Just assume a place where you get all these eatables at one place? I know I will be happy to enter such a place but when it comes to Chinese, I would go to Mainland China Hotel. But it may not be the same with others.
So, why am I asking this query in India development blog? There seems to be an excitement among micro-finance institutions in providing various financial services. They are really excited to provide not just loans, but savings, mutual funds, insurance, remittances, pension, et,al.,
Is it something to be excited about really? We can find some answers from the mainstream financial institutions. Let's take the case of insurance. The results are mixed. Bancassurance forms only 15% of the total sales in India, but around 85% in Japan. But, do we consider the banks as serious providers of insurance? Are they our first choice to go for while inquiring about insurance? Is there more mis-selling of insurance by banks? I am not sure of these things.
So, does it mean that banks should do only savings and lending. Not sure. Coming back to the topic on MFIs, it is a good thing that MFIs have started to look beyond provide just credit. But, answers to whether it is a healthy trend or whether they will do a good job of it is something that will have to wait much longer and MFIs could get excited about these a bit later.
Friday 27 June 2008
IceCream, Dosa, Fried Rice, Pizza, Pasta, Tandoori, Tortilla and 7 more....
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4 comments:
Some updates on bancassurance:
http://www.thehindubusinessline.com/2008/06/30/stories/2008063051181800.htm
I guess the question is what does one really mean by finance and financial services? At their core they are very similar but just have been packaged very differently -- the analogy I would use would be that of various types of pasta -- basic difference is only in the shape. If one sells the different financial services as stand-alone offerrings to randomly chosen clients and as a waiter would (reading off a menu without understanding the dish and how it is made),there is clearly a danger of mechanical selling even with one product. But if one tries to do this (and it is my belief that it can be done relatively easily) as a chef would, it may even be easier to sell a basket than it would be to sell one product by itself.
There is of'course the entire argument of "If the MFI does not do it, who will?". This is a very important argument also that requires careful thought -- in the argument you make, you assume the urban model will easily transplant to the rural context. It may not be viable to do this transplant. The only argument then would be to not offer these products at all even to those that need them. Is that what you had in mind?
Surely, there are financial products that are needed by people in the rural India other than just credit alone and THESE NEED TO BE OFFERED. Maybe, the question of 'if MFIs don't who will' is also a pertinent question.
But, we need to handle this query a bit carefully. Let us look back at how MFIs have handled giving the 'different-sized' pastas?
One service that has been offered by the MFIs apart from credit is that of Insurance. Even after around 10 years of experience in selling insurance, the MFIs have not been able to make much of a difference in terms of awareness of insurance among the rural people. Also, the way they have gone about in linking insurance to credit, it has somewhat resulted in new confusions in understanding of insurance.I hope there is not much of a disagreement here.
The only issue is probably due to the fact that MFIs consider credit as their CORE product and other products as subsidiary products. The operations and technology for other products are generally aligned to the misunderstandings of the credit product. For e.g. there is a FINO in the industry that can handle credit but none for insurance so far.
I totally agree to the fact that urban model cannot be translated to the rural context, but should be just seen as a case in point.
There needs to much more care while offering products other than credit and there is also a strong need to have HR, Training,operations and technology more aligned to doing this service delivery. As you have rightly said, there should be a enough efforts to make the waiter understand the dish and how it is made be it a 7Rs. filter coffee or a 120Rs. sizzling hot chocolate brownies.
The analogy of ice cream, dosa, pizza...and financial services may not be really suitable. A more likely analogy seems to be the different components of an indian meal that make for a balanced diet. And irrespective of whether it is a single or multiple agencies that offer these products, it is important that the synergies on the ground be worked out clearly.
It is sad that some MFIs have been bad advertisements for the insurance industry by failing either to educate their clients regarding the product or by not processing claims, in the process turning people further off a product as important as insurance.
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