The Jugaad Team was discussing this news article from The Hindu today, where it was said,
A uniform financial product for rural customers across the nation will
not work. "Local culture has to be taken into account," said Ms Usha
Thorat, Deputy Governor, RBI. She added banking in rural areas should
deal with cash flows rather than offering a bouquet of loan products.
As rural banking in India becomes the topic du jour, and also one of our pet project areas for research and analysis, niblettes followed up this article with some insightful questions that I’ll attempt to answer. I look forward to your input in the comments section, lets get this conversation started.
Of course mass volume markets are only profitable with one-size fits all solutions–and with razor thin margins providing services to the poor there is even less room to customize to local flavours (unless doing so comes at no marginal cost).
So, is it true that local culture must be taken into account? If so, how much does it cost to take into account local culture? What does it mean to "take into account"? And does doing this make banking the unbanked cost prohibitive?
Imho, niblettes, I believe you may have a point about the extent of localization that could economically be viable being linked proportionately to marginal cost of manufacturing that product. This only highlights the need for uber efficient supply chain metrics – two cost leaders that come to mind are Walmart and Dell, both of whom are thoughtleaders in this field as well.
As to your second question, one could say that an analogy of the answer would be the break-even point in a cost benefit analysis of localizing design – one I think that Dell might find interesting to answer if they do indeed wish to restructure to enter new and emerging markets in today’s world.
But bringing it back to banking, hypothetically, is there a cost addition that adds greater value than its marginal cost differential implies such as offering a mobile solution with localization of the interface to the regional written language at the very least. Or taking it one step further into user research, rural india desperately needs to be studied from the ethnographic point of view, what are the valid unmet needs of the rural user or the bottom of the pyramid user with respect to services and applications currently available on the mobile platform.
Yes, I realize I’m beating some of my favourite drums here but I would like to hear other opinions and answers to nibby’s question posed above.