19 Mar 10 Financial inclusion and mobile technologies
McKinsey has estimated that half the global population is unbanked. This poses a tremendous opportunity. Not a big surprise – this is fairly well known to many people.
The last para of their report is interesting:
“This is just a start. Updating and refining these analyses (and perhaps even refuting them) requires more detailed household and/or adult-level data. In the next few years we expect that there will be better data that can help identify gaps and pin down numbers more firmly. Those efforts are crucial if policymakers are to realize their ambitions to spur the creation of new markets and expand access to the under-served.”
Penetration of mobile technology is already bridging the urban – rural divide in countries like India. The exponential rise in mobile phones in India offers an opportunity to bring the non-banked individuals into the formal financial fold. Admittedly, there are regulatory hurdles to be cleared, before such services can be offered. The Reserve Bank has taken cognizance of these and I think they will get sorted out – it is really just a matter of time (though it is hard to say how much time)
Once regulatory hurdles are cleared, there are potentially a host of opportunities as mobile banking also cuts transaction costs, thus reducing the cost-to-serve. Greater financial inclusion will have positive repercussions for sectors like micro-insurance, housing, agriculture goods, white goods, electronics and many others. Some M-payment service providers have already established a presence and are offering limited services, mostly in urban markets in India. Others are waiting on the fringes for greater clarity in regulations.
But without adequate customer data, how will they serve the customers effectively. They will be forced to serve the unbanked, pretty much the same way that most FMCG companies serve the rural customers – throwing darts in the dark.