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Digital Wallets for Financial Inclusion

Has The Time Come?

It has been argued for sometime that disruptive technologies will prove to be a game changer in the banking industry, particularly for financial inclusion. There have been a few policy initiatives by the regulator, Reserve Bank of India, which has paved the entry for tech enabled “Payment Banks” like Bharti Airtel, Vodafone, Reliance Industries, PayTM and Fino PayTech. The regulator has also set down detailed norms for “Banking Correspondent” as an alternative to Brick and Mortar Branches for reaching the multitude of the unbanked in the country.

However, time has come to take stock of ground realities. The undeniable fact on the ground is that the Payment Banks and the Banking Correspondents have not had the same impact mPesa has had in Kenya. It cannot be argued firmly that technology has been able to provide banking services to the unbanked. Neither has technology managed to improve the savings habit of people or reduce their dependence on moneylenders.

It is indeed a valid case to trace the journey of the early movers who facilitated Technology enablement for financial inclusion. We should study companies who have been in existence for more than half a decade and who have pan-India operations.

Take the case of Fino PayTech and EKO to try and capture the learnings from their journey so far.

FINO Paytech has developed into a financial services company focused on providing transaction services to rural users through a technology enabled money transaction platform (biometric identification Point of Sales devices) and a network of agents. FINO has become an integrated service provider for State Bank of India no-frills accounts. It also acts as a technology partner for banks and microfinance organizations like ICICI Bank, Axis Bank, Biswa Microfinance, Janalaxmi Microfinance etc. Fino Fintech foundation has been founded by FINO to provide banking correspondence services to clients via bank partnerships. This was done as India’s regulatory framework prohibits “for profit” companies to act as business correspondents. These institutions are the account providers whereas FINO recruits local individuals to act as agents that sign up new customers and provide cash services at their doorstep. In some states, the Government of India uses the channel as a third-party operator, delivering government-to-person (G2P) payments into customer accounts. FINO also sells insurance on behalf of third-party insurance companies.

EKO started as a Business Correspondent of the State Bank of India on commission basis, for opening and maintaining its no frills accounts. EKO has developed a mobile phone enabled banking platform “Simplibank” for opening and servicing no frills accounts over the mobile. EKO offers a remittance platform over the mobile phone through which customers can remit money by sending SMSs over the mobile. EKO has also developed its own distribution channel of network of agents to facilitate the whole cycle of financial transactions.

Both these pioneering companies found that, to sustain operations and to scale up, it was essential to have a network of motivated agents. It was important to train them properly and also have systems which could monitor their work. There are a few barriers to adoption of technology facilitated banking by the rural users. They are unable to offer micro credit which is the real need of the rural people. Also  rural areas suffer from low financial literacy.

Within the Policy ambit laid down by banking regulator, if would be interesting to note how the ecosystem matures and is able to accept cutting edge developments happening in the Social, Mobile and Analytics space. Will the Digital India be able to push the technology developments happening in the Digital Wallets space and provide meaningful Banking services to the unbanked throughout the country?


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  1. Digital money can be used throughout the country if the people are taught about it in detail and made them aware. I myself have seen auto rickshaw that can be paid through Digital Money. It’s just not big in action in many cities. It’s just people are scared and more or less got use to the older ways of payment. But it can provide meaningful Banking Services if they are properly implemented and made it aware to the people and their use in an easy and efficient way.

  2. There are good things for non bankers like Airtel Money and Vodafone M-pesa, They could allow their customer to cash out any where any time. Non bank finance companies now act as business correspondents, there are so many microfinance institutions in India which already serve millions of poor customers. i have seen too many people to book tickets and recharge their phone from digital wallets, so this is the good things to convert real money in virtual money.

  3. If the agents used by the companies can introduce to the rural people a little knowledge about, how to use the technology themselves, after the people have gained some profits through it, it can cheer up their interests and might implant some addictions for the technology as well.

  4. There are players like ITZ cash cards who are already doing well in some parts. I have seen it functioning very well around colleges and universities based in semi-urban areas students use it at some dealers shop for tickets, flights booking etc.

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