What do we Know about Sales Staff Behavior? A Technical Guide for Mystery Shopping in Retail Finance

Guest post by Silvia Baur and Rafe Mazer, CGAP

The shift towards suitability frameworks for consumer protection in India is a bold and important enhancement of existing financial consumer protection efforts. To fully succeed, this will require a proactive–not just reactive–approach that measures suitability in a clear manner at the point of sale across a range of providers and products.

Mystery shopping is a particularly useful tool for gathering this suitability evidence base. Mystery shopping is a research tool that involves sending consumers to conduct sales visits or other transactions, in order to measure the quality of the sales experience, product advice, consumer assessment and related consumer protection issues such as disclosure of key terms.

Researchers such as Mowl and Boudot (2014), and Anagol, et al. (2013) have already shown how mystery shopping could be used to measure suitability principles in India. Similar to the experiences in India, mystery shopping exercises detailed in CGAP’s just-released Mystery Shopping Technical Guide in markets such as Mexico, Ghana and the Philippines have shed light on how sales staff conduct, financial advice and sales behavior can have important implications for both financial inclusion and for financial consumer protection. For example, mystery shopping in both India (Mowl and Boudot, 2014) and Mexico (Gine, Martinez and Mazer, 2014) demonstrated how even when low-balance savers sought to open basic savings accounts that are mandated by law, most sales staff did not disclose these products and even created barriers to the shoppers acquiring these products although they asked for the basic accounts directly.[1]

CGAP’s Technical Guide summarizes in an easy “how-to” manner our experience conducting mystery shopping for a range of products. This includes descriptions of the several stages of implementing a mystery shopping program, as well as actual field guides such as questionnaires, shopper training materials, sales staff surveys and product audit forms. The guide is based on mystery shopping research conducted by CGAP, the World Bank, development agencies, and financial supervisors in six different emerging markets that included products such as savings, loan, insurance, agent banking and credit card products.

Consumers seeking access to financial services (Jeanette Thomas/CGAP)

CGAP’s experience conducting mystery shopping studies has identified barriers that are both professional and personal when sales staff deal with lower-income or less experienced consumers. This can include an insurance agent hoping to increase their commissions through higher cost products giving improper advice to a consumer, or a bank teller pre-judging a lower income consumer and refusing them a savings account. It can be hard to measure these biases and how they impact consumers’ experiences, but they can play an important role in whether and how consumers achieve financial access and whether they value financial services.

Furthermore, measuring market conduct of sales staff will be an essential ingredient for the current shift in consumer protection policy in India towards a suitability framework and can support this framework in several ways:

  • By using real-life consumers with different financial background and product needs to conduct the shopping visits, mystery shopping can help measure how well sales staff guide financial consumers to select the right product for their needs, and where cases of mis-selling may be occurring and need to be corrected.
  • Mystery shopping offers a complementary marketing monitoring tool to capture consumer complaints. Consumers may not always report suitability relevant issues of market conduct on their own. This could be because they do not know they have been given unsuitable advice, are not aware of their rights, or are reluctant to use formal complaints channels (a reluctance CGAP has observed with certain consumer types in behavioral mappings of recourse systems.)
  • Mystery shopping can also help to measure “most suitable” amongst a range of product options that would be appropriate for a specific customer profile. The CGAP Technical Guide details how researchers used lists of all products on offer at institutions shoppers visited to assess what the most appropriate product recommendation would have been, and compare this to the actual advice given. For policymakers looking to implement suitability regimes, combining mystery shopping with up-to-date and complete listings of all products and terms provides a useful way to quantify suitability (for specific customer profiles) across different providers with varying numbers of products on offer.

By using the mystery shopping methods detailed in the CGAP Technical Guide it is possible to measure how financial advice changes by consumer type, understand why some consumers may receive less suitable product advice and service than others, and begin to enforce the principles of suitability in the practice of financial service providers and their sales staff.

[1] Mowl and Boudot (2014), Barriers to Basic Banking: Results from an audit study in South India, NSE-IFMR Working Paper 2014-01
Gine, Martinez and Mazer (2014), Financial (dis)Information: Evidence from an audit study in Mexico, World Bank Policy Research Working Paper 6902


Stress Testing Credit Risk of Indian Banks

By Nishanth K & Neha Dhoble, IFMR Finance Foundation

In the aftermath of the Global Financial Crisis, RBI took a major leap forward and set up a new Financial Stability Unit in 2009 specifically focusing on the measures to be taken for assessment and evaluation of financial system stability in the country. The main objectives of the Unit are to conduct macro-prudential surveillance of the financial system, to prepare Financial Stability Reports (FSR), to conduct stress tests on an ongoing basis and to develop regulatory frameworks and models for evaluating financial stability in India. The FSR contains an assessment of the resilience of the financial system and covers a variety of indicators such as asset quality, liquidity, macro-financial risk, soundness and resilience of banks, profitability and capital adequacy levels. Resilience is checked by performing a series of stress tests on banks’ books.


The objective of this exercise is to design and implement a credit risk stress test on the scheduled commercial banks in India and achieve an understanding of the stability of the banking sector. To this end, we perform this stress test using publicly available data from annual reports and other publicly available data[1] for the year 2013-14. We also compare our results with those of the RBI disclosed in the Financial Stability Report, June 2014[2].

Balance sheet based approach

The balance sheet approach is the “natural” approach to stress testing for banks and other financial institutions. The reason is that balance sheet information is publicly available for financial institutions in a standardized format which also facilitates the comparison of institutions and groups of institutions. However, with all its advantages, this approach also has some drawbacks – it is not a completely forward looking approach; it does not capture all the risk drivers that might affect the performance of the bank in a stressed scenario.


The relevance and accuracy of any stress-test exercise relies on the underlying data input. First, data availability defines the extent to which the exercise can cover various aspects of banks’ risk profile. The FSR uses data from the top 60 SCBs as they account for about 99% of all banking sector assets in India[3]. For the purposes of conducting balance sheet based stress test, we accumulated publicly available data from the Annual reports and Basel Disclosures of the top 60 Scheduled Commercial Banks in India. This exercise covered the evaluation of top 52 banks in the country due to lack of the availability of consistent data for 8 foreign banks. These 8 banks however do not contribute to more than 1% of the total assets of the banks in the country. In addition to this, we had also used the data from RBI’s Statistical Tables Relating to Banks in India.


Stress tests are conducted to test the resilience of Banks against the impact of extreme stress scenarios. A typical stress test consists of 3 important steps:

  1. Designing a stress scenario
  2. Modelling the transmission of shock
  3. Understanding the result with respect to a benchmark or a threshold

The stress scenarios used in FSR (June 2014) for the purposes of a credit risk stress tests[5] on the banking sector are as follows:

  1. Shock 1: Increase in NPAs by 100%
  2. Shock 2.1: 30% of restructured assets become NPAs (Substandard assets)
  3. Shock 2.2: 30% of restructured assets become NPAs (Loss assets)

It is assumed that an economic shock increases NPAs and ultimately affects the Capital Adequacy level of the Bank[6].

Norms on prudential recognition requires banks to provision for assets on the basis of their quality. Therefore, any increase in NPAs would require the bank to set aside additional provisions in order to cover for any potential losses from these assets. These additional provisions are deducted from the capital base of the bank. This reduction in capital would affect the level of capital adequacy of a bank.

Stress Transmission
Transmission of the stress

Shock 1: Increase in NPAs by 100%

This can be translated to 2 possible scenarios:

  1. The addition of new NPAs
  2. Slippage of standard assets to NPAs

As there is no clarity on which case to consider, we consider both cases:

Case 1: Addition of new non-performing assets

The new NPAs require additional provisions which are deducted from the capital base. Also the difference between the total value of the new NPAs and their additional provisions[7]is added to the total risk-weighted assets[8]. We assume that there is a proportional increase of substandard, doubtful and loan assets.


Below is an illustration of our approach for the calculations:

Pre-shock Post-shock
Total Capital 500 Total Capital 500
Advances Value Provisions Advances(new) Value Provisions
–        Standard 5000 50 –        Standard 5000 50
–        Substandard 20 5 –        Substandard 40 10
–        Doubtful 20 15 –        Doubtful 40 30
–        Loss 10 10 –        Loss 20 20
Total 5050 80 Total 5100 110
Additional provision[9]
–        Substandard 10-5 = 5
–        Doubtful 30-15 = 15
–        Loss 20-10 = 10
Total additional provision 30
–        Capital coverage 500 –        Capital coverage 500-30= 470
–        RWA[10] 5050 –        RWA 5100-30=5070
CRAR 500/5050= 9.90% CRAR 470/5070= 9.27 %


Case 2: Slippage of assets into the Non-performing asset category

In the second case, we assume that this increase in NPA is due to standard assets held by the bank becoming NPAs. We assume that there is a proportional increase of substandard, doubtful and loan assets.


Below is an illustration of our approach for the calculations:

Pre-shock Post-shock
Total Capital 500 Total Capital 500
Advances Value Provisions Advances(new) Value Provisions
–        Standard 5000 50 –        Standard 4950 49.5
–        Substandard 20 5 –        Substandard 40 10
–        Doubtful 20 15 –        Doubtful 40 30
–        Loss 10 10 –        Loss 20 20
Total 5050 80 Total 5050 109.5
Additional provision
–        Standard -0.5
–        Substandard 5
–        Doubtful 15
–        Loss 10
Total add provision 29.5= (30-0.5)
–        Capital coverage 500 –        Capital coverage 500-29.5 = 470.5
–        RWA 5050 –        RWA 5050
CRAR 500/5050= 9.90% CRAR 470.5/5050 = 9.31%


Shock 1:

The stress test results under Case 1 seemed to produce results that were more consistent with the RBI FSR (June 2014) results as compared to Case 2. The Case 1 results revealed that 16 out of top 52 banks contributing to over 36% of the total banking asset would fail to meet the adequate capital requirements to cover the losses that may arise in the stress scenario. The shock assumed 100% increase in NPAs proportional to existing NPAs. The banks failing the stress test constitute 13 Public Sector Banks & 3 Private Sector Banks; out of which major hit was observed on two of the Public Sector Banks and one Private Sector Bank with their CRAR (Capital against Risk-weighted Assets Ratio) falling below 7% post shock. The Private SCB falling under this category had CRAR below the minimum requirement even pre-shock. Nine banks out of these 16 were seen to have CRAR post shock below 8%.

Below are graphs depicting the distribution of Banks’s post-shock CRARs and their comparison with the RBI’s FSR results for the same shocks.


RBI’s FSR result

Observations Financial Stability Report IFF stress test exercise
No. of Banks with CRAR below 9 19/60 16/52
No. of Banks with CRAR below 8 9/60 9/52
Assets held by failing Banks 35% 36%
Capital Loss 15% 12.25%
No. of banks between with CRAR between 9 and 11 12 15

Shock 2:

Shock 2.1 was aimed at measuring the impact of slippage of restructured standard advances to NPAs. In first case we considered 30% slippage of restructured standard advances to substandard advances which however did not show much adverse impact on capital adequacy of the banks.

However, Shock 2.2 showed 13 banks failing the stress test. In this case we measured the impact of 30% slippage of restructured standard advances to Loss NPAs.

Summary of results

Our results seem to fare well with the results of RBI’s Financial Stability Report. A summary comparison of the results of the stress tests with those of the FSR is shown below:

Our Result

RBI’s FSR Result

These results are consistent, to a certain degree, with the results of the regulatory stress tests conducted by the RBI. However, we had to make a host of assumptions due to the lack of adequate data and information regarding the methodology involved in the stress tests conducted by the regulator. For example, there is lack of information regarding the design of the stress scenarios and their likelihood of occurrence.

It is also quite important to note that the most recent FSR (June 2015[11]) has changed the stress scenarios for the credit risk stress tests of the banking sector. The stress scenarios currently consider a 3 standard deviation increase in the Gross NPA ratio of the Bank. However, the concerns regarding clarity of the transmission of these shocks raised in this post still exist.

The public availability of stress test results for individual banks put out by the Federal Reserve in the aftermath of the global financial crisis served to regain public confidence in the regulator. While the European Central Bank[12] has published methodological details, as well as actual stress test results[13] on individual banks, (also done by the Federal Reserve[14]), it remains to be seen whether the RBI will put out methodological details on similar lines.

[1] Annual reports, Basel Disclosures and Data from RBI’s “Statistical tables relating to Banks in India”
[2] https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/0FSR26062014F.pdf
[3] Financial Stability Report, June 2014, RBI.
[4] Our stress testing model was broadly based on Cihak, A Toolkit for Bank- by- Bank Analysis with Accounting Data. http://www.elibrary.imf.org/staticfiles/misc/toolkit/pdf/chap3.pdf
[5] These stress scenarios are based on the stress tests results published in the Financial Stability Report, June 2014, RBI. It is worthy to note that the most recent FSR considers only one stress scenario: that of 3SD change in Gross NPA ratio.
[6] A Guide to IMF Stress Testing: Methods and Models(2014), IMF
[7] Provisioning for standard assets is assumed to be 1% here. This is a conservative estimate as the provisioning of standard assets vary between 0.25%-1% depending on the asset class. For substandard, doubtful-1, doubtful-2 and doubtful-3 and loss assets, it is assumed to be 25%, 25%,40%,75% and 100% respectively. From RBI, Master Circular – Prudential norms on Income Recognition, Asset Classification and provisions pertaining to advances, 2014. https://rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=9009
[8] RWA changes with the change in provision as the risk weight is allocated to the advances before they are subcategorized into standard, substandard, doubtful and loss loans. Therefore, it is assumed that (New NPAs – additional provisions) will account for the risky part of the asset.
[9] In these illustrations, we have used a 75% provisioning for Doubtful assets
[10] Risk weights are assumed to be 100% for all advances
[11] https://www.rbi.org.in/scripts/PublicationReportDetails.aspx?UrlPage=&ID=821
[12] https://www.eba.europa.eu/documents/10180/669262/Methodological+Note.pdf
[13] http://graphics.wsj.com/european-stress-tests-2014/#co-operative-central-bank-ltd
[14] http://www.federalreserve.gov/bankinforeg/dfa-stress-tests.htm


“Suitability” and the Law: Moving from scatter gun to straight shooter?

By Malavika Raghavan, IFMR Finance Foundation

The previous blog post in this series had presented some insights from our review of case law relating to financial products and services. This blog post will consider one of the questions raised at the end of the previous blog post: are the courtsand indeed the Law more generallyalready discussing what constitutes suitable advice and conduct on the part of financial institutions?

Suppose you invest in a market-linked insurance product without understanding how it works, whose fault is it if you lose your investment when the product matures?

If your insurance policy lapses during its term, but you don’t realise – should your insurer tell you?

If your bank miscalculates loan EMI payments or fails to debit loan repayments from your account, when should your bank inform you about this?

These are some of the questions that legal disputes are bringing to the courts, the answer to which often hinges on what constitutes “appropriate” or “suitable” conduct by financial service providers (FSPs).

Moving past caveat emptor

The logic of caveat emptor or “buyer beware” – that the buyer alone is responsible for checking the quality and suitability of goods before a purchase is made[1]— has traditionally been applied to the sale of financial products, just as it does to most retail goods and services. A classic example is seen in Surinder Kumar Singal vs. Aviva Life Insurance Co. India Pvt. Ltd.[2], where a complainant alleged that he was incorrectly informed of the terms of a life insurance policy. The state consumer forum held that although certain terms of an insurance policy were not mentioned in the insurance proposal form, since the complainant had received all the policy documents and a “Right to Consider” notice (allowing a cancellation of the policy within 15 days of receipt of Policy documents) the terms of the insurance were binding.

However, the “caveat emptor” approach is no longer typical or standard for disputes relating to financial products. Courts are beginning to interpret the law with more nuance, taking into account the type of customer and financial product involved in a dispute. This is the case especially where more vulnerable customers are involved. In one case filed at the Punjab State Consumer Forum, a market-linked pension policy had been sold to two illiterate customers without a clear explanation of how the product worked.[3] The illiterate policy holders were not aware of the product being market-linked, and there was no record of policy documents being despatched to them (indeed, the value of such documents to illiterate customers is debatable). The agents and the bank were held jointly and severally liable for the loss and that there had been a deficiency in service and unfair trade practice under the Consumer Protection Act.

Similarly, the High Court of Allahabad took a wider view of requisite FSP conduct when selling financial products in a case which questioned the validity of Unit Linked Insurance Plans (ULIPs) issued by a public sector bank.[4] In the case, the complainant invested Rs. 50,000 in a ULIP but on the maturity of the product was repaid only Rs. 248. He argued that the proposal form was couched in terms that did not disclose the dangers and consequences of picking the higher risk profile, and that the high “mortality charges” payable by senior citizens was not explained to him. The petitioner also argued that the ULIP was in breach of IRDA requirements on providing material information to the prospect on the insurance cover that would be in his best interest. Unilateral amendments to policy terms had also been carried out following discussions with IRDA about the policy. The insurer argued that the petitioner had been given all the policy documents and therefore could not allege a lack of knowledge of the risk profile and the minimum basic sum assured.

The Court held that Insurer (as public sector entity, considered to be the state for the purposes of the case) had a duty to act fairly and equitably, and that (i) the failure by the insurer to explain the additional mortality charges to the petitioner was in violation of IRDA guidelines (ii) the unilateral change of a term of the policy (which promised that if the value of the investment fell below Rs 10,000 the ULIP would be terminated) was wrongful and could not be done without the policyholder’s written consent (iii) this particular ULIP was an “an unconscionable contract and was thus arbitrary, illegal and void document” and it did not bind the Petitioner. The order has currently been stayed by the Supreme Court but is indicative of the courts actively reviewing the quality of advice given by financial institutions to their clients in the context of standard retail financial products.

Spelling out appropriate behaviour

In other cases, courts have spelt out what they consider to be appropriate conduct in relation to particular products. For e.g. where the insurer alleged that an insurance policy had lapsed due to a disruption in payment but went on to accept premiums, the Court held that the insurer should not have accepted further premiums and should have intimated the policyholder of the alleged lapse immediately upon its occurrence.[5]

In Karishma Raj Vs. State Bank of India[6], an educational loan of Rs. 4 lakhs had been granted by SBI to the appellant for studies in the UK. Only Rs. 2.08 lakhs were availed. Following this, despite sufficient funds and a standing order in the appellant’s account to repay the EMI, the bank stopped debiting monthly amounts from the account for nearly 2 years. It then declared the appellants as defaulters. The EMI for the loan was also wrongly calculated on the entire loan amount when only Rs. 2.08 lakhs had been drawn down. The Court held that the bank had not re-scheduled EMIs correctly; had failed to reply to the appellant-borrower’s letters in contravention of RBI Guidelines for Nationalised Banks (that responses are to be provided within 8 weeks); and that the litigation proceedings had an adverse effect on the appellant’s job and family’s health through the distress caused. Damages and costs were awarded to the appellant. 

The court has also apportioned liabilities from a lapsed insurance policy between the insurer and insured, where both contributed to the consequent loss. In Unit Trust of India and Ors. Vs. The Consumer Rights Society (Regd.) and Ors.[7], one premium payment during the course of a 15-year ULIP was not made due to the policy holder’s cheque being dishonoured. The policy terms clearly stated that failure to pay would result in withdrawal of the insurance cover, but the premiums continued to be paid and accepted for the years following the lapse. Here, the NCDRC held that there were lapses by the Insurer (for not returning the dishonoured cheque to the complainant as it should have) as well as the Insured party (for not following up a notice for a later premium which noted the previous year’s premium in arrest, or the lack of debits from his account). It was held that there could not be a revival of a lapsed insurance policy, but the failure of the Insurer in not actively informing the policy holder or returning the bounced cheque to him would require the payment of some compensation to the complainant.

Moving from a patch-work to a consistency ex-ante standard

As demonstrated in the cases noted above, courts are already making case-by-case determinations of appropriate conduct by FSPs in particular situations. In the longer term however, continuing with this patchwork approach can raise concerns about inconsistency and uncertainty for customers and FSPs.

A proper ex-ante understanding of the expected conduct of FSPs could reduce any potential inconsistencies. Indeed, several regulations and draft laws are seeking to do this.

  • The RBI’s Charter of Rights requires appropriate products to be provided to customers based on an assessment of their financial circumstances and understanding.[8] For derivative products, the RBI through its Comprehensive Guidelines on Derivatives has mandated that such products should only be offered to those “who understand the nature of the risks inherent in these transactions and further that the products being offered are consistent with users’ business, financial operations, skill & sophistication, internal policies as well as risk appetite”[9].
  • The SEBI has meanwhile introduced requirements for FSPs providing specific services to ensure suitability of conduct. Regulation 17 (Suitability) of the SEBI (Investment Advisers) Regulations 2013 requires Investment Advisers to consider various factors including the risk profile of the client and the client’s objectives before offering paid investment advice. The SEBI Master Circular for Mutual Funds contains several references to the suitability and appropriateness of products. It requires distributors of Mutual Fund products to ensure that the principle of appropriateness is followed when providing any advisory services. Where non-advisory execution services are being offered, if the distributor believes that a transaction is unsuitable for a customer they are bound to communicate this in writing to the customer.
  • The Insurance regulator, the IRDA, has introduced at least three pieces of draft regulation aimed at ensuring that only suitable products are offered to customers and that insurers act appropriately when selling insurance. The IRDA’s (Draft) Guidelines on Development and Implementation of Prospect Product Matrix by Life Insurance Companies 2012 are specifically aimed at ensuring that the sale of life insurance policies would be based on suitability or needs of the prospect (or client).[10] Its (Draft) IRDA (Standard Proposal Form for Life Insurance) Regulations, 2013 required a determination of suitability to be made in all direct sales of insurance prior to the making of a recommendation by an insurer, agent or broker.[11] Finally, the modified IRDA (Protection of Policyholders’ Interests) Regulations, 2014 (modifying the previous IRDA (Protection of Policyholders’ Interests Regulation of 2002)), in Regulation 3.1(6), provides prospects and policyholders with the right to receive suitable advice at the point of sale and during the subsistence of the insurance contract.[12]

Over-arching “suitability” requirements are also being contemplated for FSPs as part of the draft IFC which will mandate that retail advisors must obtain relevant information about the customer and then provide “suitable advice” to any retail customer.[13]

The draft IFC could therefore set a universal “suitability” benchmark for all FSPs facing retail customers, to ensure that they act appropriately when interfacing with customers. As some of the cases noted above show however, as we seek to achieve a coherent policy and regulatory direction to clarify the ex-ante standard of suitability for FSPs, courts are already moving the law in this direction through their decisions.

[1]        See definition in Oxford Dictionaries, Available here.
[2]        IV(2014)CPJ144(UT Chd.)
[3]        SBI Life Insurance Company Ltd. Vs. Amrit Kaur, III(2014)CPJ96(Punj.)
[4]        Virendra Pal Kapoor Vs.Union of India, 2014(8)ADJ602
[5]        H.B. Gowramma Vs. The Life Insurance Corporation of India Pension and Group Scheme Units Branch 1, 2007ACJ1087
[6]        MANU/DE/2557/2014
[7]        II(2015)CPJ72(NC)
[8]        RBI Charter of Customer Rights
[9]        Paragraph 8.3.1, Comprehensive Guidelines on Derivatives Modifications, RBI/2011-12/243, DBOD.No.BP.BC.  44 /21.04.157/2011-12, 2 November 2011.
[10]       IRDA Exposure Draft: Re: Guidelines on Development and Implementation of Prospect Product Matrix by Life Insurance Companies, Ref: 16/CAD/PPI/PPM/11-12, Available here. (last visited 18 September 2015) (IRDA Prospect Product Matrix Guidelines – Draft).
[11]       IRDA (Standard Proposal Form for Life Insurance) Regulations, 2013, Notification F.No..IRDA/REG./10/68/2013 DATED 16-2-2013, Available here. (last visited 18 September 2015).
[12]       See Exposure Draft: Modified IRDA (Protection of Policyholders’ Interests) Regulations, 2014, Ref: IRDA/Consumer Affairs/2013-14/10, Available here. (last visited 18 September 2015).
[13]       section 120(1) of the draft Indian Financial Code, Available here. (last visited 29 September 2015).


Video: A Robust Architecture for Financial Inclusion in India – Ms. Arundhati Bhattacharya

In the previous post we had covered the keynote address delivered by Mr. Nandan Nilekani at the IFMR Holdings Event, 2015. In this post we share the keynote address that was delivered at the event by Ms. Arundhati Bhattacharya, Chairperson, State Bank of India, on the topic of “A Robust Architecture for Financial Inclusion in India”.

Tracing the roots of growth to a period when India liberalised its economy in the early 90’s, she talked about how financial inclusion is both enormously challenging and at the same time presents itself as a huge opportunity. She described a robust architecture of financial inclusion as one that directly implies a robust banking system, which in addition to having banks at the centre of the wheel also will have differentiated banks, Business Correspondents among others. In addition she stressed that this architecture of financial inclusion comprises of inter-disciplinary trends that shape the economy and also one in which technology and literacy will play a critical role.

In her talk she also mentioned how the e-commerce boom that the country is witnessing would play a crucial role when it comes to SME inclusion. The prime reason being that such platforms give financial institutions better understanding of the SME business that they are financing.

Watch her keynote address in the Video below:


Video: Disruption in Financial Services – Mr. Nandan Nilekani

To mark the recent partnership with Accion, LeapFrog & Lok Capital to scale up our financial inclusion platform, IFMR Holdings earlier this month hosted prominent leaders from the financial services industry, partners and key investors at an event held in Mumbai.

The event brought together an array of key players that operate in the financial inclusion landscape and provided a vibrant setting to engage and discuss issues that are shaping the industry especially in the backdrop of innovation in the technology and regulatory architecture.

The event featured keynote speeches by Mr. Nandan Nilekani, Former chairman, UIDAI and Ms. Arundhati Bhattacharya, Chairperson, State Bank of India. Also making special remarks were Dr. Nachiket Mor, Mr. Michael Schlein, Global CEO, Accion, & Michael Fernandes, Partner, LeapFrog Investments.

Disruption in Financial Services – Nandan Nilekani

In the first keynote that was delivered by Mr. Nandan Nilekani, he described the current environment as that of fundamental disruption in the financial services industry. The proposition with which he set the tone of the session was “Are we at a WhatsApp moment in finance?

Making a compelling case of the larger shift that the economy is witnessing towards a mobile-first cashless economy, he described how mobile phones would be at the center of the re-imagined banking landscape in the years to come. Also the presence of relevant interoperable platforms would enable in the future, paperless, cashless and presence-less service delivery.

In addition, he outlined how as a nation we will go from being data poor to data rich in 5 years, and how relevant data streams and authentication in combination with machine learning & algorithms will change the face of financial services.

Following his keynote, Mr. Nilekani had a Q&A discussion with Bindu Ananth on the evolving financial service provider architecture in light of the recent disruptive changes expected to be brought about by, among others, the newly licensed payments banks.

Watch Mr. Nilekani’s Keynote and the Q&A session in the video below:

In the next post we will feature the keynote address of Ms. Arundhati Bhattacharya at the event.