Following the Reserve Bank of India’s decision to issue licenses to 11 payments banks, Mahindra Comviva, which has a 25 per cent market share in the global mobile money market, announced on Friday that it is entering the Indian market to provide the technological solutions and infrastructure to the payments banks in India. So far, it has already tied up with two out of the 11 and is in talks with some of the others.
“Mobility will be the key lever in the fast evolving Indian banking landscape. Acknowledging this change, Mahindra Comviva has enhanced its leading mobile financial solution ‘mobiquity’ to meet the needs of the payments and small finance banks in India,” Srinivas Nidugondi, senior vice president & head of mobile financial solutions, Mahindra Comviva, a subsidiary of Tech Mahindra, said.
There are several reasons why payments banks and mobile banking are so important for India, Mr. Nidugondi said. First, he cited the high cost of cash. A Mastercard study, he said, found that the cost of maintaining, managing and transporting cash cost the banking sector Rs. 21,000 crore in 2014. Mobile banking and other forms of electronic transactions stand to greatly reduce this cost, Mr. Nidugondi said.
The second reason for the success of payments banks is to do with Indians’ perceptions of their bank accounts. At the moment, he said, around 20 crore bank accounts are dormant. “These are the accounts we need to focus on,” Mr. Nidugondi said.
People need to see these payments banks not as savings instruments, he said. “The focus (with payments banks and mobile money) should not be on financial inclusion, the focus should be on electronic payments. In addition, these accounts should be seen more as transactional instruments rather than savings instruments,” he said.
He added that his company’s focus will be on two core groups: the unbanked, and millennials (aged 15-35 years). “Our experience internationally has shown us that people who are unbanked take to mobile phone banking really well. They conduct all their transactions through them. The other group we are looking at are evolved customers, especially millennials. This group is heavily into the use of smartphones,” he remarked.
So far, Mahindra Comviva’s technological product has been deployed with Idea and is expected to be adopted by Tech Mahindra as well when it rolls out its own payments bank. In addition, Mr. Nidugondi said that his company was in talks with Vodafone and Airtel as well. Airtel Money in Africa already uses Mahindra Comviva’s systems, he said.
