Sa-Dhan FI Conference 2014 - Role of Technology in New Generation Microfinance Domain
Mr V. D. Bohra, GM, FID, NABARD
Mr Sushanta Tripathy, Senior VP, Yes Bank
Mr Baskar Babu Ramachandran, Co-Founder & CEO, Suryoday MF Pvt. Ltd.
Mr Venkateshwar Rao, SUB-K (BASIX)
Moderator - Mr Rajeev Yadav, CEO, Future Financial Services Ltd.
Mr Yadav (Future Financial Services) – There is a significant need for MFIs to invest in technology but there are cons along with pros to technology. We are talking about mobile technology – that is what we mean when we ultimately talk about “basic” technology. How can the UID be taken forward for these services? One of the challenges to technology solutions is that there is resistance to adoption and that productivity does not necessarily increase.
Mr Tripathy (Yes Bank) – Mobile devices have been used by Yes Bank and there has been a great change in the past few years. We don’t have the technology to submit data to the CIB yet. That investment is being made now and has helped with the efforts to scale up. The kind of efficiency that can be achieved with internet and mobile is still not reached because of RBI restrictions on the kind of transactions that can be made. Previously there were a lot of documents that had to be filed for a loan application – this data should already be with the branch (KYC norms being made easier with technology). The idea of security with mobile transactions is also important. And literacy plays a big role in how people perceive technology while making financial transactions.
Mr Ramachandran (Suryoday MF) – Why should MFI cost structures be different for a start-up and a large MFI? We have always operated at a cost which is lower than other organizations. There are 2 models and it is always better to have a centralized system.
Mr Rao (BASIX) – We are working with low-cost services to rural customers by providing mobile applications and Aadhar numbers. Part of our work is motivating rural customers to know their bank accounts.
Mr Bohra (NABARD) –With the introduction of technology the transaction costs of banks have been drastically reduced, e.g. manual teller vs. ATM. There are advantages to the customer as well. It is great that we have more mobile phones than bank accounts in rural areas – that inclusion has been successful so we need to leverage this for the aim of financial inclusion. This is being marketed as well (e.g. Airtel money). The Aadhar has addressed all the KYC norms with its biometric information and no other documents should be required. E.g. Goa is almost 100% Aadhar enabled and this will facilitate financial inclusion at the same time.
Audience Member – Power backup has to be addressed. Mobile solutions are not a concern but work-flow based solutions do need addressing. Arab countries have worked with solar electricity and entire villages have been powered.
Audience Member – Can technology replace a loan officer at grassroots level?
Case of SBI - The number of officers have decreased and the entire proposal can be fed into a system and the bankability can be generated mechanically. However, loan underwriting will still have a human element. It is needed to maintain interaction with the customer.