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A Great Leap Forward to Transform Fintech: Data Empowerment

India is one of the first nations in the world to kick off Open APIs for consented financial data sharing. And nobody’s heard about it! 

Dear Kickass Financial Product Managers and (current & future) Fintech Entrepreneurs,

Amidst the usual flurry of sensational headlines, you may have missed a quiet announcement a few weeks ago that marked a monumental shift: RBI became the first central bank globally to publish a common technology framework – including detailed APIs – for consent driven data sharing across the entire financial sector (banking, insurance, securities, and investment).

This is a gamechanger for the industry.

Out of context, yet another circular with a good deal of jargon is an easy thing to gloss over. But it turns out this effort is actually a global first: although the UK, EU, Bank of International Settlements (BIS), Canada, and others have begun thoughtful public conversations around Open Banking (e.g. through that famous BIS report making the case, initiatives like PSD2, conferences, and various committees), India is one of the first nations in the world to actually make it a market reality by publishing detailed technical API standards — standards that are quickly being adopted by major banks and others across the financial sector in the country without a mandatory requirement from RBI. It’s not just the supposedly cutting edge banks of Switzerland, the UK, or the US driving fintech innovation: the top leadership of our very own SBI, ICICI, IDFC First, Bajaj Finserv, Kotak, Axis, and other household names have recognised that this is the way forward for the industry, and are breaking through new global frontiers by actually operationalising the powerful interoperable technology framework. Not only are they adopting the APIs, some are also starting to think through the new lending and advisory use cases and products made possible by the infrastructure. We think many new fintech startups should also be considering doing the same.

Why do the APIs Matter?

The world is focusing heavily on data protection and privacy – and rightly so. Securing data with appropriate access controls and preventing unauthorised third-party sharing is critical to protecting individual privacy. But to a typical MSME, portability and control of their data is just as critical as data security to empower them with access to a stream of new and tailored financial products and services. For instance, if an MSME owner could share trusted proof of their business’ regular historic GST payments or receivables invoices digitally with ease, a bank could now offer regular small ticket working capital loans based on demonstrated ability to repay (known as Flow-based lending) rather than just loans backed on collateral. Data sharing can become a tool for individual empowerment and prosperity by enabling many such innovative new solutions.

Operationalising a seamless and secure means to share data across different types of financial institutions – banks, NBFCs, mutual funds, insurance companies, or brokers – requires a common technology framework for data sharing. The published APIs create interoperable public infrastructure (a standard ‘rails’) to be used for consented data sharing across all types of financial institutions. This means that once a bank plugs into the network as an information provider, entities with new use cases can plug in as users of that data without individually integrating with each bank. Naturally, the system is designed such that data sharing occurs only with the data owner’s consent — to ensure that data is used primarily to empower the individual or small business. The MeiTY Consent Framework provides a machine-readable standard for obtaining consent to share data. This consent standard is based on an open standard, revocable, granular (referring to a specific set of data), auditable, and secure. Programmable consent of this form is the natural next innovation of the long terms and conditions legalese that apps typically rely on. RBI has also announced a new type of NBFC – the Account Aggregator – to serve as a consent dashboard for users, and seven new AAs already have in principle licenses. 

The Data Empowerment and Protection Architecture (DEPA) – in one image

In many other nations, market players have either not been able to come together to agree on a common technical standard for APIs, or have not been able to kick off its adoption across multiple competing banks at scale and speed. In countries like the US, data sharing was enabled only through proprietary rails – private companies took the initiative to design their own infrastructure for data sharing which end up restricting players like yourselves from innovating to design new products and services which could benefit people on top of the infra. 

What other kinds of innovative products and services could you build? 

Think of the impact that access to the Google Maps APIs allowed: without them, we would never have seen startups like Uber or Airbnb come to life. Building these consented data sharing APIs as a public good allows an explosion of fintech innovation, in areas such as:

  • New types of tailored flow-based lending products that provide regular, sachet sized loans to different target groups based on GST or other invoices (as described above). 
  • New personal financial management apps which could help consumers make decisions on different financial institutions and products (savings, credit, insurance, etc.) based on historic data and future projections. This could also branch out into improved wealth management or Robo advisory. 
  • Applications that allow individuals to share evidence of financial status (for instance, for a credit card or visa application) without sharing a complete detailed bank statement history of every transaction

…and many others, such as that germ of an idea that’s possibly started taking shape in your mind as you were reading.

In summary

This ecosystem is where UPI was in mid-2016: with firm, interdepartmental, and long term regulatory backing, and at the cusp of operationally taking off. UPI taught us that those who make a bet on the future, build and test early (PhonePe and Google were both at the first ever UPI hackathon!), and are agile enough to thrive in an evolving landscape end up reaping significant rewards. And just as with UPI, our financial sector regulators are to be lauded for thinking proactively and years ahead by building the right public infrastructure for data sharing. RBI’s planning for this began back in 2015! They have now passed the innovation baton onto you — and we, for one, have ambitious expectations.

With warmest regards,

iSPIRT Foundation

I’m Pinging A Few Whatsapp Groups Now, What Else Should I Send Them To Read? 

For any further questions or queries, please reach out to [email protected] and [email protected]

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5 Questions You Should Ask Before Launching A Product Startup

The number of startups launching every month is growing at a fast pace. Some entrepreneurs opt for a service based model, while others like me go the product model way. Although, there is no clear winner in terms of which model is the best, right or a deal breaker, there are many factors that contribute to the success or failure of startups.

However, when I launched my startup Sainergie, an IT products and services provider, I realized that running a product startup is fundamentally different from a service startup. Apart from a few other steps, you need to take care of idea generation, design, prototype, development, testing and iterations, before you actually launch it. A sizeable amount of resources such as capital, time and energy has to be spent, believing that you are really developing an amazing product that will sell itself. Well, if it was only that easy!

There are several factors you need to bear in mind while launching a product startup. I am listing them here based on my experience.

Is there a market?

You have developed a great product. At least you think so. But, is it good enough for anyone to buy? Does there exist even a little or a niche market for your product? According to an article published in Fortune, the ‘lack of market need’ was the top reason due to which most startups fail! It may even happen that you are ahead of the market curve, that is, customers do not require your product at the time which you think is right. Or maybe, the need is there, but there isn’t an appropriate supporting technology.

For instance, Pebble, Apple and Samsung are among a few leading brands in smartwatches today. But, it was Microsoft who launched it about a decade ago, only that it failed because it was as much a matter of bad timing as that of a poor design.

So, don’t jump to the product development stage straightaway. Put efforts in conducting in-depth market research, studies or surveys to see if the time is right to bring your product in the market.

Are you trying to innovate or reinventing the wheel?

The debate regarding which is better – innovation and reinvention of the wheel, isn’t new. Every product entrepreneur delves on this question before going to the drawing board. But, let’s first understand the difference between the both.

Innovation is building a product that brings a paradigm shift in the customer behaviour. It provides a novel solution in addressing the customer’s pain point. For example, FusionCharts, the provider of interactive JavaScript charts, is one of the most innovative technology companies that disrupted the data visualization industry. Reinventing the wheel is about coming up with a new or a creative idea to change or improve a product that already exists. Here, we can take the example of TATA, which designed the cheapest and smallest car Nano to disrupt the car segment and gain 17% market share.

In my opinion, you shouldn’t be afraid of either innovating or reinventing the wheel as long as it could help your product to become a game changer. The only thing you should ensure is to keep your product simple and useful.

Do you have a sales strategy in place?

So, now you have ensured that there is a market for your product and you have a product ready to hit the shelves. Here comes the tough part – selling it. You need to have a well-thought sales strategy in place. This involves:

  • Setting deliverables (how much you want to sell in what time frame, market price, profit margins)
  • Identifying the sales territories (where you want to sell)
  • Creating marketing collateral (mailers, white papers, brochures, blogs, PowerPoint presentations, etc.)
  • Finding methods to sell (direct, retail, online, word of mouth)
  • Training the sales team (product features, sales pitch, sales targets, customer relationship)

A robust sales strategy will be your road map to positioning your product correctly and gain a competitive advantage.

 Do you have the right sales team?

A sales strategy alone wouldn’t suffice. You need talent that can sell your product with the same passion as you i.e a killer sales team that doesn’t let you and your product down.

Ideally, there is no better salesman than the entrepreneur himself. So, think about how you would sell your product if you were the salesman. Or, if you were the customer, what you would want to hear or experience during the sale. Once you learn to sell the product to yourself, you would know the right kind of people to hire. When building a sales team, ensure that:

  • You don’t sacrifice quality and fit for a quick on-boarding process.
  • Salespersons understand that selling is a pre-cursor to relationship building with customers.
  • They want to climb up the ladder, are patient with customers and are open to constructive feedback or criticism from customers.

How flexible is your product?

The customers may love or hate your product. Even if they love it, they may still give inputs on what else could make your product better. If they hate it, perhaps you haven’t done your homework well and need to iterate or redesign your product. Ideally, try to push your first iteration in the market to study what works and what doesn’t. Either way, your product should be flexible enough to change or evolve to meet customers’ expectations. Be open to customer feedback and adjust your product accordingly.

Product startups have their own share of challenges. But, with a right set of mind and determination to do the things the right way, it shouldn’t be difficult to overcome these challenges.

This article was originally published in Inc42.

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How We Got The IT Minister Excited About Indian Product Startups & Made Him Our Spokesperson #UnleashTheEnergy

A behind the scenes account of how a showcase of 11 disruptive startups was put together in just 100 hours!

If you’re reading this, I’m sure  you are a part of the Indian product startup community in one way or the other. And unless you were living under a rock (which is fine, if you were busy hacking away or traveling to sell your product), you wouldn’t have missed that our Hon. IT Minister, Ravi Shankar Prasad was in Bangalore on Tuesday meeting with the product startup community. iSPIRT hosted  the “Conclave for India as Product Nation #1″, an open dialogue between the Product industry and the IT Minister.

What made it all the more special was that the he was the first IT Minister to meet with startups and also that he first met with the startups first before meeting officials from his ministry! The Minister met with the industry leaders, gave a patient hearing to the needs of the product startups and also saw presentations from 11 disruptive startups.

And here’s what the minister had to say after meeting with the startups!

So how did we pull this off? And what if I told you that it was all put together in 100 hours. We ourselves cannot quite understand how everything fell into place! But as Sharad often says, when a bunch of passionate volunteers come together towards a common cause, magic just happens. At iSPIRT, we take our volunteering quite seriously. No wonder then, that we actually have open sourced our volunteer model through a whitepaper to help other communities benefit from it!

 

A text message from Rajan on Saturday morning got me involved. Could we get on a call, he asked. There’s an iSPIRT event scheduled on Tuesday and some help was needed. We spoke and I got to know that there’s an interaction with the IT Minister scheduled on the coming Tuesday. As part of the interaction, we needed to put together a showcase of disruptive product startups to help the Minister get a sense of the kind of impactful work being done and the opportunities ahead. There was list of companies drawn from across various segments and stages, with whom we’d need to connect and get their availability for the event on Tuesday. Tapping into our network of volunteers (many of whom are themselves startup founders and industry leaders), we gathered the contact details of these companies and started reaching out to the companies. These were companies spread across the country and we checked with their founders if they’d be available to present. Based on the availability of teams and the some intense discussion and debate among the Program Managers for the showcase, a short list of the companies presenting on stage was drawn up. The thought process behind the selection of companies was to give the Minister a good view of the breadth (sectors where product startups are making an impact), the depth (companies that have achieved global market/tech leadership) and how far they can grow with sound support from the ecosystem, which includes the government as well. We were immensely privileged to have Mr. Mohandas Pai spare his valuable time for multiple meetings through the whole process and share his inputs on what kind of stories would make the maximum impact.

Product Leaders with the IT MinisterArriving at the shortlist was surely a good beginning. They say well begun is half done. But the tougher half lay ahead! We were already at Monday morning, and within the next 24 hours we had prep up the presenters. Each of the companies were to have a short, crisp presentation with the key points to be covered in under 4 minutes! Shekhar went about this with the precision of a toolmaker, thoroughness of a scientist and the strictness of a school teacher! From putting together notes on what points to cover, iterating multiple times with the presenting companies on their presentations over a sleepless night, to conducting the actual showcase in front of the minister, Shekhar was always on.

(That’s me on the left  trying to get the slides up!)

The event received some very good coverage in the media. Below are some links:

Here’s hoping that achchhe din are indeed ahead for the Indian software product industry!

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In Product Management, It’s All About Location, Location, Location!

Over the last few months, while talking to a range of Indian and Global tech companies, I noticed an interesting trend in the determination of location for key functions, specifically product management.

Global MNCs: During conversations over the last few months with some North America based technology MNCs, I observed that a lot of them plan to create product management functions for local markets and ensure better insights by placing the product managers in the local markets.  By this, they plan product functionality and global roadmaps accordingly.

Most people who have worked with global MNCs will, time and again, have observed that products are not created for Indian (or emerging) markets.  Most product managers continue to design products for their home markets (typically the more mature markets), with limited focus on local market insights.

India Based Product Companies: In a majority of these companies, more so the startups, senior management executives are either based out of, or are relocating to their largest markets (read North America, maybe South East Asia).  The logical reason is to be close to the key markets and customers.

The rest of the functions (operations, product management and engineering, service delivery, shared services), continue to be based in India.

And this is where I started thinking about the ideal location for product management.

Typically, Indian product startups focus on building a customer base (and credibility) in India, and once established, extend to more mature and higher revenue markets e.g. North America.  As they expand, they locate their sales teams there, but continue to have their product management teams based in India.

Extending the logic of creating products suited for the key markets, shouldn’t product management at Indian product companies be based in the potentially largest markets?  The refrain often is that they cannot afford to have product managers based out of the higher cost markets.I recognize that there is no easy solution, and companies choose different approaches to manage this.

Location Options
Typical Company
Advantage
Challenge
Located with Development
About 50-60% of companies, Indian and Global
Ensure that the product development matches product definition
Not enough market exposure for the product managers
Split between Development and   Market locations
Taken by SI firms, where the product manager travels specifically for large opportunities
Balance between development and market needs, being an effective bridge
Customer meetings are for closures, not for discovery – thus, not able to really get deep proactive insights into the market
Extended Product Management teams in the market
Taken by about 15% of companies, having an advanced roadmap
Get market feedback and also be able to effectively engage with the development teams
Presales / solution responsibilities are pushed onto local product managers, limiting market feedback and insights
Located in the Market
About 5-10% of companies (mainly Global)
Capture direct and deep market feedback to ensure product truly meets market needs
Limited engagement with the development teams
My belief is that while there may be no one answer, it is fundamentally linked to the stage the company is in, and the ability to effectively capture market feedback into the company’s product management teams.

The Location Matters

For product startups, however, it becomes extremely critical to get the right market insights (on an ongoing basis) so that they can actively differentiate and continue to retain their market edge as compared to some of their better entrenched competitors.  Having local market feedback could well be the key differentiator that could help them build and deliver significant value to their customers.  And could result in the long term growth and survival.  When one evaluates the employee costs of keeping the product management function in the key markets against the opportunity costs, it becomes apparent that the benefits derived can easily justify the investments.  However, the choice of the right product manager is also critical, otherwise you may end up getting pre-sales and reactive insights, which is not what the goal is.

Of course, an extreme option could be to follow Dogbert’s advice:

dogbert_consulting
Look forward to your insights on approaches that have worked for product companies across multiple markets.
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Are you a #MadeInIndia Software product company with solution built on SMAC stack that sells to Enterprise segment?

If yes here is a great not-to-be-missed opportunity for you to explore partnership with Zensar Technologies….then Read on.

Zensar Technologies is a technology partner of choice for global organizations looking to strategically transform, grow, and lead in today’s challenging business environment. ProductNation is pleased to partner with Zensar to make this opportunity available for Indian Product Startups. Zensar is looking at hungry, innovative product startups that have built exciting products based on SMAC(Social, Mobile, Analytics & Cloud) technologies from India and showcase them to their Leadership Team, with a goal of offering these innovative products for their existing customers, prospects and partners

Details of Zensar TechShowcase are as follows: Date: 7th September 2013 (Tentative), Location: Pune

  • Format 40 minute slot, with 20 minutes of demo cum presentation, followed by 20 minutes Q&A session for about 12 companies. Expected to be a full day event.
  • Audience – Leadership Team of Zensar and Key Vertical heads.
    • Areas where the Zensar is looking for Products – Mobile Solutions, Mobile Analytics, Device Management, Social networking, Web 2.0, Application Integration, Intelligent Customer Interaction Solution, partner interactions, and internal business processes. If you have an area which is not listed here, please do send us an email at showcase(at)pn.ispirt.in

What you get? An opportunity to showcase your product to one of the leading technology companies which has customers across the globe. More details can be found at www.zensar.com

  • An opportunity to get feedback about your product from the team that engages with enterprise buyer community, giving you great inputs for your future engineering and design decisions
  • An opportunity to partner and take your product to international markets. And all this with no sales qualification cost!

Interested? Great. Here is how you can participate:

  1. Provide the information desired in the online form by 20th August 2013(Now extended to 23rd August 2013). Completed submissions will be sent to the Zensar for short-listing and selection by 30th August 2013
  2. A selection committee will peruse the submissions, and based on their need and interest, will shortlist a set of 10 to 12 companies, and invite them to be present at the  Zensar TechShowcase Event, on 7th September 2013
  3. All expenses for the participating in this event will be done by the participants themselves. Zensar will provide the venue, and the audience.
  4. There are no participation charges for this event.
  5. If you have already provided information about your product for the ProductNation OutSights, please do send us an email at [email protected]

If you have any questions, please write to us at us at [email protected] and we shall try to answer them.