(Inspired by the Social Capital Index located here on xigi.net, two analysts are posting their take on the enterprises listed in Deals in Play. Deals in Play is a new feature of the Social Capital Index that lists social ventures actively seeking capital. Following is Andrea McGrath’s analysis of one of these enterprises.)

ZANADU TECHNOLOGIES

By Andrea McGrath

Zanadu Technologies first began in 2003 with a focus on the deployment of wireless broadband network services in emerging economies. During the past 5 years, as it developed its technology business to service clients ranging from governments, corporate and retail - it began to see the need - and the opportunity - to utilize increasingly available technology - such as broadband, mobile, and hand held devices - to provide increased and improved financial services to poor and largely “unbanked” communities.

Zanadu now aspires to deliver financial services through a secure, mobile, low cost, and scalable model. Solid numbers on the markets, infrastructure growth, and company strengths make this opportunity an interesting one. For example, in terms of access to ‘traditional’ financial products, recent World Bank data on three larger economies - Mexico, Columbia and Brazil - showed that 65-85% of urban households do not hold any kind of deposit account. While the flow of funds within many developing countries is low - there are a few case studies now of some ‘pioneering’ m-banking projects in the Philippines, Kenya and South Africa. Another demand signal is that the flow of funds to developing countries in the form of remittances continues to increase (the World Bank estimated recorded remittances at $240 Billion for 2007). In terms of infrastructure to support financial services, the numbers of mobile users and internet users globally continues to grow at a healthy rate. In addition to the mobile banking potential - Zanadu’s web based platform has potential to tap the growing social networks getting involved in financial transactions - be it donations, loans, etc.. in both the for-profit and nonprofit sectors. Could social networking increase the use and volume of fund flows in developing economies (increasing transparency, building understanding of new services). As an organization with 5+ years experience in emerging economies, Zanadu has an opportunity to build on its developed relationships and core skills in technology services and expand into the potential of mobile and internet banking services to the still large, unbanked communities globally.

Dialogue Questions
As public information on the organization remains somewhat limited - the dialogue questions for this idea are somewhat more specific/related to details about the market and services - such as:
Services - what services will Zanadu provide (i.e. payments to merchants and others? loans/micro loans?)
Revenue model from transactions - what are rates and volumes needed?
Regulatory/political issues in terms of licensed mobile/internet service providers
IT: Any security issues with Zanadu moving from current business into financial transactions?

Social Impact
Strengthening financial sector can have substantial impact on economic development/poverty alleviation (from the Ecomomist (Nov 15, 2007): Leonard Waverman of the London Business School has estimated that an extra ten mobile phones per 100 people in a typical developing country leads to an extra half a percentage point of growth in GDP per person)
Increased access to funds also has potential to spur or encourage increased entrepreneurship
Potential to provide LOW cost access and transparent access (remittances and credit)
Networks via web has potential to develop partnerships for funding and development opportunities