FINO Handheld Device

See a FINO agent in action with his handheld device

FINO: The Technology for Financial Inclusion in India

India may be the most talked about country whenever experts discuss about financial inclusion. Recently, there were many debates among experts on India's financial institutions, including the controversial decision of SKS Microfinance to go public and the infamous suicides of Indian farmers in Andhra Pradesh.

Despite the negative publication, experts still turn to India to learn about groundbreaking methods in accelerating financial inclusion. India remains the most innovative country in terms of leveraging ICT to promote financial inclusion. One of the innovations came from a company called Financial Information Network & Operations (FINO) that claims to be the pioneer of total financial inclusion network in India. FINO delivers integrated technology solutions for financial institutions that serves people at the bottom of the pyramid. Operations at the grassroots level are carried on by over 10,000 agents that are spread throughout India. FINO created a platform that combine three pillars, which are Core System, Distribution System and Information System.

Based on the three pillars mentioned above, FINO developed the following products to bank the unbanked:

1. FINO Mitra (Mobile Information and Transaction)

Similar to UBL's OMNI branchless banking, FINO Mitra enables customers to utilize their mobile phones to conduct banking transactions through short message service (SMS), interactive voice response (IVR) and mobile based applications. Customers can also open a bank account at FINO agents by registering for FINO Mitra using biometric-based technology.

2. FINO Parichay

The Permanent Account Number (PAN) Card is an important identification card in India. However, many people from the lower class don't have a PAN Card because they can't credibly establish their identities. Having no identity means no access to services such as financial loans. FINO Parichay provides a card where people can uniquely establish their identity. Like every other identification, the FINO Parichay card has the individual's photograph and personal details as well as a smart-chip that holds finger print data that can be used for verification purposes. This card is also used by the government to validate social security benefit recipients and deliver national health insurance.

3. FINO Tijori

This technology is a biometric smart card specially designed for financial institutions that operate in the microfinance space. The smart card not only functions as a passbook, but also an ATM card. Once a customer owns the card, financial institutions can offer other financial products such as loans, remittance and insurance. FINO agents use a handheld device to swipe the card and scan fingerprints whenever a transaction is processed.

With a 100% annual growth since FINO was first founded in 2006, FINO's clients now include 23 Banks, five Insurance Companies, 10 Microfinance Institutions, 17 State Governments and 6 Enterprise Businesses that serves more than 30 million customers. FINO is definitely in the forefront of financial inclusion efforts in India.

References:
http://online.wsj.com/article/SB10001424052748703609004575355460120599280.html
http://www.bbc.co.uk/news/world-south-asia-11997571
http://fino.co.in/

http://www.indiamart.com/company/2754503/products.html#fino-mitra
http://www.sksindia.com/

Kiva: Allowing Individuals to Contribute in International Development

In his book, Creating a World Without Poverty, Nobel Laureate Muhammad Yunus proposes that charity is not a sustainable way to lift the poor out of poverty. Yunus suggests a better idea: providing loans to people at the bottom of the economic pyramid to finance money-generating activities. I used to think only philanthropists or large companies with a well-planned Corporate Social Responsibility agenda can contribute to this idea. I was wrong.

Enter Kiva, a non-profit organization that enables internet users across the world lend as little as $25 to finance small businesses in developing countries and United States. Potential lenders can choose a business they want to lend to by browsing through borrowers' profiles in Kiva.org. The borrowers' profiles themselves are collected by field partners, who are local microfinance institutions. Once potential lenders have made a preference, they can easily start lending by making a payment to Kiva through PayPal. Kiva will disburse the lender's funds to the field partner, who will then disburse it to the entrepreneur. Once the entrepreneur repays the loan, lenders may choose to relend, donate to Kiva, or withdraw the funds through PayPal.

How Kiva Works from Kiva Microfunds on Vimeo.

According to Premal Shah, President of Kiva, the organization's success is attributed to the application of 3 "Web 2.0" principles to Philanthropy: (1) create an "addictive" donor experience, (2) be "radically transparent" and (3) "Crowdsource" against constraints. In the first principle, Kiva tries to adopt the ease of Amazon and the fun nature of Facebook. Kiva.org is easy to navigate and transactions are quick and self-explanatory, even for people with basic knowledge of the internet. Also, by having real time, unedited journal updates and a randomized featured lender, Kiva.org has become an addiction to its users. In the second principle, users' trust is earned by being transparent and authentic. Data inaccuracy and defaults in the borrowers' profiles are explicitly shown in order to apply the second principle. The third principle is conducted by establishing a Kiva Fellows Program, which enables a select few volunteers to quickly gather progress updates and verify data accuracy from field partners. Furthermore, Kiva has strong partnerships with prominent web companies, including PayPal, Groupon, YouTube, Google and Yahoo, which makes Kiva more efficient and leverages Kiva's presence in the web.

Since Kiva's birth in April 2004, Kiva has disbursed over $200 million to more than 500,000 entrepreneurs in 59 countries, all through the screen of a computer. Technology, the internet and its community has revolutionized the way microfinance is being conducted. With the advancement of Information Technology, I think that microfinance has already been brought to a whole new level: a level where each and every individual can contribute to international development.

Reference:

http://www.slideshare.net/mrpremal/craigslist-foundation-kiva-presentation-presentation

http://www.kiva.org

Yunus, M. (2007). Creating a World Without Poverty: Social Business and the Future of Capitalism. New York: Public Affairs.