Tuesday 29 September 2015

Transformation Challenge for Banks into the new Digital World

Yes Bank, has adopted an innovative way to crowdsource ideas from the millennium generation, by way of creating a competition for  the B-School students, see the details here.  This also provides Yes Bank the opportunity to interact with the best of breed talents.

The case study (PDF file), makes an interesting reading. Why interesting? because, beyond half a paragraph on unbanked and frugal innovation, the 14 pager report, it mainly focuses on top of the pyramid customers, and too focused on what Western banks have done.

The Top of the Pyramid segment, or the Sec-A as we call them, already have multiple accounts with the best banks.  The case study, reflects the persona of the Yes Bank itself. Thus, is it trying to compete with the best of the Big private Banks, like ICICI, HDFC ? or international banks like CITI?

In the new regulatory landscape, see my slideshare,  the mid sized banks like Yes Banks, should avoid competing with Wallets providers, Payment Banks and Small Finance Banks. As, they carry less regulatory baggage and thus more agile.

 Also, it should not, and it can not compete with banks tagged by RBI as "Too Big to Fail".  As these Big Banks are perceived to be more stable. While I have relationships, with multiple banks, the monies I bank with them is proportional to their size. I checked with my friends and acquaintances, and I see a similar pattern.

In my opinion mid sized banks should have dual brand strategy, under an umbrella brand:


  • One Brand, say YES NEXT GEN: focused on aspirational youth and enthuse a "Cool" factor. 
  • Second Brand, YES BASICS, which focuses on urban poor and unbanked.
Both these brands should be an extension to their current core brand, which should NOT change.

The two new brands should focus on Digital Disruption technology enablers, and both these brands avoid the bank branches.

The unbanked can have door step banking, via TABLET enabled BC (Banking Correspondents) also, now called Bank Mitra.

For the Next Gen "cool factor" banking, it can something like Moven Bank, hear Brett King, CEO & Founder of Moven, the Mobile App only bank, talks about "Friction-less Banking" .



 

Sunday 7 June 2015

Enhanced User Experience of Airtel Money adds to Transaction Risk

I am quite happy to note that UX (User Experience) of Airtel Money Mobile App has now very smooth and easy to use.

The on-boarding process is now seamless; As well as forgot MPIN is very easy. You press forgot MPIN, and an OTP (One Time Password) is sent to your mobile number which is then intercepted by the App, and you are prompted to change the MPIN. That's it.

Compared to the previous tedious process where if a user forgot the MPIN, they had to go through hoops and loops of calling the call center, wait in call queue, answer questions about your identification and then the password reset OTP was sent. By doing away with this step, Airtel saves money on call center overhead, while user is spared the torture.

That's good win-win deal right? Not really, if you consider this scenario. Someone stole your mobile, starts your Airtel Money App, resents the MPIN (see the previous paragraph on how to reset) and expends the money on buying some stuff from the local shops.

So, to avoid this scenario, lock your mobile, enable anti theft and alert Airtel to block your SIM as soon as you realize you lost your phone.

  

Tuesday 10 March 2015

Banking Regulatory Landscape in India


This blog deals with the overview current regulatory framework in India.

Overview

Reserve Bank of India (RBI) is the Banking regulator, while IDRBT (Institute for Development & Research in Banking Technology ) is the research & development (R&D) arm of RBI.
Apart from conducting R&D activities, IDRBT was also managing the National Financial Transaction backbone. Which constituted of:
  • RTGS (Real Time Gross Settlement) for High Value (₹2L to ₹10L) transactions
  • NEFT (national electronic funds transfer) for low value transfer, up to ₹2L.
  • National Financial Switch (NFS) which is the all India ATM network backbone.
RTGS, NEFT is being modernized from Structured Financial Messaging System (SFMS), based on ISO15022 to UNIFI (ISO20022). While NFS runs on ISO8583 protocol, 1987 version.

SMFS/ISO15022 is more like a COBOL type fix ASCII file format, while ISO20022 is XML and all financial industry have committed to converge towards it, thus it’s referred as UNIFI.

ISO8583 is a binary protocol. I have written a simplified parser in Java which can convert the binary format to XML, thus you can use an XML transformer to convert it to ISO20022 format.

However, in 2005 released it’s Retail Payment Vision document, which envisaged a high velocity, affordable 24x7 national retail payment infrastructure. In this view it set-up the Board for Payment and Settlement Systems in 2005 and in 2008, RBI also promoted NPCI (National Payments Corporation of India) as a Section 25 company of companies Act 1956 (now it’s section 8 of Companies Act 2013, essentially a not-for-profit company). Members of the IBA (Indian Bankers' Association) are NPCI share holders. RBI transferred the existing retail payment from IDRBT to NPCI. Thus NPCI got NEFT and NFS.

NPCI, in accordance with RBI’s vision implemented the following innovative retail platforms:
  • IMPS (Now re-branded as Immediate Payment Platform): 24x7 Mobile payments
  • RUPAY : Indian Credit Card System to counter/complement Master, VISA platforms.
  • AEPS (Aadhar Enabled Payment System) : National ID based direct subsidy transfer platform.
While NEFT presently uses ISO15022, the rest of the platforms use ISO8583 . The road ahead is to UNIFI all the channels.

Also RBI introduced Cheque Truncation System (CTS) in 2008 as a pilot at NCR (National Capital Region), and covered all India by 2013.

RBI in Financial Year 2014-2015 have unleashed a series of regulatory changes, with the vision of financially including the un-banked population on one hand, and speeding up the economy by helping Internet & Mobile Commerce by a series of forward looking regulatory innovations and technology enablements.

NPCI launched a National USSD (Unstructured Supplementary Service Data) Gateway, called National Unified USSD Platform (NUUP).

NUUP infrastructure enables any mobile phone user to transact, send and receive money by dialling *99#, no smart phone is needed. All Telecom operators will be supporting this gateway, and all banks will connect to it. However, it’s still at beta level, I tried and fail multiple times to use it from HDFC and ICICI banks, see my Tweets and Blogs on this subject. But, I am hopeful that NPCI will get this right eventually.

IDRBT issued Social Banking & Security guidance, in November 2014 described later; And NPCI, on 15-Feb 2015, issued an Universal Payment API. Though I am still digesting the material, but I am very excited about the implication and the vision.

Another important development involves new banking licenses and Payments Banks thus making the incumbent banks move faster and innovate to acquire and engage the socially mobile (pun intended) customers. Other developments include, allowing for profit BC (Business Correspondents), Mobile Wallets linked to IMPS and RUPAY, the indigenous card platform from NPCI. NPCI also plans a convergence in payment platforms, namely ATM network, IMPS, AEPS and NEFT.

There are currently about 130 Prepaid Payment Instrument (PPI) licensees and any corporate with INR 5 Crore of net-worth can apply for a PPI license and connect to the NPCI IMPS Switching backbone, and start innovating on Social and mobile wallets products. But, PPI holder cannot enjoy (earn interest) the float money and needs to deposit the daily float to a Scheduled bank. Also, such NBFC (Non Banking Financial Companies)can have 100% FDI (Foreign Direct Investment).

A corporate with 100 Crore can form their Payments Bank. However, the FDI is limited to 40%.

Social Media is Imperative for Banking

Social Media is dawning as an important channel in the old school banker’s horizon. RBI has issued Social Media guidelines for Banks to follow. ICICI Bank has already launched (early 2013) it’s Facebook (FB) Application as well as a social media enabled product iwish.

RBI on the other hand still retains the control of RTGS , but is in the process of modernizing the infrastructure by implementing UNIFI (ISO20022).

Still 6 out of 10 Indians do not have a Banking account, but 7 out of 10 Indians have mobile. Smart Phones have become cheaper and a low cost Android phone can cost as low as INR 2400. Many lower middle class Indian, like taxi drivers and office peons have INR 40,000 phones, thanks to EMI and aspiration of upward mobile lifestyle. Mostly all Indians having a smart phone have a Facebook account.

Thus the next generation banking innovations cannot ignore Social Media and Smart Phones. IDRBT Social Media Framework

Mr. Sambamurthy, Director, IDRBT lists a 10 point plan for Banks in the foreword of IDRBT whitepaper titled "Social Media Framework for Indian Banking Sector".
  • Establish business goals
  • Establish social media goals
  • Align to business goals
  • Draw up social media strategy
  • Design and implement social media organisational structure
  • Design and implement a plan to build social media operational capabilities
  • Establish a mechanism to handle adverse events
  • Place right skills, staff
  • Place controls for customer engagement and dissemination of information
  • Create new social media business unit and fund it.
While this paper, covers governance, security and Legal frameworks; this paper tows the popular pitch given by the Social Enterprise technology providers. It misses the vital transaction and commerce aspects of the Social Media.
Indian Payments marketplace trends will be segment dependent. I have borrowed upon CK Prahalad’s Pyramid model, while thinking about market segments.

Top of the Pyramid

At the Top of the Pyramid segment, it will be social commerce, for example Oxicash and ICICI are already providing transactions support over the social networks, others like EKO will be launching their respective products.
The CX (Customer Experience) of Social Commerce will improve.

Middle of the Pyramid

NFC based smart card prepaid wallets will be more popular with the middle of the pyramid. Currently the prepaid smart cards are not inter-operable in India, even though the standards and regulations are in place, the B2B relationships are in search of a robust business model. Recently, I heard about a NFC enabled ICICI Debit cards being co-branded with Delhi Metro, so that it can be used for a seamless travel experience in Metro.

Bottom of the Pyramid

For bottom of the Pyramid it will be card less ATM cash withdrawal, and Aadhar linked no frills accounts that can be transacted using a feature phone using National USSD Payments Gateway.

Integration Options for Bank to Enterprise

With the retail banking advancing at a blazing speed, the corporate enterprises also need to keep the pace. They can leverage the Unified Payment API to streamline their Banking integration.

Before this, enterprise has the options to either directly connect to each of their banks or use the expensive SWIFT (Society for Worldwide Interbank Financial Telecommunication, all banks across the world are connected through it and it supports ISO20022 protocol) connectivity.

One CFO of a telecom company shared with me that they connect with about 60 banks and have to deal with 200 odd file formats for their banking messages. While SWIFT was an option, it’s transaction fees were at a higher side, so they were using direct banking one-to-one integration.

Sunday 23 March 2014

Mango Man: Exuberance, Despair and Hope

Go Mango Man

Exuberance

GO Man go, go..go.go man go. Go mango man go.

Yes you can change the world, With all the good intentions;

You can end this corruption, Fix the broken system. Go mango man go.

Yes together we can!! Here is our chance to show the world Yes we can, end the corruption.

Now is the chance, To disrupt the corrupt; Here and now;

GO Man go, go..go.go man go. Go mango man go.

Despair

When you got the chance, to change the world; You fell apart, broke all promises.

GO Man go, go..go.go man go. Go mango man go. Go away.

You took the support, of the people you hate. When you promised you won't,

Go mango man go. Go away.

We trusted you, you broke our heart. You ran away, Away and away from situation.

Go mango man go. Go away.

Did you want to disrupt the system? Is Awaaz behind this? Funding you to disrupt? To bring the spring revolution.

GO Man go, go..go.go man go. Go mango man go. Go away.

But no one can disrupt India. Our roots of freedom are deep. Much deeper than the Turks or Syria.

Go mango man go. Go away.

No they won't succeed. Cause, we believe. In democracy and equality. We love Freedom. Go Mango man go away.

Go mango man go. Go away for good. You broke my heart Go mango man go. Go away, Go away for good.

Hope

There is still some hope, All is not lost. Hope we still can, change this world. Free it from corruption.

We are still waiting, where are you gone?

Come back on track. Lets run together, to change the world. Yes we can!! Yes we can!!

GO Man go, go..go.go man go. Go mango man go.

Let's Vote for change.

Thursday 6 February 2014

Social Banking Framework

Why Social Media is Imperative for Banking 

Social Media is dawning as an important channel in the old school banker's horizon. RBI has issued Social Media guidelines for Banks to follow. ICICI Bank has already launched (early 2013) it's Facebook (FB) Application as well as a social media enabled product iwish.
Another important development involves new banking licenses, thus making the incumbent banks move faster and innovate to acquire and engage the socially mobile (pun intended) customers. Other developments include, allowing for profit BC (Business Correspondents), Mobile Wallets linked to IMPS and RUPAY, the indigenous card platform from NPCI. NPCI also plans a convergence in payment platforms, namely ATM network, IMPS, AEPS and NEFT. 

While NEFT presently uses ISO15022, the rest of the platforms use ISO8583 '87 version. The road ahead is to UNIFI all the channels.

RBI on the other hand still retains the control of RTGS , but is in the process of modernizing the infrastructure by implementing UNIFI (ISO20022).  

Still 6 out of 10 Indians do not have a Banking account, but 7 out of 10 Indians have mobile
Smart Phones have become cheaper and a low cost Android phone can cost as low as INR 2400. Many lower middle class Indian, like taxi drivers and office peons have INR 40,000 phones, thanks to EMI and aspiration of upward mobile lifestyle. Mostly all Indians having a smart phone have aFacebook account

Thus the next generation banking innovations cannot ignore Social Media and Smart Phones. 

IDRBT Social Media Framework

B. Sambamurthy, Director, IDRBT lists a 10 point plan for Banks in the foreword of IDRBT whitepaper titled "Social Media Framework for Indian Banking Sector".
  1. Establish business goals
  2. Establish social media goals
  3. Align to business goals
  4. Draw up social media strategy
  5. Design and implement social media organisational structure
  6. Design and implement a plan to build social media operational capabilities
  7. Establish a mechanism to handle adverse events
  8. Place right skills, staff
  9. Place controls for customer engagement and dissemination of information
  10. Create new social media business unit and fund it.
While this paper, covers governance, security and Legal frameworks; this paper tows the popular pitch given by the Social Enterprise technology providers. It misses the vital transaction and commerce aspects of the Social Media. 

Brett King, CEO & Founder of Moven, the Mobile App only bank, talks about "Friction-less Banking" .

Saturday 1 September 2012

Bridging the Digital Divide between India, Bharat and Hindustan

Bridging the Digital Divide: My Vision

My vision is to bridge the Digital Divide, between India, Bharat & Hindustan.
In a nut-shell, my world-view is: India is the affluent urbanized part of My Nation. While Bharat, is the rural landscape of My Nation and Hindustan is the part of My Nation, that is trapped in semi-urban ghettos and slums.

These three names of the same Nation, symbolizes the social divide that we experience every day. I strongly believe that through individual and collective actions we can bridge the social disparity between the haves and have-nots.

One day there will be no distinction between India, Bharat and Hindustan.

Education is the key to eradicate the social disparity. By connecting the urban slums and the rural deprived with Internet, we not only deliver modern education, drive positive social change but also enhance the earning opportunities available to the semi-urban and rural population.

Lets take an example of Organic vegetables, in-spite of best efforts, I have not been able to locate a supplier of fresh organic fruits and vegetables in Noida.  The nearby farmers are not aware of this un-fulfilled need and neither do they have any know-how of Organic Farming. By joining the nearby farming community with the Organic vegetables consumers, we can get the consumers to under-write the risk the farmer would take to get into the un-charted territory of Organic farming,

By connecting the farmer community with the nearest urban consumers, the farmers can directly cater to the needs of the consumers,

 eChaupal initiative is a good example of a for-profit company benefiting the rural population, by bridging the digital divide.

My vision is to create a for-profit business model, to bridge the Digital Divide, that is self sustainable, replicable and scalable.  Here is my first step towards achieving the vision.

An Experimental Digital Bridge 

Vinay Chaddha, conducted an interesting social experiment to bridge the digital divide at Nithari Village, using the RaspberryPI. I blogged about his experiment in my previous blog post

The key take-away from this experiment was that we need to create a revenue stream for the participants to make this initiative self-sustainable. 

Scaling Up the Experiment

While we are planning to replicate this experiment from urban village to a rural village and looking at means to scale it up; we also need to create a business model around it.

Creating a Sustainable Social Business Model

The prime focus of the model is to deliver informal, useful and empowering education.

The Learners

Being an informal learning model, the learner needs to find the knowledge useful and applicable. She should be first willing to learn.

The students must pay a fees, to get the knowledge. However, for students who cannot afford to pay, a full/partial scholarship can be arranged over the social network. With the donor being able to monitor his sponsored candidate's progress.

The Teacher

The key service delivery person is the "teacher". The teacher, could be any person, who wishes to share her knowledge with the learners. The knowledge transfer, is envisaged to be informal, useful and applied. A teacher may be a paid person or a volunteer. The teacher may choose to deliver her knowledge by being physically present or through a virtual presence, say, through Google Hangout. 

The Course-ware

Open Source Course-wares, like OCW, can be leveraged as well as localized contents can be created collectively. 

The Knowledge Delivery Center

The knowledge delivery center, needs:

  • A Stable Power Source
  • A low powered and rugged computing device, like Raspberry PI or Panda Board.   
  • A TV to hook on the compute device
  • Keyboard and Mouse

Optionally, to get connected to Internet:


  • An Internet connection, say through data card.
  • A Webcam, speaker and microphone

Once the Internet connectivity is in place, the Knowledge Delivery Center can act as a Rural Commence delivery center. Connecting India with Bharat and Hindustan. That will be the True Digital Bridge.

Keeping the Interest Alive

Virtual Social events, like competition and quizzes, through Hangout and You Tube  Live streaming can be conducted in Realty Show format, with prices and sponsorship; anchored by any famous person.
   

Bootstrapping the model

The next immediate steps is to make Nithari Center self sustaining, by replacing Vinay by a professional teacher, who is funded through fees paid by the students, sponsored initially by sponsors.

We can post the student's progress on Facebook or Vinay's Blog.

Also, we have ordered a few more Raspberry PI, and looking for a suitable site to replicate this experiment; preferably in a rural landscape.

If, you wish to contribute you can contact Vinay or my self.

Jai Hind.






Raspberry PI and Nithari Village

Vinay Chaddha, had taken up an initiative to bridge the digital divide, by engaging the children at Nithari Village, Noida. He teaches them programming using RaspberryPI . For details of the initiative, see his blog post
Kaveri, my daughter played a small role, by helping teach Scratch programming on Rasberry PI at Nithari Village. Noida. Thanks to Vinay Chaddha for providing her this great opportunity.

The next steps, that we are contemplating are:
  • Expand this experiment to more remote areas.
  • Make this effort self sustaining.