Panel Presentation: Perspectives on Technology and Financial Inclusion

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Panel Presentation Perspectives on Technology
and Financial Inclusion
Vijay Gurbaxani Director, CRITOThe Paul Merage
School of BusinessUniversity of California,
IrvineE-mail vijay.gurbaxani_at_uci.edu
The Bottom of the Pyramid in Practice Institute
for Technology, Money and Financial
Inclusion University of California, IrvineJune
2, 2009
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The Bottom of the Pyramid is Personal (and Real)

• Growing up in Mumbai
• Mangoes and chocolate
• The Bottom of the Pyramid as producers
• Ulhasnagar Sindhi Association
• Made by USA

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Financial Inclusion is Critical

• Leelas story
• Amrits curse
• Hundis and Hawala
• Financial inclusion for the middle class is
  relatively recent
• The challenges of financial inclusion
• My visit to the Bank of India

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An IT Story Financial Information Network and
Operations (FINO)

• Provides end-to-end technology and operational
  solutions to financial institutions,
  revolutionizing the way their services reach base
  of pyramid citizens.
• Investors include
• IFC (World Bank), Intel Capital
• Public sector UBI, Corporation Bank, Indian
  Bank, LIC
• Private sector ICICI bank, ICICI Lombard, IFMR
  Trust
• Customers 11 banks, 20 MFI, 3 insurance, 4
  government
• Reach 1400 locations, 4000 transaction points
• 500 mm unbanked population in India FINO
  reaches 5 mm

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Inclusion encompasses many services
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FINO Time to Customer Base

• 1st million        1 year 
• 2nd million    180 days       
• 3rd million      69 days
• 4th million      50 days
• 5th million      37 days

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The New Economics of IT Leads to the New
Economics of Organization

• Economies in Production
• Scale
• Scope
• Specialization
• Economies in Coordination
• Internal Coordination
• External Coordination
• Informational Economies of Scale
• Network Effects

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The New Economics Leads to New Structures

• Successful organizations are efficient
  information processing structures, and evolve to
  reflect new business and economic conditions
• Information technologies are now not only a set
  of processing technologies but also include
  communication and coordination technologies
• The improving price-performance of information
  technologies has dramatically changed the costs
  of information processing, which in turn affect
  the economics of organization.
• The net result is that optimal organization
  structure should evolve in response to the new
  economics of organization affording dramatic
  improvements in efficiency and effectiveness

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Business Model Innovation New Pathways To Value
Creation

• Some organizations have diversified into related
  products or services
• Some have grown horizontally into different
  geographies
• Some have developed centers of excellence that
  service multiple divisions in the enterprise
• Some have developed networked partnerships with
  suppliers and complementors, reducing their own
  scale and scope
• Some have partnered in consortia to facilitate
  trade within their industry

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50 Years of IT
Worldwide IT Spending
Billions
1960s
1970s
1980s
1990s
2000s
Source IDC Directions 2004 Conference
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IT-Led Innovation Must be a Big Piece of the
Solution

• Advances in information technologies are creating
  ever changing management capabilities
• Information technologies enable/necessitate
  changes in organization structure and business
  models
• Organizations will succeed in a networked economy
  through the rapid adoption of innovative IT
  applications and new business models