Key questions after 10 years of financial inclusion

By Kshama Fernandes

Almost a decade ago, a group of us came together in India and decided to look at the financial inclusion puzzle afresh.

It took those of us who became IFMR Capital a decade to build our dream ecosystem of high-quality originators, a large base of capital markets investors, and a risk transmission platform to connect the two.  Some pieces fell in place quickly, some took time and some are yet in the process of falling into place. However, our vision does seem to be unfolding slowly but surely. We work today with hundreds of originators and investors, covering almost the entire country through our network. Directly and indirectly, we are present in 500 of the 600-plus districts of India.  We’ve provided $5 billion of financing to over 20 million clients.

To date, no investor using our structured finance platform has lost money. This speaks to the credibility of the underlying sectors and our customers. While we still have a long way to go, the foundations have been laid. I am fortunate to have been part of this journey and would like to share a few things I learned along the way. Strangely enough, lessons don’t always come in the form of answers; they sometimes come in the form of questions. So today I would like to share with you a few questions I learned.

My first set of questions

Cuts and wounds are natural, one would think. But the body doesn’t think it is natural to have a cut or a wound, and so it springs into action immediately when injured and tries to fix the damage. The moment you tear a blood vessel, the entire focus of the body shifts towards correcting the damage. Blood vessels leading to the wound tighten to reduce the flow of blood to the injured area. Platelets rush to the scene. Clotting proteins in the blood join forces, and in just a few seconds the BLEEDING STOPS! Why? Because the body thought it was important and concentrated its best resources on it.

Kshama Fernandes IFMR financial inclusion quote Claugus Award Accion

If a significant portion of the world’s population has no access to finance, it should bother us enough to lose sleep! If financial inclusion is an important enough problem to solve, then we need the world’s best resources to solve it! The quality of people and the nature of capital we throw at solving a problem is a reflection of how important it is for us to solve that problem.

Here’s the first set of questions I’ve learned to ask myself – are we throwing the best people at the problem we’re trying to solve? Are we creating an environment that enables them to perform at their full potential? Are we investing enough financial capital to solve a problem of such gigantic proportion? Do we have the best investors backing us as we focus on our job of solving this problem? In short, are all our actions suggesting that enabling access to finance is the most important task on hand?

My second set of questions

Long ago I read a book by Richard Rhodes documenting the history of science, titled “The making of the Atomic bomb.” Most scientific innovations happened during the world war years, some of the most difficult times in recent history. Yet, what resulted was a radical transformation in the fields of science and economics. These were not incremental changes, they were quantum leaps! Under extreme pressure and adversity, the human mind is pushed to an altered state and throws up the most amazing outcomes.

While there is merit in building predictability, an environment that nurtures unpredictability encourages tolerance to failure and promotes risk-taking is good for progress. It’s where those quantum leaps happen!

So the second set of questions I ask myself – are we taking adequate risks that will result in big outcomes? Are we pushing the boundaries of what we might achieve? As the world around us evolves, will we be the followers, or will we stick our necks out and create paths for others to follow?

Finally, my third set of questions

Every November, over 200 sailing boats set off on a journey across the Atlantic. Their goal is to sail 2,700 nautical miles across the Atlantic, from Las Palmas in Spain to Saint Lucia in the Caribbean – before the hurricane season commences.

Once the boats leave the shores of Las Palmas, water is everywhere. Racers focus on only one thing: getting to the other side in time. Both speed and direction become crucial. While speed is partly a function of nature, direction is in the hands of the racers. And so at the cost of losing precious time, sailors bring their boats to a standstill mid-sea to correct the variation in the boat’s compass and align it to true north.

This activity makes the difference between arriving at Saint Lucia in the Caribbean as planned versus arriving in New York!

This happens with life on land too when we don’t stop to align our internal compasses with our true north, and instead keep going, watching the speed but not necessarily the direction. It is no wonder that we often surprise ourselves by where we eventually land up!

That brings me to my third set of questions – as an organization, are we aligned to our true north? Or are we simply going with the wind, in a direction that may not quite be the one we set off on? Do our cultures, policies, behaviors, actions, decisions, communication and performances reflect our true north? Or should we be stopping to realign our compass, before we set sail across the next big challenge we undertake?

I don’t have all the answers. Most of us will rarely ever know all the answers. But that shouldn’t stop us from asking the questions, or from steering as we navigate the waters of financial inclusion.

Kshama Fernandes is one of India’s outstanding young business leaders. As CEO of IFMR Capital, she is leading a company that is transforming the very fabric of finance in India. Before joining IFMR Trust, she was the Head of the Finance faculty at the Goa Institute of Management. She has also been a driving force in committees set up by the Government of India related to the development of capital markets and the advancement of financial inclusion, and recently completed a transatlantic crossing on a yacht with seven other sailors.

The article above is truncated from remarks Kshama originally delivered when she received the Edward W. Claugus Award for Financial Inclusion Leadership.

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