Went to Assam with Mallory. If it wasn't for her I'd probably have missed my flight.
She's working on a pilot program with Drishtee for education microfinance loans. With a "real" camera her pictures are more interesting than mine. Figured I'd share.
Thanks Mallory :)
Monday, February 23, 2009
Sunday, February 22, 2009
Financial Inclusion
There is a large section of the Indian population that lies outside the realm of the banking industry. One takes things like having a bank account for granted. Maybe this is not the best time to blog about the virtues of putting your money in the bank, but its obvious that being part of the financial economy has huge advantages. Not only do you have a safe way of storing and accessing your money, but you can build your credit, have access to credit or access to "safe" and "reliable" investments. Well, most Indian's don't have these facilities.
The RBI has issued a policy for Financial Inclusion, directing banks to "voluntarily" provide banking services to the rural poor and bringing them into the banking system. This is not an easy task. First transaction costs are high. It's not easy opening branches in remote villages or setting up ATM's. Applying urban banking models to rural villages just doesn't work. But there are sustainable and scalable solutions to this problem, involving intelligent technology and innovative business models.
State Bank of India is currently exploring pilot programs to address this. Drishtee's rural franchises provide a ready network of entrepreneurs for this pilot. These franchises (or SBI kiosks) are given a small kit to sign up new customers. The technology solution is developed by A Little World (ALW) who are also partners in this pilot. For every account they open they get a small fee. The kit consists of a cell phone, bio metric blue tooth device and a blue tooth mobile printer.
Note the mobile printer, this right now is the leading contender in my own mobile printer evaluation. Its already proven to work in the field, and is pretty cheap. Anyways - back to financial inclusion. The cell phone comes with a camera, so they also take a picture of the person opening an account. The cell phone is connected to the web, so data can get uploaded and is already in the system by the time the paperwork forms with supporting documents reaches the bank. It's a great system. But the business innovation is that these SBI kiosks can operate as human ATM's. Once the bank account has been opened, the customers get a small card called a tiny card. Using this card they can withdraw or deposit money into their accounts. The tiny card just needs to be swiped to record the transaction (technically its a contactless card, so just needs to be waved). For each transaction the kiosk owner gets a small percentage (and Drishtee also gets a small share). These are very small cuts, but it is the transactions that make the model sustainable. Banks bring in customers and deposits and rural villages get to be part of the financial systems. Drishtee takes a deposit of Rs 15,000 from the franchises, and this protects Drishtee from the franchisee ever just running away with any deposits customers make through him. Fairly well thought through and has a good policy backing. Yup it all sounds great.
Here is a picture of Satyan (Drishtee CEO) opening a rural "no-frills" account
Come on, things can't be that easy. I spent some time in Assam talking to SBI kiosk franchises, and it was a litany of complaints. When we started the project things were going well. Kiosk owners were signing up a good number of rural customers and had a great steady income (~Rs 5000 - Rs 15,000 per month). Obviously this would plateau and we needed them to increase the transaction traffic instead. But the SBI has been slow in issuing the tiny cards. The ALW solution has had 2 to 3 software upgrades. I guess all to be expected in a pilot. But still frustrating for franchises and even worse for the end customer. Specially when you're building a new business, you can't tell a customer come back next week after he's been visiting you for a month to get his tiny card. What's even more frustrating is that they now have a new bank manager at the Sonitpur branch. And he's been sitting on all the paperwork for any new accounts. Saying they're short staffed at the bank. So forget issuing new cards, we can't open new accounts either. The business has by and large stalled! It's so frustrating. Unclear what the new manager's incentives are. It all comes down to relationship management and working with the local branch manager and ensuring he's happy and getting whatever he wants out of this. Disappointing and frustrating.
But I have to stay positive. The kiosk owners have bet their business on this model. It can work. It has to work!
The RBI has issued a policy for Financial Inclusion, directing banks to "voluntarily" provide banking services to the rural poor and bringing them into the banking system. This is not an easy task. First transaction costs are high. It's not easy opening branches in remote villages or setting up ATM's. Applying urban banking models to rural villages just doesn't work. But there are sustainable and scalable solutions to this problem, involving intelligent technology and innovative business models.
State Bank of India is currently exploring pilot programs to address this. Drishtee's rural franchises provide a ready network of entrepreneurs for this pilot. These franchises (or SBI kiosks) are given a small kit to sign up new customers. The technology solution is developed by A Little World (ALW) who are also partners in this pilot. For every account they open they get a small fee. The kit consists of a cell phone, bio metric blue tooth device and a blue tooth mobile printer.
Note the mobile printer, this right now is the leading contender in my own mobile printer evaluation. Its already proven to work in the field, and is pretty cheap. Anyways - back to financial inclusion. The cell phone comes with a camera, so they also take a picture of the person opening an account. The cell phone is connected to the web, so data can get uploaded and is already in the system by the time the paperwork forms with supporting documents reaches the bank. It's a great system. But the business innovation is that these SBI kiosks can operate as human ATM's. Once the bank account has been opened, the customers get a small card called a tiny card. Using this card they can withdraw or deposit money into their accounts. The tiny card just needs to be swiped to record the transaction (technically its a contactless card, so just needs to be waved). For each transaction the kiosk owner gets a small percentage (and Drishtee also gets a small share). These are very small cuts, but it is the transactions that make the model sustainable. Banks bring in customers and deposits and rural villages get to be part of the financial systems. Drishtee takes a deposit of Rs 15,000 from the franchises, and this protects Drishtee from the franchisee ever just running away with any deposits customers make through him. Fairly well thought through and has a good policy backing. Yup it all sounds great.
Here is a picture of Satyan (Drishtee CEO) opening a rural "no-frills" account
 |  |
Come on, things can't be that easy. I spent some time in Assam talking to SBI kiosk franchises, and it was a litany of complaints. When we started the project things were going well. Kiosk owners were signing up a good number of rural customers and had a great steady income (~Rs 5000 - Rs 15,000 per month). Obviously this would plateau and we needed them to increase the transaction traffic instead. But the SBI has been slow in issuing the tiny cards. The ALW solution has had 2 to 3 software upgrades. I guess all to be expected in a pilot. But still frustrating for franchises and even worse for the end customer. Specially when you're building a new business, you can't tell a customer come back next week after he's been visiting you for a month to get his tiny card. What's even more frustrating is that they now have a new bank manager at the Sonitpur branch. And he's been sitting on all the paperwork for any new accounts. Saying they're short staffed at the bank. So forget issuing new cards, we can't open new accounts either. The business has by and large stalled! It's so frustrating. Unclear what the new manager's incentives are. It all comes down to relationship management and working with the local branch manager and ensuring he's happy and getting whatever he wants out of this. Disappointing and frustrating.
But I have to stay positive. The kiosk owners have bet their business on this model. It can work. It has to work!
Friday, February 20, 2009
Assam site visit - photo essay
This week has been a bit of a whirlwind, been traveling for the bulk of it. Flew to Guwahati in Assam on Tuesday morning, spent 4-5 hours in the car getting to Sonitpur (the district office). Got there at 8 pm. Spent the next day going out on the delivery route to observe the supply chain delivery process in Assam. 120 km's, starting at 9 am and getting back to the office at 8 pm. And then on Thursday, we leave at 6 am, reaching Delhi at 8 pm that night. It took me 2 1/2 hours to fly from Assam to Delhi and then 2 hours to get through traffic to get to my place from the airport. Out of 72 hours, I spent 30 hours traveling.
Even though I didn't have much time for touristy sight-seeing, going back to Assam was nice. People in Assam were so much more friendlier that Mathura. Drishtee also seems to have a much bigger presence in this state. And the entrepreneurs there really want to engage you in how they can do better. People asking for micro finance loans, discussing new products they'd want us to supply or trying to figure out how they can market their services better. It was great, they were truly entrepreneurial.
On the other hand, the delivery process I observed - not so great. They have only one route, and I can see why. I thought Mathura was disorganized, but these guys are even further behind. The stock room had goods scattered everywhere, with no organization whatsoever.
The normal process is for someone to call the RRP's (rural retail points) and take down the delivery orders the day before. This way when the vans go out, they know what specific goods to take. Not how it works in Assam. These guys had no delivery orders, instead they almost took a mini version of the entire stock room! Given how bad the roads are, its nuts to take so many unnecessary items out and expose them to the jarring journey. And just imagine the inventory reconciliation process at the end of the day, nuts!
Loading the van in the morning -
It was great to go into the hinterland of Assam, even though I was in a 3 wheeler, squeezed up in front on a seat meant for 1 person being shared by 3 of us (driver, delivery executive and me). I spent the entire journey gripping on for dear life, while the delivery executive sat comfortably on the other side, like it was no big thing to almost get thrown out of a moving van every 3 seconds. I tried sitting like him, relaxing my posture and not holding on to anything. Lets just say after the first small bump in the road, I quickly changed my mind.
This is what the 3 wheeler looks like. Gautam is the delivery executive in the blue shirt, with the driver standing next to him.
At some points the road was pretty good -
At others not so good -
We got to a point where they were constructing the road we were driving on. I am particularly amused by the picture above, because at the hedge fund I worked at we were fond of saying working there is like driving at 80mph while they are building the road under us. Here we were literally driving on roads that were getting constructed under us! The van had to take a detour at this point and get into the neighboring fallow fields and go around the trucks. Eventually we had turn around on this path because the road ahead was just not passable. So we end up a diff "road" that is in a much worse state of disrepair. And what do you think happens? Our 3 wheeler gets stuck in the mud. Had to get out and push. If it wasn't for the enthusiastic bunch of school kids that saw us stuck, I don't think we'd have made it out. That's the other thing - wherever we went if there were kids around they would swarm to our van and just stare at what we were doing. Always the center of attention, wherever we went.
To give you guys a sense of how rural this supply chain is, I took this picture of one of the villages we service. It has 1 school, and no electricity. We got there around 1ish. It is as calm and peaceful as it looks. Hard to believe that this place has been suffering from separatist violence for decades now. But with the huge military presence in the area, it's hard to forget this reality.
Ended the day at around 8pm at night. I can't imagine having to come back the next morning for a similar routine the next day. But these delivery guys and drivers do it everyday. Here is a before and after picture of the delivery van. It's crazy that the van returned with more than half the goods it went out with. At Mathura, in contrast, they would come back with maybe 1 or 2 boxes of products.
We visited 12 RRP's (1 was closed) and sold goods worth Rs. 10,067 (~$200). This was less than what we made in Mathura per RRP and we had spent more time in the field. I didn't think it possible to be more inefficient than the Mathura operations. Wrong! I also spent time understanding microfinance and the education operations here. Will leave that for another post though.
Even though I didn't have much time for touristy sight-seeing, going back to Assam was nice. People in Assam were so much more friendlier that Mathura. Drishtee also seems to have a much bigger presence in this state. And the entrepreneurs there really want to engage you in how they can do better. People asking for micro finance loans, discussing new products they'd want us to supply or trying to figure out how they can market their services better. It was great, they were truly entrepreneurial.
On the other hand, the delivery process I observed - not so great. They have only one route, and I can see why. I thought Mathura was disorganized, but these guys are even further behind. The stock room had goods scattered everywhere, with no organization whatsoever.
The normal process is for someone to call the RRP's (rural retail points) and take down the delivery orders the day before. This way when the vans go out, they know what specific goods to take. Not how it works in Assam. These guys had no delivery orders, instead they almost took a mini version of the entire stock room! Given how bad the roads are, its nuts to take so many unnecessary items out and expose them to the jarring journey. And just imagine the inventory reconciliation process at the end of the day, nuts!
Loading the van in the morning -
It was great to go into the hinterland of Assam, even though I was in a 3 wheeler, squeezed up in front on a seat meant for 1 person being shared by 3 of us (driver, delivery executive and me). I spent the entire journey gripping on for dear life, while the delivery executive sat comfortably on the other side, like it was no big thing to almost get thrown out of a moving van every 3 seconds. I tried sitting like him, relaxing my posture and not holding on to anything. Lets just say after the first small bump in the road, I quickly changed my mind.
This is what the 3 wheeler looks like. Gautam is the delivery executive in the blue shirt, with the driver standing next to him.
At some points the road was pretty good -
At others not so good -
We got to a point where they were constructing the road we were driving on. I am particularly amused by the picture above, because at the hedge fund I worked at we were fond of saying working there is like driving at 80mph while they are building the road under us. Here we were literally driving on roads that were getting constructed under us! The van had to take a detour at this point and get into the neighboring fallow fields and go around the trucks. Eventually we had turn around on this path because the road ahead was just not passable. So we end up a diff "road" that is in a much worse state of disrepair. And what do you think happens? Our 3 wheeler gets stuck in the mud. Had to get out and push. If it wasn't for the enthusiastic bunch of school kids that saw us stuck, I don't think we'd have made it out. That's the other thing - wherever we went if there were kids around they would swarm to our van and just stare at what we were doing. Always the center of attention, wherever we went.
To give you guys a sense of how rural this supply chain is, I took this picture of one of the villages we service. It has 1 school, and no electricity. We got there around 1ish. It is as calm and peaceful as it looks. Hard to believe that this place has been suffering from separatist violence for decades now. But with the huge military presence in the area, it's hard to forget this reality.
Ended the day at around 8pm at night. I can't imagine having to come back the next morning for a similar routine the next day. But these delivery guys and drivers do it everyday. Here is a before and after picture of the delivery van. It's crazy that the van returned with more than half the goods it went out with. At Mathura, in contrast, they would come back with maybe 1 or 2 boxes of products.
 |  |
We visited 12 RRP's (1 was closed) and sold goods worth Rs. 10,067 (~$200). This was less than what we made in Mathura per RRP and we had spent more time in the field. I didn't think it possible to be more inefficient than the Mathura operations. Wrong! I also spent time understanding microfinance and the education operations here. Will leave that for another post though.
Tuesday, February 10, 2009
SCM update
Been doing a lot of research in the rural supply chain space and it is clear that no one is doing what we are doing. Which really sucks for me, cause I've built a career on plagiarizing from the web. What am I supposed to do now?
The supply chain project is huge, and there is no way we could solve it in my short time here. Instead I've narrowed my scope down to just the delivery aspects of the entire supply chain. I've mapped out a (very) high level diagram of the Drishtee process. It's a pretty simple process.
I am focused on the red box and all the integration that comes with it. (CCE = Call Center Executive)
There are 3 basic hardware solutions -
1) Cell phone paired with a mobile printer
2) 5-7" netbook linux laptops paired with a mobile printer
3) Mobile POS terminals (with built in printers)
The links are just examples of the kinds of products we're looking at. The netbook option is really not viable, given that laptops have sucky battery life. And also, given the harsh conditions in rural India (think monsoons), I just can't see any laptop cutting it.
The best case would be a Mobile POS terminal, because it's just one handy device. But they can be relatively expensive, compared to the cell phone solution. Specially if we want to get a foreign brand - import duty really sucks. The device also has to be user friendly, and the cheaper POS terminals dont come with good input interfaces. The cell phone solution is clearly the most flexible, and given that our requirements are not tied down it is easy to go for the cell phone product that is cheap and so ubiquitous. Lots of small tradeoff's, and we don't really have the time to run a good due diligence process. It's going to have to be a hypothesis based approach. Risky, but I feel fairly confident that we'll be able to pick a good hardware solution.
The challenge will be what is the best approach to developing this solution. Bringing all the verticals on to this single platform will be interesting. I think we're going to have to leave microfinance out for the first phase. Their needs are so completely different that it would be silly to force their requirements in for phase 1. I'm also wary of developing the solution internally. I think the tech group is probably qualified to build the integration with the back end systems, but developing the secure communication infrastructure and a client app might not be the best use of the Drishtee tech team (specially if the client app is on a 3rd party mobile POS terminal). The appetite to outsource aspects of the project is pretty low. I've got to figure out how to make the case for this. It is true though that the budget and timeline increases if we invite external partners in. I also think that there are generic secure communication channels out there that we should just leverage. These are being used for mobile payments etc. We'd have to adapt it for our needs, and there are partners out there who want to include us in their communication environment.
My other big concern is the lack of an overarching program plan. I've defined the narrow scope of my project, but it fits into the larger SCM program and while there is a vision (which others can articulate), there is no high level plan for how to achieve this vision. This really makes it difficult to assess tradeoffs in the long term. For example, in parallel to the SCM process is a separate cash settlement process (which has a bigger impact on microfinance). We could be doing some intelligent design right now to quickly automate some of our cash settlement challenges. There are a lot of moving pieces to this puzzle, and I just don't feel like I've got a handle on the big picture yet. Unnerves me.
PS: My field visit to Sultanpur UP this week to observe the Education and Microfinance delivery processes was postponed. I've come down with a mild case of Delhi belly. It was going to happen sooner or later. I'm a little bummed - was really looking forward to going back into the field.
The supply chain project is huge, and there is no way we could solve it in my short time here. Instead I've narrowed my scope down to just the delivery aspects of the entire supply chain. I've mapped out a (very) high level diagram of the Drishtee process. It's a pretty simple process.
I am focused on the red box and all the integration that comes with it. (CCE = Call Center Executive)
There are 3 basic hardware solutions -
1) Cell phone paired with a mobile printer
2) 5-7" netbook linux laptops paired with a mobile printer
3) Mobile POS terminals (with built in printers)
The links are just examples of the kinds of products we're looking at. The netbook option is really not viable, given that laptops have sucky battery life. And also, given the harsh conditions in rural India (think monsoons), I just can't see any laptop cutting it.
The best case would be a Mobile POS terminal, because it's just one handy device. But they can be relatively expensive, compared to the cell phone solution. Specially if we want to get a foreign brand - import duty really sucks. The device also has to be user friendly, and the cheaper POS terminals dont come with good input interfaces. The cell phone solution is clearly the most flexible, and given that our requirements are not tied down it is easy to go for the cell phone product that is cheap and so ubiquitous. Lots of small tradeoff's, and we don't really have the time to run a good due diligence process. It's going to have to be a hypothesis based approach. Risky, but I feel fairly confident that we'll be able to pick a good hardware solution.
The challenge will be what is the best approach to developing this solution. Bringing all the verticals on to this single platform will be interesting. I think we're going to have to leave microfinance out for the first phase. Their needs are so completely different that it would be silly to force their requirements in for phase 1. I'm also wary of developing the solution internally. I think the tech group is probably qualified to build the integration with the back end systems, but developing the secure communication infrastructure and a client app might not be the best use of the Drishtee tech team (specially if the client app is on a 3rd party mobile POS terminal). The appetite to outsource aspects of the project is pretty low. I've got to figure out how to make the case for this. It is true though that the budget and timeline increases if we invite external partners in. I also think that there are generic secure communication channels out there that we should just leverage. These are being used for mobile payments etc. We'd have to adapt it for our needs, and there are partners out there who want to include us in their communication environment.
My other big concern is the lack of an overarching program plan. I've defined the narrow scope of my project, but it fits into the larger SCM program and while there is a vision (which others can articulate), there is no high level plan for how to achieve this vision. This really makes it difficult to assess tradeoffs in the long term. For example, in parallel to the SCM process is a separate cash settlement process (which has a bigger impact on microfinance). We could be doing some intelligent design right now to quickly automate some of our cash settlement challenges. There are a lot of moving pieces to this puzzle, and I just don't feel like I've got a handle on the big picture yet. Unnerves me.
PS: My field visit to Sultanpur UP this week to observe the Education and Microfinance delivery processes was postponed. I've come down with a mild case of Delhi belly. It was going to happen sooner or later. I'm a little bummed - was really looking forward to going back into the field.
Friday, February 6, 2009
Celebrating the arrival of the couch
One of the many quirks of Delhi is the "unfurnished" apartment. Since I'm here for just a short while, I didn't want an unfurnished apartment. But that's what I ended up with (and now that I have lived here, I am actually very happy with my place). I figured I needed to buy a bed and that's about it. Little did I know that unfurnished meant no fridge! I guess I should be thankful that I have a sink and shower in my bathroom. It's just one of those things you would never think to ask. Well now I know.
In any case, my roommate who is going to be here long term has bought a fridge, and a couch and a coffee table. So the place is livable. And I am also borrowing his old bed (now do you see why I'm happy with my place?). With all these new accouterments the place was ready for a party. And since I don't really know many people, what better way is there? Threw a house warming party the weekend of Jan 30th. Lots of drink and lots of people. It was a pretty kickin' party. Too bad I can't really remember names or who I met that night.
Here are some pics my roommate uploaded. There is a guy in these pics who looks a lot like me and is pretty drunk. It's not me, he just looks like me. And he really really REALLY needs a haircut.
In any case, my roommate who is going to be here long term has bought a fridge, and a couch and a coffee table. So the place is livable. And I am also borrowing his old bed (now do you see why I'm happy with my place?). With all these new accouterments the place was ready for a party. And since I don't really know many people, what better way is there? Threw a house warming party the weekend of Jan 30th. Lots of drink and lots of people. It was a pretty kickin' party. Too bad I can't really remember names or who I met that night.
Here are some pics my roommate uploaded. There is a guy in these pics who looks a lot like me and is pretty drunk. It's not me, he just looks like me. And he really really REALLY needs a haircut.
Wednesday, February 4, 2009
Rishikesh weekend
My first long weekend here and I knew I wasn't going to waste it. Narrowed it down to Rishikesh and Jaipur - ultimately white water rafting and a weekend in the foothills of the Himalayas won (i.e. Rishikesh). Also, I managed to find a friend from work who wanted to go there too and since she was providing the wheels, I didn't have much of a choice.
It was a fantastic weekend. Rishikesh is not only a holy pilgrimage town for Hindus, but also a popular backpacker destination for those who want to come learn yoga. The Beatles visited and stayed in some ashram, recorded a bunch of music too. Town is crawling with hippies. Unfortunately, I never got to do any yoga while I was there. But I did go white water rafting and do a mini 3 km trek.
It's not that far from Delhi, but for reasons I won't go into we didn't get there until 3 in the afternoon on Saturday. Ended up staying at the "Laxman Jhula Divine Resort" (everything there seems to have the word divine or holy in it's name).
Fantastic view from our room of the roaring Ganga (misty in the morning) -
The river is a bit dry at this time of the year, so I can only imagine how powerful it would look during the summer/monsoon months.
It was great to get out of Delhi for a weekend and breathe the fresh mountain air. One would think that washing away my sins in the holy Ganges would be the highlight of my trip, but the car journey back beat that hands down.
A bit about highway travel in North India (I say North India, because no where else have I seen such flagrant disregard of driving laws in India). The most interesting is when cars and trucks drive on the wrong side of the highway. We're barreling down, and coming straight at you in the opposite direction is a truck.
We left Rishikesh early evening on Sunday, which meant that we would be on the road after sundown. Unfortunately for us, the fog rolled in after dusk. I've never seen anything like it. We couldn't see more than 1 foot ahead of us. And in all this confusion, somehow we ended up on the wrong side of the highway. We couldn't even see the divider on the highway! We basically honked the car for a mile or so until we came to an opening to switch to the right side of the road (in this case the left side of the road). It was pretty entertaining. I have to thank my 2 friends for some fairly sophisticated driving and navigating. Thanks guys.
Some more pics from my trip
It was a fantastic weekend. Rishikesh is not only a holy pilgrimage town for Hindus, but also a popular backpacker destination for those who want to come learn yoga. The Beatles visited and stayed in some ashram, recorded a bunch of music too. Town is crawling with hippies. Unfortunately, I never got to do any yoga while I was there. But I did go white water rafting and do a mini 3 km trek.
It's not that far from Delhi, but for reasons I won't go into we didn't get there until 3 in the afternoon on Saturday. Ended up staying at the "Laxman Jhula Divine Resort" (everything there seems to have the word divine or holy in it's name).
Fantastic view from our room of the roaring Ganga (misty in the morning) -
 |  |
The river is a bit dry at this time of the year, so I can only imagine how powerful it would look during the summer/monsoon months.
It was great to get out of Delhi for a weekend and breathe the fresh mountain air. One would think that washing away my sins in the holy Ganges would be the highlight of my trip, but the car journey back beat that hands down.
A bit about highway travel in North India (I say North India, because no where else have I seen such flagrant disregard of driving laws in India). The most interesting is when cars and trucks drive on the wrong side of the highway. We're barreling down, and coming straight at you in the opposite direction is a truck.
We left Rishikesh early evening on Sunday, which meant that we would be on the road after sundown. Unfortunately for us, the fog rolled in after dusk. I've never seen anything like it. We couldn't see more than 1 foot ahead of us. And in all this confusion, somehow we ended up on the wrong side of the highway. We couldn't even see the divider on the highway! We basically honked the car for a mile or so until we came to an opening to switch to the right side of the road (in this case the left side of the road). It was pretty entertaining. I have to thank my 2 friends for some fairly sophisticated driving and navigating. Thanks guys.
Some more pics from my trip
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