Changing Dimensions of Information Accessibility

Knowledge is power. It was true when brain, which is believed to have a storage capacity of 4Tb, was the only storage device with man for 24 hrs. With the constantly changing world and changing habits, man came to know about his new best friend-the mobile and thus changed the saying to ‘Information is Power’.

When Dr. APJ Abdul Kalam openly dreamed of bridging the digital divide among Indians, little had it occurred to anybody that mobile holds the potential to fulfill this dream. Mobile being the only device known to be with their owners for almost 24 hrs a day has changed the definition of information accessibility for human history. Information is now available on the fingertips.

According to India Telecommunications Q3 Report published by Business Monitor International, mobile customer base reached 584.3 millions in March 2010 and which is close to 50% growth over last year. Mobiles are now the most commonly used means to connect to the digital community. For a common user, a mobile is affordable, has a strong battery system, needs no huge and continuous supply of power and is easy to carry around when compared to a PC.

 Browsing internet is a rapidly growing trend in many developing countries. For many, their first internet browsing has come through a mobile. Juniper Research quotes that ‘in 2008, 90% of the internet users in India used a mobile to access internet.’  Mobile network operators offering a range of data plans enable users even from far off lands to connect to the world without any hurdles. While email was most common form of communication some times ago, social network and other forms of networking are drastically changing the messaging habits of people. People are now more connected to each other around the world through a small mobile than anything else.

Today, it is era of business gadgets. Gadgets like Androids, Blackberry mobiles, Nokia E-series and many more brands are doing quite well in market. They have totally changed the way companies operate, especially in case of small and medium businesses. It is now easier to put advertisements, check for orders and tenders, stay connected to certain communities of interest and much more. Business owners across the globe are now thankful to this explosion of mobile growth which allows them to do more things in less time and less cost. Also, advanced network services like 3G lined up to roll out soon, the chances of using networking services though PC still might go down.

FINO has been quite active in exploiting this explosion in number of mobile phone users to benefit the society. One of the services- FINO Seva is a mobile application which simplifies all kinds of ticketing, recharging and bill payment requirements without going to the service provider's offices/outlets, is a revolutionary product in the arena of mobile applications. This reduces the requirement of consumers to stand in long lines or travelling to the needed stations for availing any above mentioned services. Moreover, people in remote areas can now avail these services by just visiting the nearest BC without having to travel far off places for any recharging, ticketing or billing requirements etc.  

The dimension of accessing information has been truly and completely changed by mobiles.

-By Chitra Nayak

Social Performance Management: CSR of Microfinance OR more than that?

Social performance management has been in existance for quite some time now. However, it is assuming new significance in recent times due to the negativity caused by the recent cases of suicides and harassment; as also by the increasing consciousness amongst investors to measure the social impact generated. Add to this, the increasing competition in a maturing industry. In such conditions, an MFI’s best bet is to retain its old clients while attracting new clients. This is possible by being responsive to the customers’ needs and requirements. At the same time, looking after the staff is of prime importance in order to achieve the social objectives of the institution.

In steps the concept of Social Performance Management (SPM) which is about making an organisation’s social mission a reality. Many times, focus on social performance is seen as being lenient on the aspects of financial sustainability and vice versa. However, that’s a fallacy. On the contrary, strong financial performance will enable an MFI to pursue its social objectives in an effective and efficient way. And the strong emphasis on social objectives will help in providing better, client-focused services and improve organisational culture. This in turn will lead to increased client satisfaction and retention; and reduced staff attrition rate.

SPM is beneficial to all stakeholders:

- Clients:
SPM involves taking into consideration the clients’ requirements and thereby innovating, developing and monitoring products & services and delivery systems which are more appropriate to the target customers’ needs and conditions. Better products and services would result in satisfied clients leading to customer loyalty and increased outreach.

- Employees:
Employees form a vital part of the entire process of microfinance. SPM focuses on human resource management including incentive plans, welfare actitivities, skill development, retention plan which would help in developing a motivated field force and reducing the high attrition rate prevalent in the microfinance industry.

- Investors:
In the absence of widely accepted social performance measures, donors and socially responsible investors typically base funding decisions on financial performance alone. Managing social performance allows MFIs to demonstrate their competitive blended returns, thereby providing a simple and cost-effective tool to assess social results of the MFI leading to an improved position in a competitive funding market.
Organisation:

• SPM system will aid in balancing financial and social objectives to make better business decisions based on a more thor¬ough understanding of the trade-offs each involves.
• SPM will aid in improving higher customer satisfaction and in developing demand driven products and services which would make the institution more attractive thereby leading to program growth and better financial performance.
• SPM is necessary to ensure that MFI doesn’t experience mission drift and remains true to its goals and objectives.
• With so much negativity surrounding the field of microfinance, many players are turning to ways through which the good work carried out by them is highlighted. The effective implementation of SPM system will not only fufill double bottom line of the organisation but will also enhance the reputation and brand image of the company while avoiding the negative impact on operations (reputational risk).

Thus, active monitoring and assessment of the SPM system will help an MFI to maximise both social and financial performance.

Sustainable and responsible finance

Despite what one may believe to the contrary; today we live in a world where finance is no longer about mere profits and financial institutions cannot merely confine themselves to the traditional task of being profit making while ignoring their social commitments. What i imply to say by this is that financial organizations can no longer be entities that are insulated from the social consequences of their actions and the impact that social stasis or transformation have on them and their operations.This was made more than apparent by the recent financial crisis that sent organizations that were considered secure and supposed stalwarts of the financial world to their graves and left others gasping for the breath of bailouts from state even as they left the socieities in which they operated reeling by their actions. In an arena like finance where trust is everything the consequences of the repeat of such events can be devastating.

More recently the events in Andhra Pradesh with respect to the suicides amongst people who have borrowed from microfinance institutions has been devastating to the micro finance sector. While profit is essential (for no organization can function for long under recurring losses) the profit also needs to be responsible.  The result of these recent events has been to once again bring the focus on to the concept that is popularly known as "sustainable finance"    

Sustainable finance implies a commitment to sustainability in the operation of financial institutions whereby Financial institutions (FIs) expand their missions from ones that prioritise profit maximisation to a vision that also incorporates social sustainability. It requires FIs to fully integrate the consideration of social limits, equity and economic justice into corporate strategies and core business areas (including credit, investing, underwriting, advising), so that sustainability objectives are placed on an equal footing with shareholder maximisation and client satisfaction. It implies financial institutions creating policies, procedures and standards based on the principle of precaution to minimise social harm, improve social conditions where transactions that undermine sustainability; in this regard a delicate mix corporate and social sustainability; are avoided.Such a reality is possible only if the twin elements of responsibility and accountablity are ingrained into all aspects of the FI's operation right from the top to the groundlevel.

This is possible even without the everseeing eye of government watching over the operations of FI's. It will require FI's to have better understand the social "limits" of the environments in which they operate; be able to differentiate between needs, wants and capabilities of their customers and pay their full and fair share of the risks they accept and create. These include financial risks, as well as social and environmental costs that are borne by the communities who are forced to pay a price for unsustainable financial decisions and investments. Responsible finance also requires FI's to ensure that the lives of people; in terms of life itself and the quality of life;  are protected. This can be ensured through making sure that stakeholders’ rights are protected through practices and procedures voluntarily adopted by the FI.

Most importantly Financial Institutions are capable of and should ensure that the markets that they create or operate in are capable of fostering sustainability. This can be done by the FI's supporting public policy, regulatory and/or market mechanisms which facilitate sustainability and foster the full cost accounting of social and environmental externalities.

Mobiles: Beyond Communication and Entertainment

The structural constraints on the existing banks in providing a low cost service to all classes of people have led to a number of innovative and new business models. Among those, mobile platforms are increasingly being thought of an option for providing easy and secure financial services to those who are un(der) banked. Mobiles act as a secure card less alternative which is not only easy to use, but also always present with the customers.   

Mobile banking opens up a plethora of opportunities which is limited to the imaginative use of such services.  Spread of mobile phones across all socio-economic classes and geographical areas ensures that penetration of mobile banking wouldn’t be limited to only some classes of the society like the conventional banking models. From the user’s point of view, the success of such a service would always depend on factors like ease of use, high levels of security of transaction, the affordability and the availability of the service at all time. All of these characteristics are dependent on the key stakeholders who are involved in making available such a service end users - Network operators, financial institutions, solution providers, mobile handset manufacturers and regulatory bodies.

Mobile banking when successful can be transformational in completely bridging the digital divide. But what really matters now is that the policy divide which been created protecting the existing banks and telecom service providers should be put to use of benefit of same institutions but with BOP customers included in the scope.

- Chitra Nayak

Fair Finance or Finance Fair!!

The coming of age of rural finance industry with the introduction of BC network in as many or more as 1/3^rd of the districts present in India within such a small period of time has changed the perception of stakeholders about the asset holding pattern of rural citizens. This new tool of delivery of finance not only changed the debt holding pattern, but also their asset holding pattern. Men and women now have access to fair financial services promoted by PSU banks. It somewhere tickles a bone when thought that dominance of men in such condition was merely a loss of opportunity of women to travel far to access those services.

The BC network mode of delivery promotes not only products of banks which have RBI sitting on their heads, but also all those who have a financial product where all classes of society can participate. It isn’t hard to imagine that there would be a long line of player in the market enthused about investing money in the “Country Side” now that mode is established and customers are just a BC away. Expecting fair finance in finance fair isn’t unfair after all!!