Money 2.0 and Future of Money: Global remittances waiting to be streamlined

Over the weekend, I was reading this month’s cover story in Wired magazine The Future of Money: It’s Flexible, Frictionless and (Almost) Free. The story made me reflect on how money transfer has really gone digital. Some of these technologies online have made really convenient though we continue to use bank accounts and credit cards for traditional financial transactions, and increasingly paypal for online transactions.

Then, I began reflecting on another aspect of money exchange – Forex remittances – that hasn’t quite undergone the same revolution. A Non Resident Indian (NRI) and member of the global expatriate community, I have had my share of travails when it comes to foreign exchange remittances. This includes sending money from UK to India when I lived there, converting pound sterling savings to US dollars when I moved across the pond, occasional remittances from the US to India, remittances from Canada to the US and India when I was working there and last year from my Swiss Bank account to the US along with and some remittances to India when I worked in Switzerland. In case you are wondering, there is hardly much glamour or intrigue to a “Swiss Bank” if you happen to live and work there.

I must admit, almost every currency exchange transaction and remittance had left me feeling I was being shortchanged by the system. Banks at both ends of transaction – my transmitting bank and the receiving bank – wanted a “small” slice of my remittance pie; and so did other middlemen/exchanges through which my money passed. Add to this the uncertainty of exchange rates that change by the minute and the average remitter can be left wondering about the gain/loss he could have had. Of course, banks do agree to ‘lock’ rates for you at the time of transfer, but do so at a hugely discounted rate leaving the consumer to wonder if he wants to take the ‘risk’ of exchange rate shift or go with a predictable, albeit lower rate now?

I guess I am not alone in the remittances saga. Sanket Mohapatra writes in the Worldbank blog that “Inward private transfers reached $27.5 billion in the first half of the current fiscal year, a 4.3 percent increase on a year on year basis.” Hundreds of thousands of fellow expats, immigrants may be in the same boat as me, if not worse.

For smaller transactions, say a few hundred dollars, Western Union and other moneygram services charge a hefty fee. Of course, they provide convenience: outlets at malls, supermarkets and even post offices.

Banks from China, India, Mexico and other countries with large expat populations realize the potential of this lucrative clientale. Many of these banks have established subsidiaries in the US, Canada, UK, Europe, Australia, middle east and elsewhere and also operate branches there. The idea is to target expat populace with ‘familiar’ brands. Why do you think ICICI pays bollywood icon Shahrukh Khan a boatload of money to have his face plastered on banners and adverts in Canada, or youtube? Which to me is a bit delusional: Walk into an ICICI bank in Canada and you soon realize that they operate as a ‘Canadian’ bank, just like TD Bank or Scotia bank, and have very little to do with ICICI ‘back home.’ I remember going to a State Bank of India (SBI) branch in San Jose, California a few years ago to request the manager to attest a document that had to be sent to my SBI branch in Bangalore. The expat Indian manager politely informed me that since this was an American branch of SBI, he was not authorized to attest a document for use in India.

Bottomline: For the average consumer who probably remits money overseas once or twice a year, the market continues to hugely inefficient and fragmented. Though there are several “online” service providers that promise to shave off the currency exchange fee and offer ‘attractive’ exchange fee, hardly anything is set in stone. A common excuse is that the actual exchange rate is calculated only after the funds have cleared, which could take days if not more depending on the speed of your wire transfer and funds clearance.

While I focus on the consumer dimension to money transfer, I am sure the banks, brokers and others have to answer to governments and regulatory agencies. There are whole gamuts of issues that come to play including local, national and international regulations on money laundering, Laws on taxes, anti terrorism etc etc.
Which brings us back to Daniel Roth’s article: can the Future of foreign exchange transfers for consumers become Flexible, Frictionless and (Almost) Free? Probably not anytime soon!

Weekend musing on Toyota

My first car in the US was a (used) Toyota Camry that I kept for nearly a decade before selling it on eBay. Not surprising, since Japanese cars – especially Toyotas and Hondas, to some extent Nissans and Suzukis – are/were the perennial favorite of new immigrants, especially Asians. Given the recent recalls over Steering, Brakes, floor mats, electronics and the Mea culpa by management, it is still hard not to feel nostalgic about Toyota. A few eclectic thoughts on the car and company:

• Regardless of the recent recalls, the company still makes some of the best automobiles in the world
• Yes, even one accident caused by malfunction is one too many. As it turns other auto manufacturers’ are also signaling problems with their electronics, gears and the like.
• Toyota is multinational, with a global footprint and supply chain, including dozens of manufacturing plants in North America.
• While the company will recover from the recent fiasco, how it does, and where it goes is a topic the business press is going to watch very closely; and so will business-school professors writing case studies and legions of B-school students looking to learn from the live case study being played out
• And speaking of modern automobiles and our dependence on them for commute and transportation asking how reliable can/should the automobiles be is not even a philosophical question. But I guess automation of automobiles is a topic the technologist and Software Architect in me is pondering over. This is a topic I have had endless debates with peers and clients about: the cost of quality.

Where does the recent Toyota fiasco leave cost-conscious global immigrants moving to the west, looking for reliable ‘wheels’ that will hold value for years? Would my next car be a Toyota? Wish I had a looking glass…

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Ps: On the human side, a nice post by Basab Pradhan (My Son and Asperger’s Syndrome)

American Missionaries and Hikers: why are Americans flouting global immigration laws?

A couple of recent incidents are making one reflect on dual-standards of globalization; one for westerners (including Americans) and another for the ‘others’ in the globe
Case A) U.S. Baptist Group in Haiti Charged With Child Abductions: Ten Americans who tried to take 33 children out of Haiti last week without proper documentation were charged with child abduction and criminal conspiracy, the New York Times reports. The group, made up mostly of members of a Baptist congregation in Idaho, said they were transporting the children to an orphanage in the Dominican Republic. “We did not have any intention to violate the law, but now we understand it’s a crime,” NYT quoted Paul Robert Thompson, a pastor who led the group in prayer during a break in the session.
Question to self: Sure, there is a strong humanitarian motive here. But what the heck were these Americans thinking? A third world country ravaged by natural disaster is a case study to “rescue” orphans, take them across international borders without papers, and get some brownie points from the one above?

Case B) A few months ago, the media in America was all over the story of three American hikers who were arrested in Iran after “straying” across its border with Iraq.
Again Question to self: What the heck were these American “kids” doing, “hiking” in such a volatile part of the world, especially without the right papers/visas?! Reverse the situation; what would happen to a couple of hapless Iranian “kids” who "happen to stray" into American borders while hiking in the Canadian Rockies or in Mexican-US border near Rio Grande? A very hypothecal question I guess since few Iranians will get visas to come “hiking” in Canada or Mexico. And the rare few who do will probably not be foolhardy to stray near American borders without American visas. Given this, why did it surprise the American media when “Iran Accused U.S. Hikers of Espionage”

I completely sympathize with the helpless individuals in both situations who find themselves at the receiving, finding themselves in Iranian or Haitian prisons, especially if they were innocent.

There again, if a crisis is an opportunity, here it is: Americans who have the time, energy and wherewithal to go out to the world and solve others problems could reflect on the humanitarian aspects of immigration and closed borders back home?! Just a couple examples:
• Spouses and minor children of American Legal Immigrants (Green Card holders) have to wait at least 4 -5 years before being granted an Immigrant visa to enter the US legally! Would ANY American missionary be willing to sneak in a spouse or child of a legal resident on “humanitarian” grounds?
• Workers in America living legally, paying taxes have to wait years before their Green Card applications are processed. How many missionaries are willing to stick their neck out here

Doctor heal thyself is an old adage comes to mind. But what am I saying, aren’t American Doctors and healthcare workers trying to heal the system? Well, that’s a different story in itself.

Observations on Globalization in India: 2010

On a recent flight from Delhi to New York, I was reading up on the World 2010 supplement in Financial Times, highlighting some areas of focus from the Davos World Economic Forum. The article ‘Consumer Spending starts slow shift East’ caught my attention for a couple of reasons:
• It had a picture of a typical new Mall in Anytown India
• Highlighted the gradual move of consumerism to Asia, specifically highlighting China

Reading the article, I began reflecting on the few weeks I spent in Delhi and Bangalore during this trip that included a bit of travel around Tamil Nadu. My two cents on Globalization in India, from the ground up:
• Youth, especially non-tech graduates are torn between opportunities in globalization (read jobs in BPOs and Call Centers) vs. steady 9-to-5 jobs with regular paychecks. A nephew of mine, a recent graduate in mass communications was sitting on the fence when it came to tech-writing and opportunities at call centers. His reason for rejecting offers from call-centers? He would have to work irregular hours, impacting his social life and work-life-balance. Talk of assertive youth!
• Domestic IT opportunities are burgeoning. Many of the large software service players including TCS, Infosys (my employer), Wipro, IBM, Accenture and others are bidding for large computerization, digitization and automation projects in India, especially eying the large government bids that are in the pipeline. Bottomline for IT professionals: reverse-brain-drain of right talent from the west. The ‘Return to India’ move is no longer just a fad. Many friends and colleagues who have put in time in the west and have got US, British or other western Naturalization/Citizenship along with some $$ savings are moving ‘back home.’ They are doing this without much hoopla. Many are able to effortlessly blend into the local workforce and take the ‘traffic, pollution, overpopulation’ cribs with a smile.
• Globalization has not really hit the ‘Aam Admi’ (common man) in any significant way. Small towns in India still depend on the traditional brick-and-mortar economy with a sprinkling of cyber-cafes
• Retail chains are may be the ‘face’ of emerging Indian consumerism, but they haven’t pushed the small retailers out by any measure (at least not yet in 2010). The Big Bazaars, Spencer's, Reliance Fresh et al have built outlets all over metros. Some of the middle-class/tech-class folks do prefer shopping there for convenience. However, here is the reality: if Reliance Fresh sells apples at Rupees 90/kilo, right outside the retail outlet, one can probably find vendors in pushcarts selling apples at Rs 40-50/kilo. One can argue that the ‘grade’ of apple sold at Reliance or Spencer's is probably higher than that of the thelawala, but my mother and cousin care more about the 40-50 rupees saved!
• Malls and multiplexes are mushrooming in metros. Ture. A visit to any large mall in any metro in India will evoke the same experience as a mall in London, New Jersey or Ohio. And yes, the global chains - Nike, Rebok, Samsonite etc – jostle for eyeballs and foot-traffic with a few local retailers who have a presence in the malls. Now, about making money? Well, the average mall-consumer in the US or UK is probably the Gen-X or Gen-Y twenty-something who goes to the malls to spend money, if not doing so online. The average Desi consumer, on the other hand goes to malls with his girlfriend or her fiancée to window-shop, experience a ‘western’ atmosphere in the mall. S/he ends up spending a few rupees at the food-court and after a busy weekend window-shopping, watches 3 Idiots at the mall multiplex. As far as the 1-lakh-rupee Mont Blanc at the mall goes: the window-shoppers gawk and use cellphone cameras to take snaps as a keepsake.


All brings to mind a few questions:
• What does globalization mean to the Aam Admi in India? Is the digital-divide creating a wider gap between have’s and have-not’s?
• What does the media mean by Indian Consumerism coming of age?
• Are Malls, Multiplexes and Indian retail chains making big bucks, just on eyeballs, window shoppers and foot traffic . . . or is it a replay of the dot-com-burst?
• Closer to my area of expertise: is the brain-drain of tech workers going to get arrested thanks to domestic demand in India?

Links of interest:
• Review of Malls in Bangalore
• Dear Mumbai Malls
• The Fall of the Indian Retail Mall
• Powercut in Chennai Malls
• Expensive malls, cheap products?

Haiti Musings: Man is small in front of Nature

The recent calamity in Haiti and the aftermath makes one wonder about the best and worst of mankind that shows up at times of crisis. The good part is that most of the energy in emergency management, especially from western governments was galvanized to support victims in Haiti. However, the lawlessness boiling over seems to be bringing out the ugly side of some humans who look to benefit from a crisis.

The crisis also makes one wonder about other past ‘acts of god’and how societies and governments in the east and west respond to them:

* Tsunami in South Asia
* Hurricane Katrina devastating
* Cyclones in Bangladesh, Andhra Pradesh, Orissa
* Floods in Gangetic plains
* Famines and drought due to monsoon failures

Bottomline: Even in a flattening world, with all the technology and global communication at our disposal, man is pretty small in front of the fury of nature.

The techie in me is intrigued by the ‘Tweeting’ fad. Obama’s first ever tweet happens to be on Haiti quake. Wonder if Obama’s administration seems to be going back to a tested strategy to revive Brand Obama using the internet. They were already quite hi-tech in using technology to reach out to Grassroots of Anytown America, bringing out the best of Obama during his presidential campaign a couple of years ago too!

Savita Bhabi, Google, China and India: impact on Net Neutrality

Media and Digerati are abuzz about Google’s spat with Chinese authority over web censorship and Google’s threat to pull out of China. Reuters reports “The press is abuzz this morning over the news that Google (GOOG) could pull out of China over a hacking attempt. The Wall Street Journal explains that the large-scale cyber attack “has been under way for weeks.” The paper continues, “Google said it suffered a ‘highly sophisticated and targeted attack on our corporate infrastructure originating from China’ in mid-December, which it said resulted in ‘the theft of intellectual property.’”

While this is happening, the media and bloggers in India are also abuzz on censorship in their backyard: banning online cartoon series, Savita Bhabhi, depicting a sexy sari-clad “porn star” by the Indian Government. The series is now hosted from overseas online on kirtu.com.
Mitra Kalita’s Wall Street Journal article “Savita Bhabhi: A (Sex) Symbol of Free Speech?” illustrates the subtleties in the censorship by China and the random censorship practiced in India.

While google’s threat to withdraw from China may just be posturing, it certainly brings to mind Net Neutrality. The technologist in me has begun musing about Net Neutrality this for a while.

The principle says that that if a given user pays for a certain level of Internet access, and another user pays for a given level of access, that the two users should be able to connect to each other at the subscribed level of access.
There is no direct correlation between censorship and Net Neutrality. However, if the net is not neutral, it will preclude censorship in many forms:

* It will be easier for governments and others to target individual ISPs and Net Service providers, block content or degrade network performance
* Corporations and organizations are increasingly using open internet backbone for corporate needs including data and voice communication requirements. In a scenario of non-net-neutrality, if a company, say XYZ Corp uses a certain service provider and that ISP or service provider is targeted by censors in a country where XYC Corp operates, their communication backbone would suffer, leading to business disruption. This disruption would not have anything to do with what XYC Corp did but more because they contracted with a certain Internet Service provider!

Proponents and opponents of Net Neutrality, and corporate users should closely observe the Net censorship by governments, especially in China and India, emerging global economies.

Global travel and weather

The recent snowstorm had the anticipated fallout: disruption in travel and flights. Residents of northern hemisphere, especially northern United States and Canada take a few snowstorms during winters as a given but I guess London is not as prepared. NYT summarized it thus “London, a city known for its low tolerance for snow, was buffeted by an unusually thick snowfall on Wednesday, the heaviest in more than 20 years.

While inclement weather disrupting travel is a way of life, it can have a ripple effect on air travel, thanks in part to the practice of overbooking by airlines. What’s overbooking? Check out the interesting article (10th June 2008 - "Sorry Miss - Your Flight is Overbooked") A few months ago, I was traveling from Chicago to Houston on a Saturday and the flight had been overbooked. When the ground crew called for volunteers, I went ahead to the counter: the offer was sweet: a travel voucher for $400 and rerouting to a flight that would arrive 3 hours later and a few food-vouchers.

However, such an offer may not be ‘sweet’ for those who have a prior appointment or would be traveling with the family. For example, a friend of mine traveling from London to Bangalore three days after this week’s snowstorm was at a similar receiving end. He was traveling with his wife and one-year-old baby. The friend and his family were forcibly offloaded and rebooked on a flight three days hence. The reason given was that British Airways was recouping with the backlog due to delay and cancellation of dozens of flights a few days ago. For my friend, the compensation and offer for rebooking was a bummer since the vacation plan with his family was in disarray.

With the global economic outlook thawing, the airlines are looking for a rebound in international travel. I guess overbooking, rebooking and being bumped off flights is going to continue to be a reality.