The Master Card Foundation recently organised a Symposium on Financial Inclusion that explored the theme of “Clients at the Center” by focusing on the “Client Journey”. The event brought together key industry professionals ranging from practitioners, influencers and thinkers who are actively involved in the space. You can read the proceeds from the Symposium here.
Bindu Ananth participated in one of the panel discussions that was organised to debate on the Best Way to Interact with Clients: High-Touch or Low-Touch. Kim Wilson of Tufts University moderated the debate on the following proposition: The future of financial services for the poor will rest primarily in highly automated, low-touch models for reaching clients.
Arguing for the high-touch approach, watch Bindu participate in the panel discussion with other participants in the below video:
4 Responses
Taking the benefit of the extended holiday I was able to finally watch the entire video. It was an amazing debate and I must give great credit to our valiant warrior Bindu for winning the oscar. She made her points in her usual careful, sharp, and pointed manner and I am sure that the insights that she shared had a lot to do with the massive swing in the audience voting patterns. Congratulations.
As I watched the debate I reflected to myself what I felt the distant future would look like — 100 years later, when poverty has been overcome and access to finance is now indeed universal as is access to very high-end smart phones and big-brother knows and sees all. Would we still need high-touch models or would we finally be able to do it all on our smart-phones? I guess it depends on which “camp” you are in. The low-touch camp would argue that our digital footprint would give off enough “pheromones” so that our “mate” (by which I mean the best suit of financial products we need) would be able to find us unerringly and we would all live happily ever after. Also, our general level of education would be such that we would actually be able to completely understand the full product suite being sold to us by the mobile phone, without any assistance.
I am clearly not in that camp. I see a world today in which even bankers are struggling to understand the basic notion of compound interest, perhaps more than half the population still does not understand the over 250 year old idea of gravity, leave alone the somewhat less old concepts of Volatility and Heisenberg Uncertainty, and the much more “modern” (just a 100 years old) Boltzmann’s Constant, Entropy, and the Second Law of Thermodynamics which is currently being linked to the evolution of life itself. I am much more in the Shiller and Merton camps (if indeed there are such camps) and believe that in order to make our lives simple a lot of complexity will need to be absorbed by financial products which will need to continuously evolve at a faster and faster pace. And, that trained individuals, who are prepared to be legally liable for the sale of “suitable” products, will be need to both fully understand and appreciate my dreams and fears and the complexities of my existence and “feed” that understanding to the “machines” that can then can then throw out “suitable” products. These individuals will then need to help me understand how these products make sense for my life and persuade me to buy them. Anybody that has fallen in love with a Sonos Playbar or trusts their Oncologist to know what they are doing, will know what I mean.
This is exactly the situation that obtains even currently when companies buy financial products – it is all designer stuff based on a deep understanding of what is going on and despite all the information that is out there for companies, they are not giving off enough “pheromones” for “bots” to do this understanding and design – financial institutions spend a great deal of money building the expertise needed to understand what companies need and how those needs can be met – at the end this is the expertise that they get paid for and are legally liable for the quality of advice that they provide.
The issue about the viability of the “high touch” environment is once again all about the view one takes of the customer. There is the “band-aid” view and then there is the “brain surgery” view. There is a “I help you manage your short-term liquidity” view versus “I participate intimately in the total risk management of your household’s economic situation and I help you realise your dreams using tools and techniques that you did know even existed – trust me I am an expert – sue me if I mislead you” view. The “band-aid” view skims the life of the client and may do some good, could also could do some harm (if the wound does not dry out and if the band-aid is not changed often enough), but in either case is unlikely to transform lives. Low touch, even with mass customisation, in my view, is unlikely to be able to go beyond “band-aids” and may even not be permitted to do so, particularly as customer protection regulation starts to bite because it is possible that while a regular savings account is universally “suitable” a recurring deposit account could result in a girl being taken out of school because the household simply did not have the stability of income to support such a commitment savings schedule and therefore would not be “suitable”. Clearly, offering band-aids with high-touch models would not be viable or would be too expensive (as standardized JLG loans have turned out to be in India) but if done well, as KGFS seeks to do, they could actually turn out to be much less expensive because they go deeper and wider into the life of a household.
The debate could easily be reframed as – The future of health services for the poor will rest primarily in highly automated, low-touch models for reaching patients !
Great video! Thanks for the share…I thought that the 7% per month interest rate charged by the African Bank proves the point of the opposition (i.e. high touch is key). It demonstrates that while they have “scaled” (in their view), they can’t price the risk…because they don’t know the customer! They will be replaced as new entrants cherry pick their best accounts with more competitive rates!