Innovations in Microfinance: Examining New Product Development Process in Indian MFIs

Abstract

A new product (whether tangible or intangible, like a service) plays an important role in the growth of any organization. It is a strategic step that shapes several key decisions of an organization, having implications for both internal and external subsystems. It furthers the eff orts of any organization to achieve sustainability and thereby increase profi tability. For instance, the introduction of a new product -TATA DOCOMO -by Tata Teleservices Limited in a strategic alliance with Japanese telecom major NTT DOCOMO has signifi cantly aff ected the call plans and tariff s of all the operators in India. It has even furthered the growth of the company in terms of number of subscribers and thus helped raise the market share of the company 2 ( TRAI, 2010 ). Th ere are several other examples where a company has launched a product, whether in a competitive/mature or in a new market, and turned around its fortunes. In fact, the case of ICICI bank is interesting in this context. In a decade, the bank became large enough to off er a diverse range of fi nancial services. Th e success of ICICI bank can also be attributed to a focus on delivering innovative services to their customers ( Kochhar, 2012 ).Th ese examples set forth the thought that continuous innovation in products and services is crucial for long-term sustenance of any organization. Microfi nance institutions (MFIs) deal with sensitive and vulnerable segments of customers ( Ingham et al ., 2013 ). Th e competitive scenario in the microfi nance sector is quite diverse and intense in India. Adding to it are the regulatory requirements in the country, which are making the scenario tougher ( Ashta, 2012 ;Sinha, 2014 ).Changing context led by newer technologies, stricter regulation, and increased competition are important considerations before introducing a new product.S ince the microfi nance sector is comparatively new relative to other sectors, MFIs follow an intuitive process (and not strategic) for any kind of innovation. 16Gaurav Sinha

Microfinance and financial inclusion: Challenges and opportunities

“…To improve financial performance, researchers stress on financial innovations and improved client follow‐up (Kendo, 2017) as well as strategic positioning and organizational leadership (Sayed & Ghalib, 2016). Continuous financial innovation requires considering newer technologies, stricter regulation, and increased competition and customers' needs through a participatory approach (Sinha, 2015). Sometimes, an excellent financial performance includes strategies that have a technological component such as mobile banking to increase outreach and reduce costs (Bryson, Atwal, Chaudhuri, & Dave, 2015) or credit scoring to reduce risk (Bumacov, Ashta, & Singh, 2014; Bumacov, Ashta, & Singh, 2017a).…”

“…Researchers have focused on the profile of the clients or the impact on the clients. The impact could be social such as gender or poverty alleviation, and indeed find a positive impact (Bansal & Singh, 2020; Koloma & Alia, 2014; Sinha, 2015). Others find that microinsurance leads to more agricultural production by insured farmers (Banerjee et al, 2014; Koloma, 2015).…”

Performance measurement in product development process (PDP): literature review and gaps for further research

“…It is a strategic step that shapes the several key decisions of an organization, having implications on both internal and external subsystems. It furthers the efforts of any organization to achieve sustainability and thereby increase profitability" (Sinha, 2015). Moreover, the pressures for "faster, better, cheaper" products has taken the interest in engineering, project management, operations management, organizational science, marketing and others disciplines and it is generating an extensive body of literature in the product development area -particularly in PDP (Browning and Ramasesh, 2007;Castro et al, 2019).…”

Responding to Complexity: Microfinance MIS Service Providers as Complex Adaptive Systems

“…While on the one hand, it is seen as a service for the poor, on the other, it is regarded as a commercially viable social innovation. It is often characterised as an incubator for innovation—be it in terms of products or services or processes or even business models (Kapoor & Sinha, 2013; Sinha, 2015). Of late, the entry of commercial players in microfinance has raised questions and debates pertaining to sustainability, transparency and customer experience among other issues (Milana & Ashta, 2012).…”

“…For example, the current regulatory push (like reporting to credit information bureaus) is paving way for more robust information system in the country (Ashta, 2012;Nair & Tankha, 2014). While the literature is replete with demand-side studies on microfinance in India, there is a dearth of literature on the supply-side issues (Sinha, 2014). The business ecosystem, in which these players operate, is gradually diversifying and becoming more unpredictable.…”