Updated: September 30, 2010 19:34 IST

The silver bullet for financial and social inclusion

D. Murali
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Title: The March of Mobile Money, The Future of Lifestyle Management. Author: Sam Pitroda & Mehul Desai.
The Hindu
Title: The March of Mobile Money, The Future of Lifestyle Management. Author: Sam Pitroda & Mehul Desai.

Technology is playing an important role in creating an empowered demographic, write Sam Pitroda and Mehul Desai in ‘The March of Mobile Money: The future of lifestyle management’ (Harper). They see the growth of mobile telephony engendering a new power group, a billion connected people, a group that is ‘slowly but surely heralding a paradigm shift in the growth and development story of the country.’

Balancing demands

India has one of the fastest growing mobile markets in the world, servicing some of the savviest as well as basic demographics, catering to the most demanding as well as simplistic requirements, providing applications that can hog tremendous bandwidth even while balancing the needs of relatively trivial messaging services, the authors describe.

Interestingly, they find that on the supply side, the telecom companies, banks and merchants – who have to continuously balance the shareholders’ demands for sustainable growth and profitability against some of the lowest average revenues per user (ARPUs) in the world – are moving towards becoming lifestyle managers.

For instance, “Despite being focused on the immediate goal of increasing their respective subscriber base, most Indian telecom providers have designed their networks to deliver various services across multiple channels, related to content for the larger part, but building in the necessary scalability to support secure transaction services in the future.”

Enterprise bus

The authors explain how telecom companies have started to build an enterprise bus-based network infrastructure, which will allow them to aggregate and distribute content as well as personalised transaction services across multiple channels, ensuring a common interface for their subscribers and enterprise customers.

Noting that the sharing of network infrastructure across different carriers and outsourcing of managed services have attracted much attention from a cost-savings perspective, what Pitroda and Desai foresee as significant is the coupling of a transaction management system with the existing content management system over a high-availability enterprise bus, supported by various vertical services and a community of secure transaction application developers. For, this will enable carriers to generate new revenue streams, increasing their ARPU and enhancing revenue assurance.

Cart before the horse

As for banks, the authors observe that while in the West, mobile is seen as just another channel – in addition to the bank lobbies, ATMs, interactive voice response systems, and websites – the scene closer home is one of mobile channel being appreciated for its potential to acquire new customers through the offer of various time- and location-sensitive banking and non-banking services. “In several instances, the emphasis is more on non-banking services, like airtime top-up or recharge, ticketing, bill payments, coupons, and others, which in turn use the bank’s payment products, indirectly converting users of mobile value-added services into bank account-holders and customers.”

An obvious challenge to banks is the cost of servicing customers at the bottom of the pyramid, but the larger challenge, as the book lays out, is one of putting the proverbial cart before the horse. Arguing that if a consumer had the need for a bank account or banking services, and hence could justify the cost for the same, he/ she would already have one by now, the authors add that the very fact that a consumer does not have an account or cannot pay for the same implies the lack of such a need.

Three providers

The authors’ recommendation, therefore, is that banks and other providers, and possibly even the regulators, first identify the services that will truly serve the needs of the masses, which in turn will justify the need for an account, possibly a stored-value account rather than a traditional bank savings account. They concede, however, that even a barebones account will require a scalable and sustainable delivery model. In the opposite, “The approach of creating en masse bank accounts and forcing them on consumers cannot and will not scale.”

Consumers at the bottom, similar to those above, transact all the time and have real needs that are not being met due to various factors, rue Pitroda and Desai. They suggest that financial and social inclusion will have to be initiated by merchants or service providers, by identifying the appropriate services or applications, post which the banks can provide the necessary financial accounts and services to help facilitate the cash-in and cash-out for such services, leveraging the telecom companies’ infrastructure for distribution. “All three providers will have to come together to deliver this silver bullet.”

Innovative services

There are several well-publicised offerings related to mobile lifestyle services that go beyond the traditional voice and messaging-based services, the authors acknowledge. Examples they mention include services such as providing farmers with weather-related updates, and fishermen with market prices before they come ashore to sell their catch; and there are services that deliver personalised content, tickets, bills, coupons, and targeted advertising.

Among the examples of innovative mobile value-added or mobile money services listed in the book are the following:

•Airtel, India’s largest mobile operator, distributing the bulk of its airtime through non-scratch-card-based channels.

•Indian Railways, one of the world’s largest rail networks, allowing passengers to book tickets through mobile phones.

•ICICI, India’s second largest bank, providing more than 40 different features under its iMobile application.

•Tata AIG launching a mobile insurance service for its agents.

•Jet Airways providing mobile ticketing and related services through its Jet Wallet.

•Dainik Bhaskar, one of India’s largest media companies, launching a premium mobile content and secure transaction aggregation service called MeraMobi.

You may be aware that the National Informatics Centre has launched ‘an innovative pilot that enables postmen using their mobile phones to distribute funds to recipients of the National Rural Employment Guarantee Programme, one of the world’s largest social programmes, leveraging vernacular voice annunciation, biometric authentication and smart-card readers over Bluetooth.’

P2P space

In the view of the authors, an area ripe for further innovation is mobile P2P or person-to-person services in India. They inform that, with the Reserve Bank of India’s recent relaxation of its regulations related to fund transfer between individuals, several service providers have already started, or plan to start, services related to mobile P2P.

Beyond the obvious payment arena, the authors expect P2P to open up the avenue for person-to-person transactions through non-monetary tokens, such as coupons and loyalty, further linked to a cash-in and cash-out capability that is built and delivered as per RBI’s guidelines. They extrapolate that coupling the above with proven micro-payment and micro-credit services will enable more holistic integration of commerce and the availability of credit, with a consequent reduction of cost of capital both for personal and enterprise services.

An insightful message that the book offers to regulators is about the need to create a framework for a superset of services, where essentially all other mobile money transactions become a subset, because it may not be possible to envision all the different use-cases for mobile money.

One such superset service, as the authors visualise, is the issuance of currency directly on mobile phones, effectively replacing cash without creating another cash-replacement product, and in the process enabling consumers to actually spend cash in the real and virtual environments using mobile phones…

Valuable read, with plausible futuristic portrayals.



“After we installed the electronic gate, employees are reporting for work at least 10 minutes earlier than previously.”

“Which means the new attendance system is effective?”

“No, the gate works so slowly that one has to wait 10 to 15 minutes to enter!”

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