Bhagwan Chowdhry's FAB idea: Give babies $100
UCLA Anderson Finance professor Bhagwan Chowdhry has a big idea: give all babies $100 at birth, which they could claim when they turned 16 years old. This concept, called Financial Access at Birth (FAB), has two projected outcomes. First, it would give all people, regardless of where they're born, the chance to become "financial citizens". Second, it would allow for the assignment of a global identification number, giving voice and potentially providing social services and other assistance to some of the world's poorest people, who often slip through the cracks.
PopTech had a chance to sit down with Chowdhry just after he presented at PopTech to find out a little more about the FAB project.
PopTech: How would your project reach folks who are not literate, are not connected to the world in the ways that we’re used to getting our information?
Bhagwan Chowdhry: We think incentives work. I think the word will get around when people hear that every child will get a hundred dollar deposit. That’s a lot of money in some parts of the world. The fear that some people have of not wanting to connect is overcome by this incentive. That’s what we are hoping will happen.
Do you have a location in mind already for where the pilot will take place?
We do have a location but we haven’t made the announcement yet so I am not at liberty to say.
We have a lot of distrust around banking institutions in general right now, and promoting them as a way to solve for some of these issues seems to conflict with what we are hearing about banks.
I don’t think it is really an issue of who is going to serve it. There are other financial intermediaries who could step in. Some other socially-conscious banks might step in. We haven’t made a decision about who is going to do it. There has to be cooperation with other agencies such as government. For example, these deposits have to be safe. You cannot have fly-by-night banks. These intermediaries have to be called to invent some sort of regulatory agencies like the government and they will have to be part of the solution.
And that’s assuming that governments aren’t corrupt, which is another whole slew of problems that you may be dealing with.
Right. And I think technology is a big help there as well. Because this technology that uses biometric authentication is going to resolve some of those issues.
Could you define biometric technology?
There are many things that go into biometric authentication but the three most promising ones are fingerprints, iris scans and the latest one, voice authentication. We have seen that fingerprints together with iris scans in India are working fine. You get somebody in and they do palm prints of both hands and you get an iris scan at the same time. You also give them a 12-digit number. So that number becomes your identity but to authenticate it, they will test your fingerprints against the database. It’s the same thing with voice authentication. I was surprised to learn that voice is indeed unique.
A logistical question: how would this work with existing identification measures already in place such as social security numbers from the United States for example.
The social security number in the United States is not one of the more secure identification systems. The first two digits are depending on the area, second set of digits are something else, so basically you are talking about the last four digits. And they always ask you what are the last four digits! Once I say what my last four digits are, I’m done. Anyone can figure out what it is. I think the identification that we are imagining will be more secure. It’s truly a random twelve digit number that’s not so easy to copy.
Have government agencies you’ve spoken with responded well to this concept? Do you have advocates that are helping you further this along?
We have spoken to many agencies who have shown positive response. They’ve given us suggestions. Most of the conversations have not been at the state level agency but multi-national like United Nations, UNICEF, UNDP. We are not far enough to talk specifics.
Our focus right now is to a do a pilot. The pilot is exactly the way to show how these pieces fit together and that’s where our concentration is. And at the same time, learn about what parts are feasible, what are not. It’s a great opportunity to learn.
What would success look like for you with this project?
There’s immediate success and there is long-term success. Immediate success would be proof of concept, having a real model that works. That would be our best way to advocate to other agencies. Long-term would be that people who see this work would start implementing it. Many countries that have thought about something similar have hesitated because they don’t know what is going to work and what is not going to work, like Mexico for example tried this idea of giving the poor identification cards. It didn’t work, the poor people were too afraid to get cards, they didn’t trust the process.
Once you show a concept that’s going to work and bigger countries like Mexico or a big country in Africa trying it, that would be the time for me to retire and someone else to take over.
Image: Kris Krug for PopTech
This interview has been edited and condensed.
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