Green Redefined....

There's so much green talk going around these days, thought I should join the bandwagon.

Was watching Al Gore a couple of days back elucidating on the need for "stepping on the gas"-metaphorically speaking of course. In the race to conserve our environment and the planet, was very curious on the role that could be played by banks and financial institutions in this direction. Posted questions on Linkedin, read the Equator principles again, observed the recent frenzy in carbon credits, scanned the absolute lack of greenery at our workspaces and became conscious of the gas guzzler that I was driving to work each day.

Banks and financial institutions can play roles in three broad areas to drive forward this movement:

a. Customer Transactions : There is an extraordinary amount of paper that is utilized daily in conducting retail transactions, be it in loan application forms, writing cheques or ATM and POS charge-slip printouts. The obvious but arduous path lies in the movement to electronic paperless formats. The challenges, as you would be aware lie in.....
i. Regulatory reforms required
ii. Shift in Consumer Attitudes &
iii. Revamp of transactional systems

The tipping point lies not in the above, but in economic incentives from governments for banks to invest in making that shift. The rest would gradually follow. And what could the nature of incentives be....A few thoughts (rather wild perhaps!)
i. Measure usage of paper per customer
ii Enable tax deductions basis the reductions achieved
iii Issue Green credits (similar to carbon credits) which could be traded!

Quite easily said of course...but am confident that the gaining momentum in Corporate Social Responsible (CSR) initiatives would also translate to a path down the green road in the coming years and push banks to lobby with governments and central banks for the same. Do not believe sufficient political intent lies currently with governments to take the first step.

b. Green Lending : There are several banks globally who specialize in lending towards eco-friendly initiatives - windmills, solar panels, low emission plants etc.

The Equator principles present another angle towards defining principles for lending to organizations and projects that follow prescribed norms towards conserving the environment and following reduced pollution norms.

Banks would do well in developing expertise in the above areas and defining policies that ensure that "green principles" are at least examined at the time of evaluating lending norms

c. Enlighten your Employees : Nothing works like dialogue, reinforcement, measure and incentives. Ask your employees to define what their understanding of going "green" means. You may be quite surprised on the responses.Most personnel believe that the issue lies in the deforestation in Brazil and the diesel guzzling buses trucks emitting carbon monoxide.

The question lies in how banks could recognize and incentivize employees to adopt car pools, rationalizing usage of paper, adopting video conferencing over flights for client meetings....

Can we have green credits which are issued to employees as well!

Innovation....Where are you?

Came across a fairly interesting article by Mark Fidelman titled "Where Are India’s Innovative Companies, Products and Solutions?"....

The article builds on the fact that India has produced some of the world's best minds in science, technology and medicine yet does not appear to have created large scale and breakthrough innovations in these fields. Further reflected by the low number of patents originating from Indian companies.

The missing ingredients required to jump-start India’s innovation ecosystem are;

1. Access to intellectual and relational capital.
2. A well developed Angel and Venture Capital industry
3. An active segment of the Press focused on promoting early stage ventures and building Entrepreneurs into Business Celebrities.
   
4. A Comprehensive Understanding of the Indian Consumer and the lack of formal Government support to promote Entrepreneurship and Innovation.
5. Establishing Compelling Reasons to Innovate

Over the last couple of months have come across several Indian start ups and large organisations that have been undertaking some breakthrough work in the areas of mobile payments, financial inclusion and even social lending. The essence, as propounded by several others, lies in creating business models and innovations from an Indian perspective and for an Indian environment. The rapid growth in the mobile telephony space has quite clearly shown that large value markets exist in India, and do not necessarily take decades to develop.

The key to the next level growth lies in innovations in financial inclusion and payments to open out new frontiers in customers and markets.

To read the article click here

Top Innovations in Retail Banking & Payments?!

I posted a question recently on Linkedin, seeking viewpoints on the top innovations in retail banking and payments in the last decade........... and received a myriad of interesting responses

Though mobile & Internet banking, bill payments and smart cards scored at the higher end, the one response that captured the essence was the Internet / IP enablement of financial services. This has led to a spate of new products & services and effectively opened out new segments that were hitherto restricted for electronic payments.

To read the various responses received on Linkedin click here

National Payments Plan - Vision for UK Payments

The Payments Council in the UK was set up to outline a strategic direction for payments in the United Kingdom. The first release of the report focuses on retail payments and focuses on those areas that require collaboration.

The report makes for interesting reading and touches upon several subjects including the phasing out of cheque based clearing by 2018, the need for open & interoperable standards for mobile payments and the imperatives for financial inclusion.

Fairly interesting reading.....

White Space Redefined

Came across a brilliant document that has outlined 12 case studies of service organisations that have applied innovation in creating quantum value.

The case studies include three players in Banking & Financial services - Bank of America, The Hartford and MyBizHomepage. The case study on Bank of America highlights the "Keep the Change" programme, has proven to be an inflection point of sorts for the bank in the North American market, which is a must read if you have'nt already.

Do read on the concept of seizing the white space as detailed in the document. The report has been prepared by Peer Insight

Much has been written on the need for innovation. The model provides a simple and lucid method to articulate the opportunities in the competitive space as also the "Inside Out" & "Outside In" approaches that your organisation could take to creating value.

Once again, a must read.

Internet Access Redefined

No laptops, PCs, PDAs, clunky internet access devices.....

Internetspeech has a developed a technology that makes the Internet accessible over the phone. That's right....no keyboards, monitors or even a stylus...Just pick up your phone and yell "Yahoo" or "email" and the service would help you access the information / messages on your account.

The possibilities and opportunities are limitless for information & transactional services. Be it for executives on the move seeking to access their email or portfolio value, or a customer in the BOP attempting to determine the rates of onions in the local wholesale market!

As I keep saying, its not in the technology...it's in the user interface!

Am excited with the opportunities for banking and financial services...Lets see how this evolves in the coming years....

Biometrics Redefined

A critical milestone for the widespread adoption of any new technology is the establishment of standards! The ISO has released a standard for financial services for biometric applications - ISO 19092:2008

This would, I hope assist financial institutions in adopting and developing applications on a common platform for biometric end uses.

Biometrics enables accurate authentication and the end benefits include reduced risk and fraud alongwith customer convenience

Biometrics is also finding new use applications in a wide array of industries including loyalty systems......

An extract from the ISO website

"ISO 19092:2008 describes the security framework for using biometrics for authentication of individuals in financial services. It introduces the types of biometric technologies and addresses issues concerning their application. ISO 19092:2008 also describes the architectures for implementation, specifies the minimum security requirements for effective management, and provides control objectives and recommendations suitable for use by a professional practitioner.

The following are within the scope of ISO 19092:2008:

• usage of biometrics for the authentication of employees and persons seeking financial services by:
• verification of a claimed identity;
• identification of an individual;
• validation of credentials presented at enrolment to support authentication as required by risk management;
• management of biometric information across its life cycle comprised of the enrolment, transmission and storage, verification, identification and termination processes;
• security of biometric information during its life cycle, encompassing data integrity, origin authentication and confidentiality;
• application of biometrics for logical and physical access control;
• surveillance to protect the financial institution and its customers;
• security of the physical hardware used throughout the biometric information life cycle.

ISO 19092:2008 provides the mandatory means whereby biometric information may be encrypted for data confidentiality or other reasons."

Scotiabank Pilots Social Network for Staff

Some of you may have read an article I had written on social networking in corporates a couple of months back.

Was thrilled to see Scotiabank in Canada having launched a social networking platform for their staff members recently. The platform would allow employees to view profiles and exchange ideas and best practices.

Social networking within large organisations can break across hierarchies and departments and tap into the unutilised potential that lies within employees............which would lead to innovation I'm sure....

Risk Redefined!

"In this country, you gotta make the money first. Then when you get the money, you get the power. Then when you get the power, then you get the women."....Al Pacino - Scarface...

Hmmmmm....and this was a blog on trends and innovations in banking and financial services...fear not.....

A research conducted recently at the University of Berkley, determined a correlation between sex and propensity to taking greater financial risk! Hence, when young men were exposed to erotic pictures, they were more likely to make a larger financial gamble than if they were shown a more scary or neutral image such as a snake.

This is in line with an increasing amount of research being undertaken in the area of neuroeconomics, which attempts to understand better the areas of brain biology with softer aspects of human psychology and its influence on individuals / organisation's perspectives and actions on undertaking financial risks.

The above study may be criticized for its accuracy, but there is obviously a need to understand the genetic code and stimuli that stimulate greater financial risk taking abilities.

Innovation and risk taking go hand in hand and am looking forward to more breakthrough research in this area.

If you'd like to read more on neuroeconomics click here to get started....

Picked up from Wikipedia...
"Neuroeconomics is the subset that focuses on personal choices and the mental changes that correlate with the choices and may even cause them. A key insight is that the biological substance of a living organism can be modeled as implementing an optimizing solution to some survival/reproductive challenge in the evolutionary environment."

Mobile Banking - Opportunities & Challenges

There have been several papers and articles written on the opportunities offered by the mobile phone in enabling banking access and transactions in an economical manner....

Came across this paper, which clearly outlines the basics of the subject and would serve as a good starting point for those who would like a simple document that covers the fundamentals quite well

To download the paper, click here

The Base of the Pyramid.....

The Base of the Pyramid (BOP) is an area that has ignited research and several initiatives across the globe in recent years. The challenge in extending basic banking services and credit to BOP members is one that is spurring innovation amongst bankers and financial institutions alike. Over the next couple of months, I would be touching upon some work & initiatives being undertaken in this space.

The BOP as a concept gained much visibility with CK Prahlad's book on the same subject. The Base of the Pyramid (BoP) Protocol Initiative is an action research program launched in 2003 to develop and refine a corporate innovation process geared for the unique challenge of sustainably serving Base of the Pyramid markets.

The initial framework for the BoP Protocol process was developed in 2004 through an intensive four-day design workshop at the Johnson Foundation's Wingspread Conference Center. The workshop brought together a diverse mix of social entrepreneurs and non-governmental organizations, a dozen managers from the project's four corporate sponsors, and thought leaders from various academic fields such as International Development, Social Work, Economic Anthropology, and Design.

Working from this framework, the 1st Edition of the BoP Protocol was released in March 2005. Since then, CSGE has partnered with two corporations to implement the BoP Protocol. The first project was launched in 2005 by SC Johnson in Kenya, and the second was launched in 2006 in India by the Solae Company, a subsidiary of DuPont.

To read / downlad the second edition published recently, click here

Innovation Redefined!

"Innovation is the ancient art of letting people do their jobs!"

I just loved this one when I came across it in wired....Your views ?

Debt Redefined!

The Indian market for unsecured and secured loans including credit cards has exploded over the last seven years. Access to low cost loans has fueled the growth in consumer spending but has also resulted in "exuberance" and resulted in rising defaults.
As more consumers traverse the rocky path of increasing interest rates and as newer customers enter the credit fold there is an ever growing need for education and advise at the right time!

A movement that has gathered momentum are Internet based communities that facilitate members to exchange notes and also advise on how loans should be managed and repaid in effective manners. Wesabe offers both a forum and a set of tools that help customers make better financial decisions!

This leads us to another question/ opportunity? Perhaps there is an opportunity for lending institutions to play a consultative / advisory role in guiding clients on the quantum of loans that they should take?

Your views?..........................

Compromise Redefined !

Over 162 million electronic records containing data like credit card, social security numbers etc were compromised in 2007!!!!

With an increasing number of cases of data theft globally across retailer and financial institution databases, customers quite often seek simple solutions that offer greater online transaction security. The challenge is not only with credit card number details but a wide array of personal records including driver's license, PAN card numbers and other personal details.

Credentica is working on a product that would enable customers to enter partial information and not divulge the complete details whilst completing an Internet transaction.

Those who are "tech" oriented can visit their site or the recently published article in Wired.

However there are two key aspects that we need to address at this time, and which continue to infuence the growth of e-commerce....
a. Most researches conducted in India continue to indicate that online security continues to be an area of concern for customers to reveal their credit card details in an online transaction

b. With increasing instances of compromise of personal & transactional identity information, are we investing sufficiently in working towards a more secure payment mechanism for the Internet and mobile?

Cards & Transfers Redefined

There's a small revolution brewing in North America...........coincidentally called the Revolution Card!

There are two products actually....the first is a credit card which consists of a card which has neither the card-holder name nor the card number embossed on it! The cards can be used at the existing Point of Sale (POS) infrastructure and would require customers to use pins to complete their transactions.

The USP - significantly lower merchant interchange fees of 0.5% vis a vis the prevailing rates in the range of 2% ( in North America). For the customer much greater security and identity protection.

The second product is an online money transfer service, that enables customers to transfer funds free of charge! There are fees incurred for withdrawals and some deposit transactions. Quite a healthy benefit for customers using Paypal, Western Union and similar wire transfer services.

The company is backed by Steve Case, one of the founders of AOL and has received funding from an interesting array of investors including Citibank, Morgan Stanley and Deutsche Bank.

The payments industry has typically been driven by Visa, MasterCard, American Express and a few others. Innovations have been typically been incremental & reactive and not always quantum in nature. It is refreshing to see the birth of an all new player that might just change the rules of the game.....

Kiva & The Birth of Microfinance

I've always been fascinated by stories and accounts of entrepreneurs. Came across this document a couple of days back, which recounts the starting roots of Kiva by Matt Flannery. It's crisp and makes for extremely interesting reading....What I find even more remarkable is the spirit and determination which drive entrepreneurs towards success.

Why does this figure in this blog...well.... we will over the next few years increasingly see greater advances made in the arena of micro-finance and and the sheer undercurrents of change that are sweeping across the financial services space will most likely require finance professionals to revisit the way we look at the BOP and also in the way we do business....

Future of Payments ...at your fingertips?

In a recently conducted informal research at Glenbrook on payment preferences, the findings were quite unexpected........The most popular option followed by cash was fingerprint, then contactless. Mobile based payments seemed rather distant

This does pose an interesting perspective and question....where lies the future of retail payments?

In an earlier post, I had highlighted the opportunity presented by biometrics in enhancing security and ease of transactions. In discussions I've had with industry professionals, this has largely met with a "not sure" response. Would the storage of biometric information by banks and financial institutions be considered an extreme intrusion of the customer's privacy, and would urban customers accept this? ...Your views?

Mobile Banking Redefined?

ICICI Bank has launched iMobile, a unique mobile banking platform on mobile phoneswherein customers can now transfer funds to ICICI and Non ICICI Bank accounts on their mobile. The application covers Savings bank, Demat, Credit Card and Loan accounts. Customers can also pay their utility bills and insurance premium through this facility.

This is in line with a spate of mobile applications being launched by service organisations in the banking, insurance and travel segments ( eg. AIG, yatra, PVR). These applications are being designed to work on both SMS and GPRS to tap into the 200 million + mobile subscribers in India.

As everyone in the Industry is going overboard with the large numbers and the tremendous opportunities therein, what clearly waits to be seen is how well the Indian mobile audience will adopt all these services and features.

We are slated to see several new mobile application launches in the coming months in 2008 in this space!

Lending Redefined

If the high interest rates throttle your dreams for that new LCD TV or the holiday in Goa ( as you await your bonus of course!), then make way for Peer to Peer (P2P) Lending.
Yes its back to the good old days when chaps in your community, this time on the Internet, can actually bid to lend you money!

The rates would be lower for you of course vis a vis the mainline banks, and the lenders too can make more money than in a classical bank deposit.

This phenomenon has also been used to a good cause , check out kiva.org




So, is it goodbye to banks and financial institutions...may be not just yet..... :)

The Yellow Arrow Revolution

Yellow Arrow is a global public art project running in multiple countries. To my mind this is much more than art and more about expression and interpretation.

Yellow arrow stickers can be obtained from their website and placed anywhere, on buildings, park benches, telephone booths or even your car actually! When you see the yellow sticker, you can send the unique code printed on it as a text message to a defined phone number.

You would then receive a text response, sharing an interesting tit bit / trivia about that particular location / building etc, as each arrow links digital content to that particular location.

Yellow arrows are present in over 300 cities across the world allowing citizens to share their experiences and memories with all!

Now thats cool!

You can visit them at yellowarrow.net