Role Banks can Play - India at a Turning Point
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India at a Turning Point Role Banks can Play Lonavla 02 nd February, 2015 Arun Maira
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Transcript of Role Banks can Play - India at a Turning Point
India at a Turning Point
Role Banks can Play
Lonavla
02nd February, 2015
Arun Maira
FORCES SHAPING OUR FUTURES
1
Ideas and Institutions
of Government
Ideas and Institutions
of Business
Technology
THE WORLD
INDIA
FINANCIAL
SYSTEMS
THE ARCHITECTURE OF INSTITUTIONS Institutions are humanity's vehicles to progress
2
FORCES SHAPING OUR FUTURES
3
Ideas and Institutions
of Government
Ideas and Institutions
of Business
Technology
THE WORLD
INDIA
FINANCIAL
SYSTEMS
FORCES SHAPING THE WORLD
4
THE WORLD
IN
2040 ?
DEMOCRACY
HUMAN
RIGHTS
ENVIRONMENTAL
DEPLETION
CLIMATE CHANGE
ACCESS TO
INFORMATION
CAPITALISM
FREE
MARKETS
GROWTH NOT INCLUSIVE
5
THE WORLD
IN
2040 ?
DEMOCRACY
HUMAN
RIGHTS
Global wealth inequality: top 1%
own 41%; top 10% own 86%;
bottom half own just 1%*
$1 bn house = 1 Indian
No closed toilet > 626 mn Indians &
No safe drinking water > 75% Indians**
*Source: Credit Suisse Global Wealth Databook (2013)
** Data from UNICEF
ENVIRONMENTAL
DEPLETION
CLIMATE CHANGE
ACCESS TO
INFORMATION
CAPITALISM
FREE
MARKETS
DEMAND FOR FAIRNESS
6
ENVIRONMENTAL
DEPLETION
CLIMATE CHANGE
THE WORLD
IN
2040 ?
DEMOCRACY
HUMAN
RIGHTS
Since 1974, more than 90
countries have made
transitions to democracy*
Universal Declaration of
Human Rights (1949),
Millennium Development
Goals (2000)
ACCESS TO
INFORMATION
CAPITALISM
FREE
MARKETS
*Source: Foreign Affairs Magazine
PEOPLE ARE NOT IN THE DARK
7
THE WORLD
IN
2040 ?
DEMOCRACY
HUMAN
RIGHTS
ENVIRONMENTAL
DEPLETION
CLIMATE CHANGE
ACCESS TO
INFORMATION
CAPITALISM
FREE
MARKETS
Number of mobile phones in India:
2000 < 5 m
2014 > 930 m
Global hits on Google:
2000 Nil
2013 > 2 Trillion
EXCEEDING THE FOUNDATION’S CAPACITY
8
THE WORLD
IN
2040 ?
DEMOCRACY
HUMAN
RIGHTS
ENVIRONMENTAL
DEPLETION
CLIMATE CHANGE
ACCESS TO
INFORMATION
CAPITALISM
FREE
MARKETS
If everyone lived like an
American, which is the
aspirational standard for
development, we would need
more than 4 earths to survive*
*Source: Global Footprint Network
TWO VOICES SPEAKING FROM THE STORM
9
1. Is this Fair ?
1. Is this Sustainable ?
FORCES SHAPING OUR FUTURES
10
Ideas and Institutions
of Government
Ideas and Institutions
of Business
Technology
THE WORLD
INDIA
FINANCIAL
SYSTEMS
WHICH WAY INDIA?
Models of Change and Leadership
Engaging a diverse nation
democratically in the quest for
sustained security and prosperity
11
Inclusive
growth and
development
Isolation from
the world
Exclusive
growth and
development
BOLLY WORLD
Integration with
the world
WOLVES PROWLING PEACOCKS STRUTTING
12
BUFFALOES WALLOWING
Inclusive
growth and
development
Isolation from
the world
Exclusive
growth and
development
ATAKTA BHARAT
Integration with the
world
13
Inclusive
growth and
development
Isolation
for the
world
Exclusive
growth and
development
PAHALE INDIA
Integration
with the
world
FIREFLIES
ARISING
14
THE SYSTEM MODEL AND LEVERAGE POINTS
Impatience
and Protest
Governance
Models
Availability of
Earth’s Resources
Political
Logjam
Business
Models
Science and
Innovation
Lack of Trust in
Institutions
Outcome: Pace and
Pattern of Inclusion
Outcome: State of
Nation’s Finances
External
Forces
Outcome:
GDP Growth 15
WHICH SCENARIO WILL EMERGE?
16
Institutional
Reforms
Implementation
Environment
Sustainability
Public
Confidence
Investments
Jobs Consumption
Growth of
Enterprises
GDP Growth
Inclusion
Poverty
Reduction Global
Economy
International
Commodity
Prices
Political
situation in our
neighborhood
SYSTEMS REFORMS TO OUTCOMES
Total Factor
Productivity
17
SYSTEMS REFORMS
MORE HANDOUTS / SUBSIDIES
OR
FASTER GROWTH OF LIVELIHOODS
A: THE APPROACH WE TAKE TO INCLUSION
STRONG, CENTRALIZED GOVERNANCE
OR
LOCALIZED GOVERNANCE
B: THE APPROACH WE TAKE TO GOVERNANCE
LARGE, CENTRALLY-PLANNED PROJECTS
OR
COMMUNITY-BASED SOLUTIONS
C: THE APPROACH WE TAKE TO SUSTAINABILITY
✔
✔
✔
Improved
Implementation:
Productivity of
Assets, Programs
and Projects
18
FORCES SHAPING OUR FUTURES
19
Ideas and Institutions
of Government
Ideas and Institutions
of Business
Technology
THE WORLD
INDIA
FINANCIAL
SYSTEMS
FORCES SHAPING THE “BANKING” INDUSTRY
20
• Social and political pressures for “inclusion” of the ‘small’ : poor
citizens ; small enterprises
• Digitization and communication technologies
obreak – down of ‘brick – and – mortar’ business models
• Networked platforms for coordination ; rather than pyramidal
hierarchies
• Deconstruction of conventional banking ; entry of new players
from outside ‘banking’ into banking
oRetail chains : mobile – phone companies ; and ??
• Changes in regulatory structures
CHALLENGES FOR INCUMBENT BANKERS
21
• The ‘last mile’ for inclusion
– cost of reaching
– ‘asset light’ borrowers
– ‘informality’ : non-conformity with ‘formal’ structures
• Dealing with ‘systems’ and ‘communities’ ; not individuals in isolation
• Pressure to reduce risks, therefore need for conservatism rather
than risky innovation
• Internal written and ‘unwritten’ rules within banks (and performance
management systems)
• Creating partnerships with others : community organizations ; NGOs,
other formal businesses (retailers, communications’ companies, etc.)
– Sharing of responsibilities, risks and rewards
The Magnet to align Stakeholders:
A shared aspiration
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The architecture of a networked organization is based on 4 fundamental principles from living systems
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