How a money-tracking tool is helping businesses grow in India
While growing up in northern India, Shivani Siroya says she encountered entrepreneurs on a regular basis. Now, she’s helping them track their finances in order to boost their businesses.
It all began in 2008 while she was working for the U.N. Population Fund. While there, Siroya said she interviewed many entrepreneurs and saw how they operated their businesses, bought raw materials and spent their profits.
She found that many people didn’t have access to the financial tools that would help them get loans and expand their businesses. They didn’t even write down their expenses and profits.
“It’s not that they weren’t doing money management — a lot was being done in their head — but they weren’t making a budget,” she said. They weren’t planning ahead and were basically just trying to make ends meet.
These entrepreneurs had great potential but didn’t have anything in writing to show banks that they were running a profitable business and deserved a loan, said Siroya. The resulting perception that they couldn’t handle a loan persisted to the point where they didn’t even try, she said.
That’s why she entered the picture to try to give them the tools to track their finances in a way that would help them as well as the lenders. Siroya started InVenture in 2011. Her organization developed a product called InSight that aims to make it easy for people to enter and keep track of their financial information in a database.
Here’s how it works: Users call the number for InSight and answer questions either by voice or text messaging in their own language. They can view their financial information in the form of pie charts and other visuals.
InVenture doesn’t charge people to use InSight. Instead, the company makes money through licensing the product to microfinance institutions, nongovernmental organizations and banks. The product appeals to those groups because it gives them data about their beneficiaries, Siroya said. So they promote the use of InSight to their clients, and that in turn helps InVenture with distribution.
Siroya tweeted about the beta test in India on Dec. 6, 2011:
— Shivani Siroya (@shivsiroya) December 7, 2011
Siroya also came to realize that, in any country, a credit score helps you prove your financial reliability. So why not create a standard credit score in India that was comparable to other countries, she thought.
She used the cash flow information collected by InSight to help create that credit score. People can use those credit scores to prove their buying power at financial institutions that have partnered with InVenture.
Siroya said she’s been meeting with government officials in India and elsewhere to convince them of the value of the financial data and the global credit score. When asked how successful she’s been, she said it depends on the country. Places that don’t have a credit bureau or microfinancing institutions tend to be more receptive because they are interested in systems that help provide transparency, she explained.
Residents of Bangalore in southern India undergo InSight training.
InVenture’s clients have incomes that range from $100 per month to $1,500 per month, but most are in the middle — those who earn about $300 to $600 per month, said Siroya. Because of the improvement in their accounting, some even have gone on to qualify for home loans up to $19,000, she said.
“It’s amazing to see a woman use [InSight] and say, ‘I have awareness of my finances and now I can get a home for my family.’”
The biggest challenge, she said, is getting people to “buy into” the concept of tracking their finances after a lifetime of not keeping a written record. The group tried using lotteries and prizes to encourage clients’ repeat use of InSight, but realized those gimmicks weren’t needed if people bought into the idea of its usefulness.
InVenture, which now has a staff of 16, continues to refine InSight and confer with members of the community on how it’s marketed. “We are still working on the messaging and figuring out how to make the product fun” she said, so that people will be more inclined to use it in their daily lives.