By Nikhil John, IFMR Holdings
In our endeavor to achieve our mission of ensuring that every individual and every enterprise has complete access to financial services, we realize the crucial role that innovative ideas can play in this journey. These innovations, either the big-impact ones or the incremental steps forward, play a critical in aligning our efforts to serve our customer better and are a constant source of inspiration that nudges us to reflect and adapt to future challenges.
To systematically channelize these ideas from our colleagues across the board, right from our KGFS branches to our corporate offices, we had launched “I-innovate”, an organization wide-effort aimed at inspiring and expediting the spirit of constant innovation by facilitating the generation of the next wave of innovative ideas. Each idea received through the platform is funneled through a screening process and the selected ones are allocated resources, incubated and taken to scale.
To qualify the idea must achieve two outcomes:
- Solve a fundamental client problem – where the client can be a household, financial service provider, regulator, or internal clients like IFMR employees.
- Accelerate the mission of IFMR Trust.
Since opening the call for proposals in the first cycle the submissions from KGFSes covered a wide spectrum of areas, pertaining to customer engagement, product design, infrastructure and system design, human resources management and administrative processes. The ideas ranged from and included loan management system improvements, installing Everywhere Teller Machines (ETMs), combining equipment like biometric embedded thermal printers to save costs, a rewards and recognition program for employees, inter-branch idea exchange for best practices, business intelligence improvements, and product improvements in credit and non-credit products.
The submissions from Chennai office ranged from a rewards program for KGFS customers, incentivizing savings up behaviour, digitizing payments to gain insights on migration from cash to cashless solutions, creating a repository of the occurrence of natural disasters and its effects at originators, a customer self-service IVR system, and a social game designed to immerse the user to decisions faced by the Indian low-income household.
After careful deliberations we have shortlisted the below ideas from the first cycle that have made it to the final stage. These ideas and the innovators behind them are developing the ideas further and are in the process of structuring relevant pilots where necessary. With successful pilots and further development appetite the following ideas will be implemented in the current cycle:
Informing customer consent at KGFSes – Rachit Khaitan
Objective: A more responsible financial services provision at KGFS – through a point of sale engagement with the client– facilitating better customer outcomes & documenting the challenges and lessons for advocacy towards a stronger customer protection regime in India.
Description: There are often instances when customers of retail financial products are inadequately informed and caught by surprise about the financial contracts they enter into, leading to unplanned and adverse financial outcomes such as over-indebtedness and delinquency. While there is an important role for norms on transparency and product disclosure in bridging the information gap between the provider and the customer, it is not clear whether the point of sale processes of Indian retail financial services providers today take into account a customer’s truly informed consent. This innovation seeks to design and pilot a small but key process at KGFS to better ensure the informed nature of customer consent at the point of sale of a particular financial product (which could be determined based on mutual stakeholder agreement), based on a customer’s demonstrated understanding of its key aspects. The process entails administering a short verbal quiz to customers, at the point of sale, on the key aspects of a financial services product such as specific features, customer obligations, and potential risks and benefits in a manner that is understandable to the customer, to form the basis of more meaningful informed consent.
FAQ and answer database platform for originators and investors – Arjun Subramanian
Objective: Web-platform/Mobile App that serves as an answer database for the key questions asked by originators, investors, partners and management to serve as a best practices sharing tool for IFMR Capital.
Description: The idea is to have an interactive web platform that would answer the top questions/best practices from originators, investors, senior management and get answers from stakeholders in the context of specific clients. As an organization that has multiple access points with clients and teams that constantly change in terms of managing relationships this innovation will make the organization’s journey more inclusive.
KGFS rewards card – Deepa Anand
Objective: Rewards card to enhance customer experience and enable higher customer retention, stronger customer referrals, incentivize uptake of particular products, encourage timely repayment and other good financial behavior.
Description: The KGFS reward program is intended to be offered to all KGFS customers. Every time a customer avails a KGFS product or repays on time for the life of a loan, or exhibits any other financial behavior that is to be encouraged, the customer earns reward points that accumulate on her rewards card. The points can then be redeemed at the end of the year or at product closure date/renewal date (for example at loan closure date or insurance renewal date) in exchange for discounts on the next product availed (for example discounts on the EMI or processing fees of the next loan availed, or discounts on remittance charges etc.), or free mobile recharges.
Inculcating saving-up behavior – Aditi Kumar
Objective: To deploy a program at the KGFSes designed to inculcate saving-up behaviour.
Description: Saving up requires discipline and gives slow gratification. The idea is to incentivize saving-up behavior through a program at the KGFSes that could be designed in either of the following ways:
- Mobility of services – Local Agent model for savings transactions, which could include:
- Door step collection of savings amounts
- Transactions through smart cards and point of transaction machines with local agents (present in the village)
- Piggy bank method – Give the customer a KGFS piggy bank in which she deposits what she can and get it at the end of the month to the branch to unlock and get her savings – probably do an activity around this in a group and reward the customer who has the highest savings balance – this is purely to inculcate savings behavior. Gradually instead of the piggy bank, one can move the customer to a savings bank account under a mobility model.
- Using a JLG group structure to encourage savings in different ways (individually or as a group) – Could involve savings as a group and one of the people in the group gets access periodically and cyclically. More like a reverse SHG bank linkage model. This would also involve looking at whether we currently tap into the SHG network for lending and if we can mobilize their savings.
- Via a micro-saving platform delivered through an investment/savings planning tool that determines how much each customer is to save periodically and then synchronize it with their repayment schedules.
Development Impact Bond (DIB) to ensure suitability of MFI products – Nikhil John
Objective: A product that affords MFIs a source of cheaper debt to incentivize them to ensure their employees are offering suitable financial products to customers – an outcome social impact investors and grant funders are willing to fund.
Description: Through this idea the intent is to launch a Development Impact Bond in which IFMR Capital invests in the equity tranche with DFIs/ financial institutions, interested in suitability, investing in the mezzanine tranche. The objective is to fund the outcome where MFI employees are tested to ensure products they offer are suitable, with financial investors participating in senior tranches, getting an additional return if the outcome of suitability is achieved.
Through I-innovate we aspire to engender new grassroots thinking and believe that over a period of time it will pave the way for systematic innovation that propels us further in our path towards our mission.