NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, July 7, 2014

Mobile phones are a key way to expand financial inclusion to rural areas across emerging markets, as M-Pesa has demonstrated in Kenya. In India, Adarsh Credit Co-operative Society reaches one million members through 800 branches and more than 100,000 financial advisors who travel through villages taking deposits or disbursing money by linking to the bank through their mobile phones.

“The advisors are like walking ATMs where customers can deposit cash or get cash,” said Philips Eapen, an SAP business manager in Mumbai. “They do online and electronic banking and work primarily in rural areas, among the lowest strata of the population who don’t have access to financial institutions.” The amounts customers lend or deposit can be as low as $10 to $50 in a month, or $100 in a year.

It’s been more than a decade since the late C.K. Prahalad alerted the business world to the opportunity in thinking about the world’s poor as a viable market rather than simply a target for charitable NGOs. In financial services, he looked at how ICICI Bank, one of India’s largest, and an Adarsh banking partner, was reaching out to poor people, particularly in southern India, where he was from. His book, “The Fortune at the Bottom of the Pyramid,” encouraged multi-national corporations to improve lives and make money by marketing to the poor who were so often neglected in corporate planning.

Prahalad would no doubt recognize similar thinking at Adarsh, which started in 1999 and has become the country’s largest credit cooperative society. It builds on the fact that 90 percent of Indians have a mobile phone but less than 50 percent have a banking account, said Himanshu Shah, the chief technology officer at Adarsh.