Why India Needs The Presidential System

I came across this book recently and since the title sounded so interesting, I decided to buy it. In his book "Why India Needs The Presidential System" author Bhanu Dhamija writes about what's wrong with the present Parliamentary System of Democracy in India and how and why the Presidential System can solve this problem.

The Presidential System is the US Presidential System and the Parliamentary System is the British Parliamentary System . India's governance was modelled around the British Parliamentary System which is quite unlike the US Presidential System. The author believes that the US Presidential System can solve this country of some systemic problems and presents a fact based analysis of his arguments.

In this and subsequent blog posts I will try to analyse what the author presents in his book. He starts with the 4 laws of power:
1. Power tends to corrupt and absolute power corrupts absolutely.
2. Power consolidates when it is more than essential
3. Power dissipates when it is less than sufficient
4. Power co-operates only when it is encroached upon

-If powers are properly assigned, government serves the people, otherwise, it becomes their master.

-The author believes these laws are confirmed in the US Constitution. James Madison had found that governments failed to serve not only when they were too powerful, but also when they were too weak. Madison had also stated that "Unless these government departments be so far connected and blended as to give to each a constitutional control over the others, the degree of separation.. essential to a free government, can never in practise be duly maintained."

This is how the above 4 laws were addressed in the US Constitution:
1. To deal with powers tendency to corrupt, they separated the powers. They separated the powers in local governments, state governments and the central government - leading to a Federal System of Governance. In India, the GST Bill, which has been stalled in the Rajya Sabha, aims to give the states the power to levy a tax and collect a tax. The Constitutional Amendment required for passage of GST Bill requires a 2/3 majority and not a simple majority.

2. In order to ensure that the Federal Government did not become too strong and tyrannical, they set up a system of powerful state governments. Each government, national and state, was assigned only limited and essential powers.

3. To solve the problem of co-operation, they created a system of 'co-ordinated' departments through checks and balances. This gave each department certain constitutional rights over the others.

Indira Gandhi, who came to power with less than 44% of the votes, instituted a state of Emergency in this country in mid-1970s, giving her unfettered powers and converting the Parliamentary system into a dictatorship. She amended the Constitution with retroactive effect and replaced the Chief Justice of India. The forty-second amendment by Indira Gandhi still stands which states that "There shall be no limitation whatever on the constituent power of Parliament." In six months of the Emergency, Indira Gandhi drafted a massive amendment to the Constitution which was 20 pages long. It added 59 clauses and 9 new articles to the Constitution and amended 50. One of her amendments gave Directive Principles precedence over Fundamental Rights, providing the government the right to deny individual rights for state purposes. The courts could no longer handle election disputes. They were not allowed any jurisdiction over tribunals. The Supreme Court was barred from considering the constitutionality of a state law, the high courts from those of Central Laws.

There was now a complete lack of any oversight on the Government. Corruption became endemic in the system. Transparency International's Corruption Index dropped India 11 places in 2011, ranking her 59th in the world.  The practice of establishing commissions of inquiry to scrutinize specific government activities was also downright impractical. A government was expected to start an inquiry against itself, and then to reprimand itself.

[All facts in this blog post are quoted from the book "Why India Needs The Presidential System" by Bhanu Dhamija.]

Where to find growth in the post QE era?

The market turmoil over the last few weeks has indicated that businesses are uncertain where they will see growth, now that the QE has ended in America and the interest rates are on the rise. The Chinese economy which had overheated, is now cooling off and the demand for oil, iron ore, copper and other commodities are dropping along with their prices. China is suffering from an over-capacity problem right now.

I think in this environment, the input costs for manufacturers would be very low since the price of oil is at an all time low and the price of copper and iron ore are also close to their all time lows. This should boost the margins for the manufacturers if their sales are constant. So all else being same, the manufacturers should be able to report better profits. 

But the demand side is weak as the consumer is not spending a lot of money. This is due to the fact that they are cautious in this uncertain environment. In this situation, lowering the prices could be a good solution to increase sales. Considering the low input prices, manufacturers of goods should be able to sell their goods at a much lower price now vis a vis one year ago. Price of oil has dropped from the $50-60 range in 2015 to $30 per barrel today.   Iron ore prices have dropped to a third of where they were one year ago.  Copper prices are down 8% year over year. 

There could be demand for commodities from building heavy infrastructure such as a rail road in Afghanistan or solar power farms in Sahara in Africa. India, which is facing a power deficit right now, is planning to build 5 new nuclear reactors in collaboration with the French. I think there are business opportunities and investing opportunities present today that could yield dividends going forward.

The Indian Identity by Amartya Sen

Just finished reading the essay titled “The Indian Identity” from the Argumentative Indian by Amartya Sen. I am trying to summarize the main ideas expressed in this essay here, to share them with you and get your views. In this essay Amartya Sen dives into Indian history to identify the roots of the Indian identity and various dilemmas faced in defining such an identity.

The question to be answered here is whether the Hindu identity and the Indian identity are separate or are they inseparable? On this, Sen is very clear that the Hindu identity is very distinct from the Indian identity. India has a pluralist and multi-religious population with Jews, Christians, Parsees and Muslims. Identity has to be chosen with reasoning and is not a matter of discovery. The Indian constitution is secular in nature and so one religion cannot be attributed to the Indian identity.

The Indian Identity has been one of integration of several cultures over a long period of time. Challenges to this have come from separatism within India particularly with the privileging of one community over the others and one cultural tradition over others. Indians have multiple identities based on their association with any specific community, language, religion or home country. There is varying relevance of different identities in different contexts and we have the choice to how much significance we attach to our different identities. However, there is no escape from reasoning just because the notion of identity has been invoked.

Global movements of ideas, people, goods and technology have tended to benefit progress and development in different regions. Sometimes the global movement of ideas is seen as the ideological imperialism of the West - as a one-sided movement that simply reflects an asymmetry of power which needs to be resisted.

Amartya Sen mentions that the Indian Institutes of Technology, which were launched at the initiative of Nehru have been critical at flowering information technology and related developments in India. These along with the Institutes of Management have brought many dividends and have certainly been instrumental in opening up new possibilities for Indians. The development of Indian school systems has also been extraordinary. If we are not able to seize the economic opportunities for the manufacture of simple products in a way that has happened in Japan, Korea, China and other countries in east Asia, not to mention the West, it is because of a neglect of basic education.

The real debate on globalization is ultimately not about efficiency of markets or about the importance of modern technology, but rather about the asymmetries of power, for which there is much less tolerance today than after the Second World War. Amartya Sen argues that India has to move to import substitution and then to export promotion to build economies such as those of South Korea and Taiwan.

India today faces many challenges in setting up advanced manufacturing industries in the sectors such as semiconductors and electronics, advanced transportation systems and energy systems such as smart grids, solar and nuclear power to achieve energy security. These challenges are very similar to those faced by Jamsetji Tata in setting up the first steel mills in this country in 1907. Jamsetji Tata wanted to have a flourishing iron and steel industry in India whence the British had not setup a single steel mill in this country in their entire rule. It was during the Swadeshi Movement in India that Dorabji Tata was able to gain enough financial support from Indians for construction of the first steel mills that started rolling out steel in 1911. We will need similar initiative today to achieve energy security in this country that imports more than half of its requirements of oil, gas and coal.

P.S. The British are the largest investors in the Indian economy today out of the G8 nations.

Climate Change Summit Paris 2015

The 2015 United Nations Climate Change Summit is underway in Paris now. At the previous summit in Copenhagen in 2009, it was agreed to control carbon emissions to the point that the temperature rise is below 2 degrees celsius. There were no legally binding agreements signed by the participating nations. A carbon trading system was proposed and global carbon trading market was stated as one of the goals of the COP15 summit.  

Controlling global warming by reducing carbon emissions is important to sustain life on this planet. High levels of pollution have made cities in China inhabitable and people have to wear face masks on their daily commute to work. The rate at which plant and animal species become extinct has increased post the advent of the industrial age.  Studies are showing that human productivity  is decreasing in nations having heavy increases in temperature. 

In the run up to the Climate Summit 2015, America has pledged that by 2025 it will cut its greenhouse-gas emissions by 26-28% below 2005 levels. South Korea says that by 2030 its emissions will be 37% below where they would be if the recent upward trend in emissions were projected forward. 

What makes it difficult to get countries to a consensus on emissions reduction is the fact that the cost at face value of sustainable environmentally friendly business practices is more than that of more polluting practices. However, the recent advances in technology have made this argument turn on its head. As we had noted earlier on this blog, rising cost of coal imports and inflation in India have increased the costs of coal based thermal power plants to a point where wind energy is competitive without subsidies and solar power has come very close to break-even. The indirect benefits of a cleaner power source are also many, primary one being the healthier life of the citizens of the country.

Apart from this, carbon trading to offset the emissions is also gaining ground around the world. The revenue from taxing the emissions is used to fund environmentally friendly energy sources. I think it would be advisable to target areas where eco friendly technologies have reached free market pricing and have agreements on the use of these technologies. For example, electric cars, high speed rail, nuclear and wind power are some of the technologies that are at market potential and there should be agreements on the use of these technologies and their increased adoption. Instead of focusing on how much to reduce the emissions, the discussions have to now move to how to reduce emissions since several environmentally friendly alternatives are available which are competitive on the free market.

A global market for trading carbon offsets could be a good idea and carbon credits could potentially become an international currency. The price of a carbon credit would be low in a country which pollutes less and high in a country which pollutes more. Industries could purchase carbon credits from such countries that pollute less and get a license to pollute to that extent. The money earned by selling a carbon credit would be invested in developing eco friendly technologies and solutions. The carbon credit system could be internationally regulated and have a single controller such as the United Nations. The UN could then set quantitative targets on how much emissions are permissible over a given span of time and enforce it with a fine (carbon tax) on industries that don't have the required carbon credits. An Agreement on such a carbon cap and trading system should be the aim of the 2015 Climate Summit in Paris.

Where are the bottlenecks to growth in India right now?

So this is the question on my mind - given the situation that India is in right now, where should we be investing the limited funds available to us? The situation being that government budget is constrained by the fact that the fiscal deficit should not be more than 5% of GDP. With the Goods and Services Tax coming up next year, there will be revenue sharing between center and states and the budget of the Central Government will be constrained even further. At present the government is finding it hard to implement the recommendations of the 7th pay commission. The manufacturing sector is lagging as government is not undertaking major projects (such as new dams, nuclear reactors, smart grids, etc.) at this stage and this is showing in corporate earnings of the industrial companies. The economy is in a dismal state right now.

The Goods and Services tax is expected to be a friendlier tax regime than the present VAT which suffers from 2 important drawbacks: 1. Cascading taxation and 2. Inability to tax imports on par with the domestic production. With the states sharing the revenue from the single GST tax regime, the Center will have to delegate increasing responsibilities to states than done previously. This would also open up the opportunities for state level debt and state government bonds similar to the central government bonds. A constitutional amendment will be required to enable the states to collect the GST.

The Congress had brought the GST bill in Parliament in UPA2 regime but were not able to bring the states on consensus on a common tax rate and so the bill was stalled. Now the BJP has been able to bring the states to consensus on the GST tax rate and the Congress is blocking the GST bill in Rajya Sabha.

The second factor that can boost the economy is Foreign Direct Investment in critical sectors such as power (nuclear reactors, smart grids, etc.) and transportation (high speed rail). These are very attractive sectors commercially and corporations in Japan and USA provide debt financing at low interest rates for such environmentally friendly projects. For example, Japan has offered to finance the the first bullet train in India, having a cost of $15 billion, at a 1% interest rate.  There are a lot of opportunities in the nuclear power sector after the India and USA reached a joint agreement on development of civilian nuclear power (Link to September 2015 story).  GE-Hitachi had started discussions on building nuclear power plants in India (Link to February 2015 story).  These deals are stalled right now.

Generating more nuclear power will help reduce our dependence on coal imports for generation of electricity. This could potentially solve the persistent power deficit problem in this country and make power production immune to supply side shocks from high price of coal and natural gas when the Rupee depreciates.

The FDI regime in India can be changed from limited FDI (49-50% in most sectors) to 100% FDI with a caveat that the business has to support local jobs. This has been implemented in multi brand retail where we have seen Walmart set up stores in India and source large amounts of their merchandise locally. USA has similar FDI norms where car manufacturers have to manufacture at least half of their cars in USA. I believe this would make the FDI route more attractive for businesses and multi national corporations.

I think these factors can significantly improve the growth prospects of the Indian economy at this point of time.

Impact Of Rupee Exchange Rate On Business Opportunities In India

We published a research paper titled "Impact Of Rupee Exchange Rate On Business Opportunities In India" in the IOSR Journal of Economics and Finance and the paper can be accessed here: Link to the journal

In this paper, we have presented the impact of Rupee exchange rate on business opportunities in India from a macro economic perspective considering the indicators such as Consumer Price Inflation, Gross Domestic Product and Index Of Industrial Production.

Abstract: In this paper, we present an analysis of the macro economy in India with respect to the exchange rate of the Rupee and de regulation of oil prices. These 2 factors have been critical in deciding the business competitiveness of the economy and their individual effects are studied. Various business competencies arising from strong and weak Rupee as well as de-regulated prices of oil are discussed. 

In continuation with the analysis expressed in this paper, we would like to share the following analysis:

The Rupee exchange rate in India is linked to the trade deficit (imports - exports). Higher trade deficits lead to a weaker Rupee. Considering an economy which has certain total imports x and certain total exports y, if the exports start dropping and imports (of consumer goods) start increasing, it might be a cause of concern (on the competitiveness of the economy). A currency depreciation might boost the exports in the short run, by making them cheaper. 

But consider the case of India. Here the primary imports are all in energy: oil, natural gas and coal. When the imports increase, we are importing more energy, and that is because the economy is doing well  and we are producing and selling more (domestically and internationally). In this case, should the Rupee depreciate with increased imports? Think about it.

(Petroleum accounts for 34% of India's imports. Data source at tradingeconomics.com)

On another note, Japan manages to import energy (oil) to meet 42% of its energy needs, but does not see any inflation even if the Yen depreciates from 75 to a US Dollar to 100 to a US Dollar. This is not the case with India. As is evident from the above research paper, a depreciation of the Rupee vs US Dollar will lead to higher inflation in the country (data from 2010 to 2014).

The below graph shows the energy imports in India as a percent of total (Data from: tradingeconomics.com)

source: tradingeconomics.com

A Hundred Small Steps (Contd.): Market reforms within existing legal and institutional framework

First a comment on my previous blog post in this series: Creating Liquid and Efficient Markets

"Consider the last 2 weeks turmoil in the financial markets. On Aug 24 the markets dropped by around 1000 points as fears from slow down in China and the US rate increases created a flight to safety in the markets. As the money moved out of Indian equities, the Rupee dropped to a 12 month low to 67 to a US Dollar. Subsequently, as the rate hike fears in USA were eased and the Chinese government reduced the rates, the markets recovered and so did the Rupee to 65 to a US Dollar. Now suppose we had a robust and liquid corporate bond market open to foreign investors. The money that moved out of equities at the start of the down swing, would have moved into corporate bonds and the Rupee would not have been hit so hard."

The suggestions given in the section on market refoms have been alluded to in earlier sections of the report and so have been superficially covered in the previous blog posts in this series. I find the treatment in the report to be very complete and am unable to contribute to the suggestions expressed in any way. So I  would suggest the reader to read this section on the report on pages 133 to 135 here: A Hundred Small Steps: Raghuram Rajan

IT STRATEGY CASE STUDY FOR BANKING INDUSTRY IN INDIA

This case study was prepared as a part of the IT Strategy course taught by Prof. Sanjiv Mehta at SICSR

BACKGROUND:

Industrial Credit and Investment Corporation of India was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses.

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary.

In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE.

CASE FOR IT STRATEGY:

Analytic technology was not relevant for the old ICICI but it is now central to the banks growth and success. In the next decade, retail banking is expected to be one of India’s fastest growing markets.  Nearly 70% of the population is under 35 years of age according to the 2003 government census and banking services are a new phenomenon for most of the population.

ICICI is aiming to be in the domestic urban and rural markets where 70% of the population lives and to be the bank of choice for Indian’s living abroad in North America and Europe. ICICI is using analytics and information technology to accelerate new customer growth and manage its risk exposure. It has positioned itself as a high tech innovator with cost effective and convenient banking through online banking, ATMs and mobile phone banking.

 

HOW WAS IT STRATEGY IMPLEMENTED:

ICICI was the first bank in India to offer internet banking. In 2008 ICICI introduced iMobile banking wherein customers connect to the internet using their mobile phones to do transactions with the bank. With the growth in e-channels, branches are now more valuable to ICICI as points of sale for products.

Credit Analytics:

When ICICI created its first in-house analytics team in 2001, there were only 25 analysts whose sole responsibility was to track market conditions and delinquencies. India did not have a credit bureau until 2005, so when ICICI began developing its first predictive models, it had no external source of data on consumer credit behavior. Moreover because ICICI was new to the consumer banking market, it also did not have internal data. Therefore the first in house score cards were constructed without data.

Now ICICI has large internal databases and has refined its internal score cards which are used in credit card services, mortgage, auto and 2-wheeler bicycle lending. Better customer segmentations increase the banks precision and agility in monitoring delinquencies and adjusting credit lines. Segmentations are also used for transactions based target marketing programs and to forecast accurate foreclosure rates. New segmentations are being developed based on consumer behavior rather than static attributes.

Analytics has also been a powerful tool for ICICI to expand pre-approved credit line offers. An ATM based overdraft service for checking accounts is one of the bank’s most novel services. ICICI has also developed scores to monitor the risk behaviors of a single customer across multiple products. ICICI and other Indian banks have an edge over the foreign global banks competing for their slice of the new urban consumer class. The domestic banks advantage is even more pronounced in rural areas. Using technology and imagination, ICICI is coming up with radically different retail services for a radically different client.

Rural Lending:

Rural lending might include loans for growing crops or buying a buffalo as well as for education, health care and mortgages. Because there is no data, ICICI has been creative in characterizing the rural segments. For example, an affluent farmer is someone who purchases hi-tech equipment and has a large land holding whereas a normal farmer owns small plots of land and is often employed by an affluent farmer. ICICI is developing its micro-finance lending for as little as $100 and terms of payment are also personalized. For example, for a farmer it might be adjusted to the milk yield of a single buffalo.

ICICI is constantly investigating other ways to proliferate their banking presence. In fact, one of the key challenges for the future is how to create more convenient and low-cost access points for rural customers. Some ideas include partnering with the Indian postal service to place ATMs within their extensive infrastructure and integrating ATMs with vending machines.

Rural Kiosks:

ICICI has now set up additional partnerships with EID Parry, n-Logue, ITC e-Choupal and BASIX to take advantage of the rural kiosk network they each have established. Each partnership is designed to build on the unique strengths of each organization and to truly leverage their experience and relationships. These partner organizations receive in return the backing of the second largest bank in India to help expand their kiosk network. ICICI envisions setting up many more partnerships with MFIs and NGOs that have the expertise and passion for serving the rural poor.

Rural ATM:

The rural ATM machine, to be placed in the kiosks, is a simplified version of a regular ATM. With a simple interface and multiple languages, the rural ATM will be accessible by all and will be the conduit through which ICICI delivers banking services to the remote Indian countryside. It is currently in development in the lab of Dr. Ashok Jhunjhunwala and is expected to cost a meagre 3000 rupees or USD 600 versus the 80,000 rupees or USD 16,000 that it costs for a normal ATM machine. ICICI envisions placing this rural ATM in the kiosks their partners have already implemented.

Mobile ATM:

ICICI also is investigating the possibility of building a mobile ATM. The ATM machine would be installed in an ICICI-branded truck that would circulate through a number of villages on a specified, pre-determined route. Rural villagers would know when the ATM was coming to their village and would be able to take care of their banking needs on that day. With the mobile ATM, ICICI could serve a number of villages with limited capital outlay.

Smart Cards:

ICICI is also researching the possibility of implementing a smart card based payment system in order to eliminate the costs associated with cash handling. “The two key challenges that must be overcome to extend banking to the rural poor population are elimination / reduction of cash handling and innovation of low cost delivery channels.”  Smart cards effectively harness the technology advances of the new economy and apply it to the old economy. “By combining the features of a handy credit / debit card with the advantages of storage capacity, the smart card provides secure identification, a store of value and an ability to function off line while maintaining an audit trail of all the transactions.”

Smart cards were launched by ICICI in October 2000 by ICICI at Infosys Campus in Bangalore and at Manipal Academy of Higher Education to create a cashless economy. However, many problems exist with smart cards, such as high cost and lack of technological infrastructure for widespread adoption. The high cost is especially amplified at the rural level. However, ICICI is watching closely what BASIX is doing currently with smart card technology to see if it is cost effective and viable.

New Rural Initiatives:

With new initiatives such as rain insurance, venture capital, mobile ATMs and derivatives, ICICI is always testing, rolling out and then scaling up innovative ways to profitably serve the BOP.

ICICI Bank Pockets:

“Pockets” is a new offering from ICICI Bank and it offers all the features of an e-wallet with some additional features as well. 'Pockets' is a mobile application, which can be used to send money, pay utility bills, book movie tickets, send gifts and share expenses. One can use this service even if one doesn’t have an ICICI Bank account. With this app, one can also open a zero-balance account.

The Reserve Bank of India (RBI) is in the process of deciding on payments bank licenses, for which it has 41 applications.

Payments banks can accept deposits up to Rs.1,00,000, offer current and savings account deposits, issue debit cards and provide internet banking.

Explaining the rationale for calling it the ‘first digital mobile bank’, Rajiv Sabharwal, executive director, ICICI Bank said, “We have called it a bank because it can do much more than what an e-wallet does. It can actually function as a bank account. Going ahead, we are going to be adding a lot more features and services that are available in a bank otherwise.”

According to RBI regulations, the maximum amount a consumer can keep in the e-wallet is Rs.10,000. The upper limit on a transaction set by the bank is Rs.5,000.

With Pockets, ICICI Bank plans to target the youth segment and first-time banking customers. Currently, 50 per cent of the bank’s customers transact via the digital medium.

Between April-October, ICICI Bank has recorded transactions worth Rs.7,400 crore on its mobile banking platform.

USP OF IT STRATEGY:

The IT strategy at ICICI has been designed with the end customer in mind. They have tried to penetrate both the urban and the rural markets in India, designing specific products for both. They have been consistent first movers in the segment. They were first to offer internet banking, phone banking and mobile wallets. Their rural initiatives are also pioneering.

KEY OUTCOMES:

A product of India’s liberalization policies in 1990s, today ICICI has come a long way. ICICI is India’s largest private sector bank in market capitalization. It is India’s second largest bank in terms of assets. It is a growing international competitor with presence in 18 countries. In 2000, ICICI’s consumer banking business had a fewer than a million customers. By June 2006, that number had risen almost 10 fold to 9.5 million. Its asset base grew from around USD 2.5 million in 1996 to USD 80 billion in 2006 and to almost USD 100 billion by the end of March 2008. As of 2007, ICICI had a 30% market share overall in retail financing products including credit cards, mortgage lending and personal lending.

FUTURE IT STRATEGY:

Going in line with the customer segments that ICICI has developed, the future IT strategy could be divided into these segments:

Urban Retail Customer:

Analytics on a customer’s credit card spending could lead to a better understanding of the customer behavior and needs, helping the bank design customized credit offerings.

Rewards points on the use of credit cards could be en-cashed through petrol and diesel payment receipts (as is done by CITIBANK.)

Microcredit facilities for school and college drop-out students could help them in starting new business ventures.

 

Rural Retail Customer:

Linkages with AADHAR and RUPAY will help in reducing fraud and also in mobile payments in rural India. Government is experimenting with Direct Benefits Transfer with RUPAY linked bank accounts. This would overcome a significant hurdle in rural banking with regards to payments and receipts.

Investment Banking:

Develop algorithmic trading platforms for automated online trading based on mathematical models.

Develop high speed trading platforms for large organizations to trade.

International Markets (USA and Europe):

Explore the BITCOIN market and study its feasibility as a payment system.

OTHER TOP FIN-TECH DISRUPTORS:

HDFC Bank has started automatic loans processing through the use of machine learning and big data algorithms.

TradeLab (http://tradelab.in/)

Algorithmic trading platform, high speed trading platform and paper trading on simulated market competition

Metamako

Low latency trading platform. Metamako is a technology company that specializes in solutions for latency sensitive businesses. It was founded by Scott Newham, Dave Snowdon and Charles Thomas who have a background in ultra low-latency hardware, software and trading. 

Klarna

Klarna is one of Europe’s leading providers of payment solutions for e-commerce. 
Klarna separates buying from paying by allowing buyers to pay for ordered goods after receiving them, providing them with a safe after-delivery payment solution. Klarna also assumes all credit and fraud risk for e-stores, providing assurance to sellers that they will always receive payment. Klarna’s vision is to enable trust and to offer a frictionless buying experience to buyers and sellers across the world.

Square, Inc.

Square, Inc. is a financial services, merchant services aggregator and mobile payments company. The company markets several software and hardware products and services, including Square Register, Square Reader and Square Order. Using a free credit card reader on their iOS and Android device, Square Reader allows anyone to accept credit cards anywhere, anytime for a low transaction rate per swipe and no hidden fees. Square Register is a full point-of-sale system that allows businesses to accept payments, manage items and share menu and location information. Square Order lets people place orders for pickup from local businesses eg. shops and restaurants.

Kreditech

Kreditech uses big data and complex machine-learning algorithms to serve a simple mission: make faster, better credit decisions. Via its consumer platforms Kredito24 and Zaimo, individuals can apply online, mobile or via SMS and receive funds into their bank account, credit card or at an ATM in under 15 minutes. Kreditech's technology identifies and scores individuals in seconds based on 15,000 dynamic data points. Customers can apply for short or long-term loans and other financial products in seven countries worldwide.

Xero

Xero is the emerging leader in online accounting software, providing business owners with real-time visibility of their financial position in a way that’s simple, smart and secure. At its core Xero is an easy-to-use but powerful online accounting platform designed from the ground up for the cloud, not adapted from desktop software. For advisors such as accountants and bookkeepers, Xero forges a trusted relationship with clients through online collaboration.

REFERENCES:

1. Case study on ICICI Bank by Todd J. Markson and Michael Hokenson, University of Michigan Business School (Research Paper)

2. The Deciding Factor by John Nash and Larry Rosenberger (Book)

3.  Pockets: ICICI Bank’s answer to payments (The Business Standard)

http://www.business-standard.com/article/finance/pockets-icici-banks-answer-to-payments-banks-115021000859_1.html

4. FINTECHINNOVATORS.COM