Familiar but digital, with Rohit Bhargava

When I lived in Hong Kong, which was not all that long ago, there were these rather complicated-looking ATMs around town, covered with instructions to help you correctly feed a passbook into them without the staples causing problems. I never actually saw a passbook in the flesh, but they were explained to me as a paper-based statement of record that you updated as needed, like an automated receipt stamp after a significant deposit or withdrawal, rather than the statements the bank sent to you on month end. Since I had internet banking, I never looked any deeper. But not everyone has internet banking.

Rohit Bhargava started his career in banking the year I was born, so he experienced passbooks in their prime, and he was running a retail bank in Malaysia when they were phased out. The arrival of text messages had made them less popular for most customers, and now only a shrinking segment of less tech-savvy consumers relied on them. As a result, the economics went underwater from the bank’s point of view.

Rohit realised that, so he helped the bank convert to monthly statements. But Rohit also realised that that shrinking segment relied on their passbooks. Relied. So when he retired, he set his mind to solving that problem with the BOMTech. I think of it as a Kindle, but for your loan data.

BOMTech is Banking on Mobile + Tech so you can learn more at https://bankingonmobile.com/

Or reach out to Rohit directly on LinkedIn (https://www.linkedin.com/in/rohit-bhargava-849aab5/) or through me if you’d like to have a chat.

You can learn more about myself, Brendan le Grange, on my LinkedIn page (feel free to connect), my action-adventure novels are on Amazon, some versions even for free, and my work with ConfirmU and our gamified psychometric scores is at https://confirmu.com/ and on episode 24 of this very show https://www.howtolendmoneytostrangers.show/episodes/episode-24

If you have any feedback, questions, or if you would like to participate in the show, please feel free to reach out to me via the contact page on this site.

Regards,

Brendan

The full written transcript, with timestamps, is below:

Rohit Bhargava 0:00

What happens if I can marry a mobile phone, with finding out what their account is, what their account balance is? Because we're sending out SMSes giving them details of the withdrawal and things like that, and once you have that, we have the basic requirement for what a teller updates on your passbook.

Brendan Le Grange 0:22

Often when we think about innovation, we think about pushing the status quo further away from the past, but sometimes that can leave people behind. Sometimes the past actually worked pretty well for them. It was just inefficient.

So in this episode, we look at innovation to preserve a classic format, not to replace it.

And as an aside, this also completes our first ever father daughter appearing on the show, because Niharika Bhargava, Rohit's daughter, was one of the three voices on episode 24 of this show, when I spoke about ConfirmU, the startup that I'm a part of and our gamified psychometric credit score.

Welcome to How to Lend Money to Strangers with Brendan le Grange.

Rohit Bhargava, founder of BOMTech, welcome to the show.

If I was to take your career and plot it on a chart, it wouldn't have the steady progression of a full time career man, but it also wouldn't have the ups and downs and left's and rights of a serial entrepreneur, but rather, something in-between where you had long periods within some of the big banks whose names we all know but then jumped very far from there to the next role, both geographically and in terms of what you are undertaking.

So before we talk about BOMTech and the work you're doing at the moment, would you mind spending some time on your career and your background in banking, and really how you got to where you are today?

Rohit Bhargava 1:58

I joined HSBC many moons ago, 1979 to be precise. We had to work through departments, if you like, as part of the training, corporate banking, I went in as a junior person; then treasury for a long stint, for, what, eight years; next was another stint in Hong Kong for treasury trading; and then I came back to India in a senior Corporate Banking role.

So I really got an idea of all the departments. Then I moved on to Malaysia, where I headed the retail bank, then on to Hong Kong again. And that's when I call it quits.

Brendan Le Grange 2:37

What inspired that fairly dramatic-looking change, to move from your career in banking into founding your own venture?

Rohit Bhargava 2:45

When I was looking after retail banking in Malaysia, the branches were very crowded, and they were crowded because customers would come in with their passbooks, statements, and things like that. And they would not use ATMs.

What we did at that time, was to stop the passbooks. We said, no, if you want a passbook we'll charge you extra. Now instead, statements will be coming to your house for free.

Brendan Le Grange 3:09

Yeah. And I just want to interrupt you there for the international audience, because the passbook is something I only know about because in Hong Kong, until very recently, they were these very complicated looking ATMs, which I learned were passbook printing ATMs, and they would sort of take that in and do some printing and print them back out again. But for those who aren't familiar with what that would be, would you mind educating us very quickly on what a passbook was, and what its role was in banking in the region?

Rohit Bhargava 3:37

Instead of statements, they give exactly the same details as what your statement gives you at the end of the period. Whereas this one, you could go at any time and update your passbook. You have to go to a branch. So it's nothing but a statement in a passbook format, or it would come by print to you in hardcopy.

Brendan Le Grange 3:56

Yeah, thanks. Sorry, I interrupted you there talking about what the inspiration was, so what did you see there that got you thinking?

Rohit Bhargava 4:04

At a certain time when these mobile phones were starting off? The revolution was starting all over the world, and Malaysia was in the forefront. And they started giving alerts when a customer transacted on their account. So much amount has been deposited/ overdrawn.

Brendan Le Grange 4:19

Yeah.

Rohit Bhargava 4:20

So I felt guilty about taking away from customers what they wanted. I said it's not great. Of course, it made sense to us. The cost came down, which was very profitable, but yet it was not quite the thing to do.

I said, What happens if I can marry a mobile phone with coming into and finding out what their account is, what account balance is, because we are sending out the SMS is giving them details of the withdrawal and things like that took which you have that we have the basic requirement for tailored updates in your passbook?

So if I can marry it into a mobile phone, that will be wonderful. And the customer will get their account balance instantaneously, as soon as he's transacted.

That's why they used to come to the branch at that time for the balance to make sure everything has been deposited. Correct.

Brendan Le Grange 5:10

It's interesting because, obviously, you can get caught out almost by innovation, particularly if you're not a super profitable segment of the customer base. As you said, the costs of serving the passbook become higher, the highest spending customers have moved away from it, or are moving away from it, and so it's leaving a shrinking pool.

But those people, they're really needed it!

They understand it, they felt comfortable with it. And they're seeing it disappear, and innovation, taking it away from them.

And I think what I really like about the BOMTech idea is that it's innovation addressing this need - not going out and trying to find a new format and a new thing of doing it and then trying to push pioneers and the change-loving folk in that direction, but actually going backwards and saying here's this format that everybody knows and loves, how can we conserve it with modern technology?

So I think it's a lovely part of the market to get into. But I was speaking Jinesh Vohra for the show, and he had had, not quite as long a career in banking, but he had been with Goldman Sachs for 16 years before he went out and started his venture. And he said that, on day one of sitting on his own at the laptop, he started to really appreciate and realise how many resources he had in the big bank before, where if you needed a lawyer, there was a team of lawyers, if you need an accountant, there was a team of accountants, and now he was on his own. And he had to go out and find lawyers and hire lawyers and find accountants and hire accountants and do the bits and pieces himself.

So I'm quite interested, how was that experience for you having worked in all the banks and always had these teams available to now be working on something on your own?

Rohit Bhargava 6:54

I think very similar. You could take it for granted that everything is given to you, everything is working, and you just have to pick up the phone and say it, send the message across, that was fine. But for me there's a slight difference: I've moved to Canada at the same time!

I left HSBC, then I moved to Canada. And when I moved to Canada, that's when I got developers to work on this idea. They were based in Pune. But they Pune and there's a 12 hour time differences between India and Canada, and that is what made it a 24 hour working time for us. In my daytime, I would work on ideas and things like that. Then I'd give it to the developers in the evening. They would work on it, and by the time I woke up, it was already there.

So it was a very efficient use of time. And I didn't have much time to think as to missing out on all those trappings.

Brendan Le Grange 7:47

I know wha you mean when I was in Hong Kong, my boss was in Chicago which was a blessing and a curse with the time differences: sometimes you knew you had a few hours of peace because everyone was asleep, but other times you waking up and there's a whole day of tasks sitting waiting for you.

Rohit Bhargava 8:01

And I had outsourced to these people, and then the developers that helped me get the local lawyers or anything like that, which was there. So that was fine.

Brendan Le Grange 8:12

Rohit, as I said just before then, what I really like about the BOMTech model is that you're looking to serve this part of the population in a way that works for them. It's not about finding a new technology and then making it available and saying this is how you use it, but rather saying what does the segment that's often overlooked want? And how can I keep it there for them?

So how have you joined those old and new worlds together?

Rohit Bhargava 8:35

So what's reached the bottom of the pyramid is the micro loans/ microfinance. Microfinance is transactions of less than 50,000 rupees, if you like, which is like £80.

And often in this segment, people don't get a receipt for what they have paid back. Millions of such customers which are they're taking money from the banks, or institutions which are there, they don't get receipts when you pay back. So when the time comes after six months or something like it, how much do I owe you is left to the banks to decide, or the institution?

I thought that was not fair.

I think they should have a copy of whatever it is. There are some copies which are thermal receipts, but those are likely to disappear after three months or something like that.

But really be used for recording all the transactions of a person taking a loan from a bank and repaying it: this is the BOMPassbook if you like, so it will show you this. It actually records all the transactions which happened as you pay back.

Brendan Le Grange 9:42

Yeah, so it's a standalone device. It's not that people require a smartphone and an app and and all this stuff that can be very difficult to to have in maintaining the village has been it's actually a device purpose-built

Rohit Bhargava 9:54

And hopefully we have kept its price so low - I mean the cost of manufacturing is quite low - that institutions can give away for free.

Brendan Le Grange 10:02

Yeah. And I think that that's not unreasonable, because if I think about my banking, and some of that's changed now, but not so long ago, I would get a little dongle for the one time password, I forget its proper name, but you know, the little code that's always changing, they'll give you those for free with a bank account.

So it's all in one place. So it's not SMSs that are getting covered by millions of other messages in your phone. It's not a smartphone, which is even more important, but it's something that is there and can be kept.

And as you said, it's fairer for the borrower to have that record. But I think also, it's good for the borrower to be able to see that paid down happening: and this is not scientific, but one of the things I've seen in an older role of mine, when I was working with the credit bureaus, when consumers are starting to miss payments, so consumers are in trouble, you know, we'd always thought you pay your mortgage first, then your car, and then it goes down and the personal loan, would get paid last, because there's really no benefit in paying your personal loan, you've already got that money, you've already spent that money, and now you're just doing what's right. Whereas the mortgage, you want to live in the house, or you want to drive the car, even, you want the credit limit on your credit card, but what they actually found was the personal loan gets paid quite high in that hierarchy. And the assumption, so now, yeah, it's not super scientific, this is just the assumption. But the assumption is that it's a very attainable goal. So if you've sitting in life, and you feel like you're losing track of things, you can actually say, Okay, there's four more months, I pay this loan, and it's done, versus 20 years now of paying a mortgage or something.

So people really value that ability to see how many more payments, see that balance come down. And actually, it probably makes the loan less risky, because your customers can see the endpoint. So I think the lenders will benefit in many ways, as well. But of course, the borrowers.

And if we talk about those borrowers, you'd have used terms like bottom of the pyramid of where we say too much, I've just finished editing an episode in Sri Lanka. And I went to got my old copy of the book out, but essentially, if you're talking about those consumers that you're serving, what does that market look like? What sort of consumers are we talking about?

Rohit Bhargava 12:09

We're talking in India of about over 50 million customers. So numbers are huge.

Brendan Le Grange 12:15

It's always fun to talk about India with the scale.

Rohit Bhargava 12:18

And this is only in India we're talking about. But even here, in Canada, also, you have some microfinance, a lot of people are involved in this. And there's some very large institutions in India, which does this.

Brendan Le Grange 12:29

So you're not making the micro loans, you are facilitating this exchange of information between the lender and the borrower. So that borrower goes and they ask for a loan from an institution that you're working with, they will be given the pontic passbook and then they will be able to use that to track their loads. So you're not making the loans, but you are part of that process to provide the information or move the information between the two.

Rohit Bhargava 12:54

That's absolutely correct. But take the risk on the customers we first lated and we make this history will have drawn to the people who are learning through how often is rented is repaid his loans, and therefore is ready for another loan or not or something, it's all recorded one place. So basically, it gives them information to work with lenders, as to where to infer the poorest, it's easy for them to present to the prospective lenders as to what and how good would risk their suitable worth customers and the borrower's

Brendan Le Grange 13:28

if we just think around you most of the audience listening is probably quite used to kind of modern mobile banking. But if you even think about the apps that are out there that help people budget that help people keep track of where their money's going and what their credit reports looking like. This is doing the same sort of thing and as I said, somebody who can see what they owe and where it's also just much easier for them to to stay on top of it and I think it's not just luxury under the bomb tick umbrella.

I see there's a number of different products as it were so you've got BOMInfo, BOMFolio, BOMCollect and BOMPassbook.

BOMPassbook we've been talking about a lot now for account management and loan management. But talk to me about those different types of products and the certain niches that they are designed for.

Rohit Bhargava 14:13

BOMInfo is exactly what it says: information.

It sends out information for people, agriculture people. So weather forecast prices of seeds, prices of fertiliser, and all these things can be sent out from one source. This is all looking at the future.

BOMCollect is for the collectors. A whole lot of CDs will come out to them as to what a call to correct this is all phones, carry on with all of the information on the phone, all the history of the customers and then get the payment as soon as payment comes. They ping it and it updates the head offers and local office so they know their salaries at work over there.

BOMFolio, that helps you get you information on your stock portfolio. Once you have a debit and a credit, you can have the stocks, I buy Apple, buy some more attacks. If you sell something, it subtracts information at your fingertips as to what is the value of the portfolio. And you have next you can link it to prices and all that. So that's why we are going to work for them as well.

Brendan Le Grange 15:18

What is the state of the microfinance industry? In India today, you're talking about 50 million consumers to such big markets at play, but how are we seeing innovation in general happening in the space?

Rohit Bhargava 15:31

Much has happened in the last 10 years. Then what is the stage of microfinance? It's growing about 20 - 25% I think last year. This is the outstandings growing by 25%, because it was it would be the onflation adjusted, that is to 16% real growth. So we'd probably go with a huge, huge market, we hadn't growing market, and therefore it has to be serviced.

Brendan Le Grange 15:52

You are innovating in a very different way in a different segments. So how has this process been bringing it to market, how you see the various players in the ecosystem respond to it,

Rohit Bhargava 16:02

I think the people that I've spoken to so far have all been very positive, the whole thing, there's a bit of demand, can I get it as soon as I can, I should be able to get it hopefully in a little three to four months time, the production has to be in China. And that has creates its own challenges right now.

Because the price at which I want it to be given out is like it is us less than $10 per piece is what I'm aiming to give them, right. So that's sorting out all these forms of positive and all that. But this product should be ready to roll out in about three to four months time. And we'll do the BOMPassbook first, and then the others would come.

Brendan Le Grange 16:39

If somebody has the BOMPassbook in their hands and they take out a new loan, or they take a loan from a different lender, that's also part of the programme, do they get multiple passbooks or cannot facilitate multiple loans from multiple lenders?

Rohit Bhargava 16:54

It's all the information in one place, you have can have multiple passbooks in the same device, each one would have its own password, that's the only thing. Otherwise, it's all tied to the same device. And you can look at the data here and can be used again, we use for people who already have it. Once they've repaid the loan, they can take another load until we roll it back onto the device.

Brendan Le Grange 17:18

You ever see in the launching process, you understand the demand of the market, you've got manufacturers on the show that you're looking at. So it's all ready to go. If people listening would like to follow that story. We'd like to see how this launch happens. Or even if anyone listening is involved in microfinance in India, I know we've had a few guests in that broad space in the past and India as a market. We do have quite a few listeners in or in fact, the the subcontinent in general, where can they go to follow the story? Or indeed, where can they go to talk to you about learning it in more depth or maybe even getting involved?

Rohit Bhargava 17:56

I think first thing people to see is my website called banking on mobile.com. So they can go there, they will get all the information that's required of the device? And what stage we are in, you can check it out there. And secondly, would be yes, I'm looking for quarters and a direct approach a phone call will be very nice to earning also to see how they can partner me and what to buy. Where do we actually at Richard,

Brendan Le Grange 18:22

I'll put links to the the website on the show notes as well. And yeah, Ryan, thank you so much for your time, it's great to hear that there's innovation happening in these market segments that are not being left behind is probably not quite the right word, but are not the target for most people that are out there looking for new solutions. Yeah, I saw these things in Hong Kong. I never knew what they were when I was a child in South Africa with the post office used to have a little bank and you got a little book you wrote in and it reminded me of that. And it was still existing, and it was out of place, but clearly still in demand. So I love that it hasn't just been left alone. And the banks have just said, you know, it's no longer profitable to serve. But you've looked at it and said, well, people like this, people know this. Let me find a way to make it work. And I think that's really interesting and really impactful. This is 50 million people. So thank you for making the time to talk to me about bomb tech and for sharing those insights and I'm certainly looking forward to seeing how this progresses. Happy to be here. And thank you all for listening. Please do look for and follow the show on your favourite podcast platform, and share the updates widely on LinkedIn where lending nerds are found in our largest concentration. Plus, send me a connection request while you're there. This show is written and recorded by myself Brendan Lagrange in Brighton England and edited by fina Charlson of FC productions. Show Music is by I am weak and you can find show notes and written transcripts at WWW dot How to Lend Money to Strangers dot show or just www dot HTML MTS dot show. And I'll see you again Next Thursday