Round 2 with CGAP’s Gautam Ivatury

The ThinkChange India staff is committed to providing our readers with interviews with people we believe are at the brink of something special but have for the most part been overlooked by the mainstream media. Readers will be able to see other conversations under our TC-I Changemakers tag.

This week, Vinay sat down (over the phone) with Gautam Ivatury of the global microfinance center CGAP, which works to expand poor people’s access to financial services. Such services include but are not limited to microcredit and branchless banking. This interview is a follow up to one conducted on May 4, 2008, which you can read here.

Vinay Ganti: Could you please review yourself on the following topics, which we discussed in our last conversation?

  • Reaching beyond MFIs:

Gautam Ivatury: This still continues to be a major focus of CGAP’s mission. Across all of CGAP’s work we continue to look for ways to partner with a range of institutions and providers, including but not limited to MFIs, to be able to massively expand financial services for poor people.

GI: With regard to branchless banking, we set out to accomplish a number of goals. Overall we have been happy with the results of CGAP’s work in this area over the last six months, despite the fact that it has taken longer than expected for our project partners (in countries like Pakistan, Kenya, Mongolia, South Africa and elsewhere) to roll-out the branchless banking channels we helped design and finance.

Since our last talk, CGAP has expanded its policy and regulatory diagnostic work in branchless banking. New markets analyzed have included Colombia, Argentina and Indonesia, and we’ve continued to maintain close dialogue with the Reserve Bank of India and regulators elsewhere.

Also, the actual awareness of mobile banking in the field, i.e. what is and how it can work, has increased dramatically in the past. Last May we co-organized the first major annual event on “Mobile Money” for the unbanked in Cairo with the GSM Association (the industry body for the world’s 700+ mobile operators), IFC and DFID. That event got more than 500 paid attendees, most from private industry. And this week at the GSM World Congress in Barcelona, GSMA and other private sector players will announce additional activities in the space. DFID announced its new FAST program to encourage branchless banking this week. Initiatives like these are critical to get widespread adoption of the concept and to achieve scale. Moreover, major consulting and research outfits like Aite, Monitor and McKinsey have started research and published reports on the topic.

At the same time, our seven branchless banking projects have been slower to launch than we all expected two years ago. There have been some notable achievements — our Philippines partner has entered three new rural provinces and signed up about 80,000 new mobile banking clients, and Telenor bought 51 percent of Tameer Bank (our partner in Pakistan) to jumpstart its mobile banking initiatives. But in general the implementation of mobile / branchless banking has been slower than anticipated.

VG: Why do you think this is? Continue reading

Transfer money after the beep

Here is an interesting approach to the technological hurdles of mobile banking. Called Cashnxt, this venture in Kerala, uses high-pitched sounds via mobile phones to encrypt and decrypt the secure data needed to perform a financial transaction. An article on ReadWriteWeb, explains it as such:

As a customer, if you and a vendor are a member of the Cashnxt network, you can conduct transactions using your mobile phones. The merchant dials CashNxt’s IVR number, enters their PIN and transaction amount, and then hears a high pitch sound on their mobile phone. The customer does the same – calls the IVR number, enters their PIN and hears a high pitch sound. The two phones are then brought together, held close enough for CashNxt to encrypt and decrypt the sounds. 

Go after the jump to see a youtube video of the process:

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Quarter billion internet capable phones by 2010

Previously we wrote about how India is positioned to have the 2nd most mobile phone users behind China. Well now, ThinkChange India has discovered some better statistics underpinning this trend. According to WATBlog.com, 250 million Indians will have internet capable cell phones by 2010. The article continues to breakdown the user base even further. The post estimates that:

  • 60 million people will be able to watch video on their phones
  • 100 million will be able to listen to music
  • 200 million will have radio capability
  • 250 million will have built-in cameras

The article also was cautious to note that simply having such capabilities will not mean much unless the actual data usage plans to utilize such features are affordable to this consumer base. Nevertheless, we have seen the push to utilize mobile phones as the primary platform to reach the BoP market, and so such stats are promising.

2nd is the best … India to move to #2 in mobile phone users

According to TRAI, India is positioned to have the second largest number of wireless phone users in the world behind China. Even more relevant, is the fact that India is estimated to have the fastest growth rate in this market — including China — which means that other sectors that rely on mobile phones, like banking, are likely to grow substantially as well. Much of this push can be credited to the downward pressures on pricing that have occurred over the last twelve months, and the increasingly affordable state of mobile technologies.

Just Call Me on My Cell …

At the risk of overstating the role that mobile phones will play in reaching the BoP, a great post on NextBillion.net talks about how cell phones have reached the level that Malcolm Gladwell would label a “social epidemic.”

It is notable that Eric Schmidt, chairman of the board and enlightened CEO of Google has said that the trend “will end with 5 billion out of the 6 billion with cell phones,” a figure that reaches well into the Base of the Pyramid.

While the article may seem to place cell phones on a pedestal and almost describe them as the missing link for development, one point the article does make well is the notion that unlike in developed economies where some blame mobile technologies for the fragmentation and depersonalization of society, in the developing world they actually enable people to become more secure and interdependent.

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Does it come in Hindi? — CureHunter, a must for India

We have blogged before about the Piramal Prize and its desire to incentivize people to develop innovations that will democratize healthcare. Well here is one that has emerged west of the Atlantic that needs to figure out a way to crossover to India. Kind of like a WebMD for your phone, the new mobile site of CureHunter lets you type in a drug or disease and find out immediately what the generally accepted use or therapy is.

While the importance of medical professionals cannot be understated, the ability to utilize a mobile phone to assist in the diagnosis and treatment of individuals simply screams rural applications. Someone quit your job and translate this software to Indian languages ASAP.

Cutting Edge Tech for All

Why should the BoP not gain access to the newest technologies? A recent shift by major private sector players has shown that the old guard’s view that the poor do not need the latest and greatest technological innovation is no longer valid — as they too require what is on the cutting edge.

Neerja Raman from Digital Provide: From Good to Gold explains:

One month after announcing the world’s cheapest car — the $2,500 Tata Nano — India has unveiled the telecommunications equivalent: the $20 “people’s phone.” Developed by Spice, the Indian telecoms group that is listed in Bombay and worth $2 billion, is angled at the very lowest end of the market …

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