Connectivity Is changing India fast
Connectivity is changing the living of millions of people across India and fast. More mobile broadband and decreasing smartphone prices are helping create new behavior in the country’s vast urban areas.
“The internet is finally coming of age and is empowering cross sections of Indian society,” writes Ajay Gupta of Ericsson India in an Ericsson ConsumerLab report on the region. “Though the most used smartphone services in India are for social networking and instant messaging, the usage of banking, e-commerce, navigation and cloud storage apps and services is increasing. It is for this reason we are seeing uptake and digital transformation of many industries like retail, transportation, and banking.” It seems that Indians that have the opportunity to use smartphone services are doing so and increasingly choosing m-commerce. As I pointed out during the panel discussion I participated in held by the Guardian Global Development Professionals Network, mobile money success stories are not limited to M-Pesa in Kenya.
Achieving Deep Distribution In Rural Areas
I have seen many initiatives launched in India and had many discussions about the future of banking in the country. Apart from the launch of M-Pesa and Airtel Money in India, an interesting company I came across is Suvidhaa Infoserve. To me, this company has set the foundations for solving a major challenge in mobile money and branchless banking: deep distribution in rural areas.
As Natalie Baatjies, Visa’s Senior Director of Financial Inclusion in the Central Europe, the Middle East and Africa region, pointed out in the aforementioned Guardian discussion, “India is a tough environment for mobile operators. The regulation is very restrictive since you need to have full KYC (equal to a bank account) to be able to cash out your funds. And easy access to money is a critical success factor. As a result, the majority of the population are forced to use over the counter transaction services at agent locations – which is not as convenient as paying bills from home or wherever you are.“
In response to this problem, the central Reserve Bank of India added fuel to the ecosystem by announcing payment bank guidelines. But, even if regulation is very supportive, I have noticed that consumers tend to be wary of “self-serve wallets” and rely on OTC services.
What needs to happen:
- The Indian government and policy makers need to urgently define guidelines for mobile financial services. As we’ve seen in many other countries, lack of regulatory support this is hindering the ecosystem in working together and is, in fact, leading to examples of mistrust and confusion between different types of financial service providers.
- NGOs and foundations can play a strong role in aiding consumer education and supporting funding for deepening of agent infrastructure in rural areas; these two aspects continue to be big barriers to service adoption.
- Finally, the private sector needs to drive a shared value driven approach to grow the ecosystem, a non-interoperable closed loop approach will only slow down the adoption of the service and stifle innovation. It might work in a few markets and isolated cases, but in most cases, openness is key driving innovation and service uptake.
This post was written by Rajiv Bhatia and first published on the Ericsson’s Mobile Services blog.