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GameChanger
M2 Mobile money is likely to be the biggest catalyst in the race to trade with the Indian
consumer. The scope and potential of this technology dilutes the relevance of
traditional, expensive models designed for last-mile access. We examine how this
powerful tool is going to facilitate financial transactions for marketers of products and
services in the telecom, banking and value-add services (VAS) spaces. Fortuitously, this
phenomenon is fully supported by official policy given that it is a truly democratic
change that feeds into the Indian government’s commitment to ‘financial inclusion’.
Catalyst for financial services – facilitating two-way interaction
Mobile phones enjoy the highest penetration of any two-way communicating device in India.
Mobile phones reach 500 mn unique subscribers in India as compared to the reach of cable and
satellite television's 100 mn homes. With India having twice the number of mobiles as compared
to bank accounts, M2 promises to be the best way to deliver financial services.
Catalyst for financial inclusion – reaching the unbanked
The government is becoming a large remitter of money via its various schemes (e.g. MG-NREGS,
various subsidies). It is also helping put in place enabling systems (unique identity, banking
correspondents) that are directed towards creating financial inclusion. Many payment service
companies, seeing a market in internal remittances and transfers, are also helping bridge the gap
for the vast multitude that does not have access to electronic cash.
Catalyst for Growth at the High End - convenience for the converted
With inexpensive mobile phones (<US$150) also now supporting GPRS facilities, mobile phones
are the new tool to connect the connected with their peers and service providers. Across ticketing
(air, rail or movies), utility payments (electricity, telephones, pre-paid time recharge) or remittances
(person to person, micro-payments or purchases), mobile-based applications have started gaining
acceptance. Mobile banking can dramatically reduce the cost of service for banks, while possibly
reducing churn for telecom companies.
Catalyst for Banking in the Developing World
Mobile banking was a solution that fit developing world needs like a glove. Most developing
countries have suffered from low penetration of banking and electronic cash. The model is being
led by various types of entities: banks, mobile companies and third-party aggregators. In India, the
push for mobile banking is coming from the banking regulator committed to financial inclusion.
Had this come from India’s vast unbanked population, the task of conversion would be far more
simple and inexpensive for service providers.
GameChangers: Convergence; Regulation
The biggest GameChanger for mobile banking will be its ability to converge the twin objectives for
financial inclusion and convenience of the already-banked. The latter will provide scale and income
while the former will create a self-sustaining ecosystem of increased inclusion. A linkage between
the two sections of the society will also lead to increased transaction flows.
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