financial institutions. It requires no download or internet access and is free of cost to the user except the cost of one text message to a local number. The financial institutions (with a per user subscription cost) will be able to access a digital dashboard that would give them all the details about the borrowers at any given point of time. “InSight helps the micro-borrowers with their own money management.As for the financial institution, it is very useful too as we are de-risking this segment because we are the only way to track their borrowers in real time,”shares DasamiMoodley, Business Development Director, InVenture. InVenture also works with community service organizations like NGOs, hospitals etc to market and expand the number of users. They also provide a free financial literacy course for all the inside users. Presently with 4000 subscribers and working in five states – Maharashtra, Tamil Nadu, Rajasthan, Utter Pradesh and Karnataka, InVenture hopes to add another 1000 subscribers by the end of August.
Within a fortnight, InVenture will start a pilot test to track the quality of life improvements over a course of the loan taken by capturing 10 indicators such as food spending, labour, inventory etc.
How InSightful is InSight?
Given that, India has such high illiteracy rates along with the supposedly literate but largely uneducated populace, InVenture’s system focuses mainly on numeric inputs. InVenture did conduct pilot tests with vernacular inputs, but finding it to be a very cumbersome process when some states in India had no choice for their language, they had to shelve that idea. InVenture’s volunteers accompany the loan officers from the bank to train the new subscribers to send mostly numeric and a few English inputs. They are also given a handbook to help learn faster. Even with education, to be able to read the response sent by the InSight system on receiving a request for a customer call or even their accounting information could prove to be difficult. With InSight being in use for just 6months and 4000 subscribers, InVenture might still be dealing with issues that are just the tip of the icerberg, but these are going to be heady times, and wouldn’t it be interesting to look into the challenges that might crop up and how InVenture deals with them in living up to its idea of financial access for all.
But most of all, InSight is definitely a good attempt to address a unique problem in a market like India with high mobile subscriptions and low acceptability and adoption levels. Do you think banks collaborating with startups like InVenture is a probably a sign? Along with mobile apps, do you think banks are trying to enable mobile banking and better accountability through USSD enabled relevant services like these? Leave your comments below.
For more information on InVenture, take a look at their website.