India is hot now, one of the few bright spots in the emerging markets, and the Global Underbanked is one of the big Fintech Mega Trends that I track on Daily Fintech.
So a company using Big Data to find profit among the Urban Underbanked in India caught my eye.
Janalakshmi means People’s Wealth in Hindi. The name is clearly not designed for a global audience, but then as Alex Letts of Ffrees pointed out to me, worrying about klunky URLs is very old fashioned. Its the value proposition, stupid!
The obvious label for Janalakshmi is Microfinance which got a bad name in 2010 during the Andhra crisis. This post has the details. This Tylenol moment for Microfinance is what got me interested in non-profit models such as Zidisha.
“with the entire promoter (read “founder”) stake being held in a not-for-profit Section 25 company, Jana Urban Foundation, which focuses on addressing larger issues related to urban inclusion. The structure ensures that no financial benefit arising from the performance of Janalakshmi accrues personally to the promoter.”
The original seed money for Janalakshmi came from the Michael & Susan Dell Foundation and this video on their site brings the world of the Global Underbanked home to you. Janalakshmi has a strong team with deep financial services experience. The CEO is ex Citibank which was one of the first Global Banks to invest big in India. This is a mature Fintech venture. They also seem to have a social mission. Great, profitable businesses can have a social mission as well. There does not have to be a trade off.
Janalakshmi focusses on the Urban Underbanked, which makes sense because a) migration to Cities is a major trend and b) the population density makes customer reach easier.
Which brings me to Big Data. InformationWeek has the story on how Janalakshmi is using Big Data. On the Big Data part of the story, IBM is involved – not surprising as IBM has more smarts on Big Data than most. My interest is in how they are using Big Data to solve a business problem. This quote from the Janalakshmi CEO from the Information Week article has a clue:
“We run our entire technology workflow on Salesforce.com. Our front-end, which involves our sales representatives, carry a netbook along with a biometric reader. We have got our entire database on biometrics”.
Janalakshmi has figured out that payments as an ancillary service has it backward. In the Global Underbanked, payments IS the service. The ability to make and receive payments is the first step on the ladder from subsistence farming to a middle class life. So Janalakshmi are mining the transaction flow.
Janalakshmi is part of the bigger story of Fintech in India, which I started to explore here, but I missed the ambitious plans of the Modi Government for Gujarat International Finance Tec-City (Gujarat is Modi’s home state).
This is an $11 billion Fintech Accelerator! (estimated cost of the entire project). It is not just Make it in India. The ambition also seems to be Finance it in India.
My theory is that innovation comes from those who have been excluded by the status quo, because necessity is the mother of invention. That is what explains the leap frog effect that we see around mobile phone adoption in emerging markets. The future of Finance may come out of Africa or India (or some smart entrepreneurs in Europe or America who have spotted the opportunity).