Panel Presentation: Perspectives on Technology and Financial Inclusion The Bottom of the Pyramid in Practice Institute for Technology, Money and Financial Inclusion University of California, Irvine June 2, 2009 Vijay Gurbaxani Director, CRITO The Paul Merage School of Business University of California, Irvine

The Bottom of the Pyramid is Personal (and Real)  Growing up in Mumbai  Mangoes and chocolate  The Bottom of the Pyramid as producers  Ulhasnagar Sindhi Association  Made by USA

Financial Inclusion is Critical  Leela’s story  Amrit’s curse  Hundis and Hawala  Financial inclusion for the middle class is relatively recent  The challenges of financial inclusion  My visit to the Bank of India

An IT Story: Financial Information Network and Operations (FINO)  “Provides end-to-end technology and operational solutions to financial institutions, revolutionizing the way their services reach base of pyramid citizens.”  Investors include:  IFC (World Bank), Intel Capital  Public sector: UBI, Corporation Bank, Indian Bank, LIC  Private sector; ICICI bank, ICICI Lombard, IFMR Trust  Customers: 11 banks, 20 MFI, 3 insurance, 4 government  Reach: locations, transaction points  500 mm “unbanked” population in India; FINO reaches 5 mm

Inclusion encompasses many services

FINO: Time to Customer Base  1st million 1 year  2nd million 180 days  3rd million 69 days  4th million 50 days  5th million 37 days

The New Economics of IT Leads to the New Economics of Organization  Economies in Production  Scale  Scope  Specialization  Economies in Coordination  Internal Coordination  External Coordination  Informational Economies of Scale  Network Effects

The New Economics Leads to New Structures  Successful organizations are efficient information processing structures, and evolve to reflect new business and economic conditions  Information technologies are now not only a set of processing technologies but also include communication and coordination technologies  The improving price-performance of information technologies has dramatically changed the costs of information processing, which in turn affect the economics of organization.  The net result is that optimal organization structure should evolve in response to the new economics of organization affording dramatic improvements in efficiency and effectiveness

Business Model Innovation: New Pathways To Value Creation  Some organizations have diversified into related products or services  Some have grown horizontally into different geographies  Some have developed centers of excellence that service multiple divisions in the enterprise  Some have developed networked partnerships with suppliers and complementors, reducing their own scale and scope  Some have partnered in consortia to facilitate trade within their industry

50 Years of IT 1960s 1970s1980s1990s2000s Worldwide IT Spending Source : IDC Directions 2004 Conference $ Billions

IT-Led Innovation Must be a Big Piece of the Solution  Advances in information technologies are creating ever changing management capabilities  Information technologies enable/necessitate changes in organization structure and business models  Organizations will succeed in a networked economy through the rapid adoption of innovative IT applications and new business models