This post is written by Debbie Watkins, SBI Resident Adviser for the bKash project in Bangladesh.
You may or may not have read the underground classic “The Goal” – a novel by Eli Goldratt that manages to make Just-in-Time manufacturing both understandable and entertaining. In the book, the main character, Alex Rogo, is a production manager whose plant is facing closure. A chance meeting with a previous associate, Jonah, and their subsequent long-distance discussions, enables Alex to identify the root of the problems and thus turn the plant’s fortunes around.
Jonah provides guidance not by giving answers, but by asking Alex questions – and by working through the answers to these questions with his colleagues, he is able to gain a deep understanding of the way in which demand-driven manufacturing works, and where his plant is failing. One of the first questions that Jonah asks him is, “What the goal of your company?” After a few false starts, Alex finally realises that the goal of his business is not to make things, or even to sell things – but to make (more) money.
The same is true of any business – even social enterprises, created to benefit society, must make a profit in order to realise their aims. Any activity, purchase or decision that a business undertakes should be consciously focussed (either directly or indirectly) on helping it achieve The Goal.
So what does The Goal have to do with Alternative Delivery Channels (ADC)?
The deployment of ADC should theoretically be a no brainer for anyone wishing to offer financial services to a large volume of people while simultaneously achieving their Goal. ADC, being lower in cost than setting up thousands of physical outlets, and enabling outreach to possibly millions of customers, have the potential to realise returns far higher than the initial investment in their creation.
Note the use of the words “should theoretically” – because, as has been seen in countless pilots and implementations around the world, deploying ADC has often been extremely expensive, very time consuming, and resulted in no discernible benefit to the financial institution or mobile network operator concerned. Significant expense, minimal incremental revenue – The Goal in reverse.
Many implementations have not only failed to show signs of recovering the costs involved in getting them running – they have also failed to be taken up by the market which they were intended to serve. Why has this happened? And indeed, why has it continued to happen? Can this trend be reversed – so that deploying Alternative Delivery Channels for financial services show ongoing returns that exceed the cost of their implementation, and simultaneously offer measurable benefits for the low income clients who they are intended to serve?
During a series of posts over the coming months I’ll be raising questions, encouraging discussion and hopefully providing some insight into real-world considerations that make the difference between success and failure – those of relevant and workable technology solutions; business models that make sense to both the financial institution and the consumer; implementation strategies that reflect the culture and geography of the country concerned. If you are a financial institution or mobile money business that’s looking to deploy ADC offerings which achieve these objectives, then stay tuned!