Retail banking for the unbanked

On a ride on a Ola cab had a casual discussion with the driver. The discussion that day led me to realize how one company can bring about a huge change- a change which can help a vast majority of people who still do not have a bank account. While the Prime Minister Pradhan Mantri Jan Dhan Yojana is a great initiative in this direction, there is a lot of effort being done by various corporate who have done their bit

The Ola driver explained the business model. He explained about his journey with Ola and how the payment term and profitability has changed over the period. He said he needs to open a bank account which is linked with Ola and then based on rides done the amount is either debited from his account if most of the passengers pay by cash or credited if payments are done through Ola money. I asked him if he had a bank account before joining Ola for which he replied no. Now that is the cascading effect in a entrepreneurship model!!! Each entrepreneur has multiple effects on the economy at large

Joining Ola allowed him to join the mainstream banking services. His access to the banking services would help him in streamlining his savings and free him from the clutches of the money lenders.

Now just imagine the number of the cabs & auto linked with Ola or Uber across the country. While some might already have a bank account most of them would not have one. The other benefit of this would be that the income of these drivers would be tracked (while most of them would not like their income be tracked and taxed, it’s a fact that ambitious driver monthly income would be in 6 digits-yet all tax free). So the whole economy is benefitted.

The most important benefit in this would be for individuals who pay atrocious interest on the borrowed money.. Individuals who do not have access to the banking system borrow money from money lenders on an interest rates which is unimaginable..E.g. a vegetable vendor borrows Rs 1000 in the morning to buys the vegetables for business and repays Rs 1100 in the evening post the sales. Which is a whopping 365% interest pa.!!!.Can any bank (private or nationalized) dare to collect such an interest rate??. As the payment is cleared everyday paying a small sum will not actually affect the vendor hence he is not conscious of the interest rate. This was the thought behind the famous pigmy collection scheme started by Syndicate Bank.

In the pigmy deposit scheme a bank personnel would collect as low as even Rs 5 a day from the shopkeepers’ vendors etc from his place without he having to come to the bank every day. while a vendor could pool in Rs 5 every day. He could not pool Rs 1825 at once in a year. This daily saving deposit scheme helped the daily wage earners, small time vendors etc to save for the rainy day or for bigger capital requirements. These pigmy deposit holders could even borrow a loan with the pigmy deposit as a security and then pay it on a daily basis. This was a very large untapped community with the bankers and who had fallen prey to the money lenders for borrowings and chit funds for deposits. The pigmy scheme tapped it

While this scheme did help a lot of people enter the banking sector today’s entrepreneurs such as Ola/ Uber (taxi services) urbanclap, housejoy, bro4u (hyper local services) are making their contribution in this direction.

In the retail banking revolution this time it is the effort from a different industry which is contributing to the retail banking sector.






Make In India-The Retail Way

Owner of one of the biggest bakery chains was ruing about the lack of innovation in the bakery industry. While every child swears by the black forest cake which is of European origin no attempt is made to develop a world class recipe of the fruits grown in one’s own backyard. He was giving an example of jack fruit, a nutritious fruit with unique flavor indigenous to India. He said hundreds of varieties of this fruit existed but with each passing generation due to lack of knowledge and commercial viability lots of varieties have become extinct. Some products like jackfruit chips, papads and curries are made by the unorganized sector but there is no organized player in this category. This has led to lack of innovation, scalability and branding for jack fruit. While a ice cream maker has attempted to make jack fruit ice cream and is successful at it there is still a lot which can be done with this tasty yet versatile fruit he said.

The speaker on his part has attempted to make a start. The brand now sells jack fruit sandwiches, pizzas, and breads and plans to start with jackfruits puffs. This truly is the Make in India. What the speaker was referring that day is an issue wherein lots of products indigenous to India have lost in competition with their global counterparts due to lack of big players in the category. Harish Bhat of the Tata Group in his column in a a business daily was referring to two such products.

In his first column he referred to tender coconut. He refers to his experience world over with this fruit, a native of India He says he tasted the fruit in various form as a drink, a tasty jelly etc. The consumption of this drink has increased world over due to its health benefits. Even I had tasted this product in two innovative ways. One as a drink with lime juice. A person in small lane does it in limited quantity and is sold out by 11 a.m. in the morning. (The store opens only at 10.00). When we went there only one glass was available and 7 of us had to share it!! Yet another form was as an ice cream. Of course by the same brand which made the jackfruit ice cream. Infact through the tender coconut ice cream the brand gained fame and success. Even today it remains his most popular product. Before the brand opened various branches people would carry the ice cream in special thermo packing inside a flight. While the ice cream costs Rs 150 the packaging costs them Rs 250. Yet the tender coconut ice cream was worth it. Can this sort of a brand loyalty be beaten??

In another article he refers to God’s own chips-the banana chips. He states though this product is tasty and cannot be easily crushed as in potato chips yet the humble banana chips has never tasted the success enjoyed by the potato chips with Pringles. Even a non native chips the tortilla chips made of corn has achieved higher success with brands like cornitos available in India. The major issue for this is the absence of an organized player in this category.

The above three are just examples of the potential & possibility which the indigenous fruits and vegetable can provide. The best brands which can take up the challenge are the retail stalwarts. Both the offline and online retailers with their business turnover provide an easy platform for such products. They bring about the necessary visibility and the scale to take the products forward thereby giving them a first mover advantage in an untapped category. This one bold step by any retailer will do to the supply chain of the fruits and vegetable what no FDI can achieve. This one step by the retailer will add to the Make in India in the true form.

Any takers? Any other products which has lost in competition due to such issues??