Hi Lawry,
The EKO system that Friedman describes is a different beast from hawala.
It's scalable, while hawala isn't. Hawala only operates in small networks
where the individuals can trust one another completely -- usually between
relatives or via a village elder, but they don't spread much wider than
that. The money flowing through the EKO system is recordable at every stage
and doesn't depend on personal trust so it could spread very widely indeed
-- as it is already showing signs of doing.
Western governments have been able to lean on the phone companies in order
to prevent this development so far. Over here, it could greatly stimulate
the grey economy developing more widely.
Keith
At 11:35 03/11/2010 -0400, you wrote:
Friedman entirely misses the point. The system he describes is quite old.
It is the hawala system -- which in this article he mischaracterizes as
"hand-to-hand" -- pure and simple, with transactions recorded via mobile
phones. Hawala was always a "virtual bank." His larger speculation may
have merit, but his example doesn't support his speculation.
Interestingly, the Knights Templar created for Europe a similar system
and, together with what could be considered one of the world's first
institutionalized, non-governmental intelligence networks, became
extremely powerful. The Templars in creating their "virtual" banking
system, copied the Muslim hawala system, which predated it by some centuries.
Had I read the Hindustan Times article Friedman cites, I would instead
have ruminated on the significance of mobile access at the top of Everest,
and what it symbolizes for humankind.
Cheers,
Lawry
On Nov 3, 2010, at 7:26 AM, Keith Hudson wrote:
Here is one of the most interesting articles I have read in a long time
-- from today's NYT.
Keith
<<<<<
DO BELIEVE IN HYPE
Thomas L. Friedman
The Hindustan Times carried a small news item the other day that,
depending on your perspective, is good news or a sign of the apocalypse.
It reported that a Nepali telecommunications firm had just started
providing third-generation mobile network service, or 3G, at the summit
of Mount Everest, the world's tallest mountain, to allow thousands of
climbers and trekkers who throng the region every year access to
high-speed Internet and video calls using their mobile phones.
I can hear it already: Hi, mom! You'll never guess where Im calling from
. . .
This is just one small node in what is the single most important trend
unfolding in the world today: globalization -- the distribution of cheap
tools of communication and innovation that are wiring together the
world's citizens, governments, businesses, terrorists and now
mountaintops -- is going to a whole new level. In India alone, some 15
million new cellphone users are being added each month.
Having traveled to both China and India in the last few weeks, here's a
scary thought I have: What if -- for all the hype about China, India and
globalization -- they're actually underhyped? What if these sleeping
giants are just finishing a 20-year process of getting the basic
technological and educational infrastructure in place to become
innovation hubs and that we haven't seen anything yet?
Heres an example of why I ask these questions. It's a typical Indian
start-up I visited in a garage in South Delhi, EKO India Financial
Services. Its founders, Abhishek Sinha and his brother Abhinav, began
with a small insight -- that low-wage Indian migrant workers flocking to
Delhi from poorer states like Bihar had no place to put their savings and
no secure way to send money home to their families. India has relatively
few bank branches for a country of its size, so many migrants stuff money
in their mattresses or send cash home through traditional hawala,or
hand-to-hand networks.
The brothers had an idea. In every Indian neighborhood or village there's
usually a mom-and-pop kiosk that sells drinks, cigarettes, candy and a
few groceries. Why not turn each one into a virtual bank? So they created
a software program whereby a migrant worker in Delhi using his cellphone,
and proof of identity, could open a bank account registered on his
cellphone text system. Mom-and-pop shopkeepers would act as the friendly
neighborhood local banker and do the same.
Then the worker in New Delhi could give a kiosk owner in his slum 1,000
rupees (about $20), the shopkeeper would record it on his phone and text
receipt of the deposit to the systems mother bank, the State Bank of
India. Then the workers wife back in Bihar could just go to the
mom-and-pop kiosk in her village, also tied into the system, and make a
withdrawal using her cellphone. The shopkeeper there would give her the
1,000 rupees sent by her husband. Each shopkeeper would earn a small fee
from each transaction. Besides money transfers, workers could also use
the system to bank their savings.
Since opening 18 months ago, their virtual bank now has 180,000 users
doing more than 7,000 transactions a day through 500 branches--
mom-and-pop kiosks -- in Delhi and 200 more in Bihar and Jharkhand, the
hometowns of many maids and migrants. EKO gets a tiny commission from the
Bank of India for each transaction and two months ago started to turn a
small profit.
Abhishek, who was inspired by a similar program in Brazil, said the kiosk
owners are already trusted people in each communityand are already in the
habit of extending credit to their poor customers: So we said, "Why not
leverage them?" We are the agents of the bank, and these retailers are
our subagents.The cheapest cellphone today has enough computing power to
become a digital mattress and digital bank for the poor.
The whole system is being run out of a little house and garage with a
dozen employees, a bunch of laptops, servers and the Internet. The core
idea, says Abhishek, is to close the last mile -- the gap where
government services end and the consumer begins.There is a huge business
in bridging that last mile for millions of poor Indians -- who, without
it, can't get proper health care, education or insurance.
What is striking about the small EKO team is that it includes graduates
from India's most prestigious institutes of technology who were working
in America but decided to come home for the action, while the chief
operating officer,Matteo Chiampo, is an Italian technologist who left a
good job in Boston to work here where the excitement is, he said.
India today is this unusual combination of a country with millions of
people making $2 and $3 a day, but with a growing economy, an increasing
amount of cheap connectivity and a rising number of skilled technologists
looking to make their fortune by inventing low-cost solutions to every
problem you can imagine. In the next decade, I predict, we will see some
really disruptive business models coming out of here -- to a neighborhood
near you. If you thought the rate of change was fast thanks to the garage
innovators of Silicon Valley, wait until the garages of Delhi, Mumbai and
Bangalore get fully up to speed. I sure hope we're ready.
>>>>
Keith Hudson, Saltford, England
_______________________________________________
Futurework mailing list
<mailto:[email protected]>[email protected]
https://lists.uwaterloo.ca/mailman/listinfo/futurework
Keith Hudson, Saltford, England
_______________________________________________
Futurework mailing list
[email protected]
https://lists.uwaterloo.ca/mailman/listinfo/futurework
