‘Our interest is to serve service providers who want to promote financial inclusion in India’

About 70% of people in APAC (Asia Pacific) region are not using mobile financial services, with over 50% in India having no access to a bank account. However, the mobile payment market is expected to reach over 450 million users with a transaction value of over $721 billion by 2017.

In an interaction with Voice&Data, Sharath Dorbala, Head of Sales, Marketing and Products, Mobile Financial Services, Amdocs, explains what exactly will trigger the growth of mobile financial services and how they will shape financial inclusion in India.

Voice&Data: How will mobile financial services help financial inclusion in India?
Sharath Dorbala: First of all, many people in India are unbanked, over 50% of people do not have access to bank accounts now. With mobile financial services it’s not just about basic deposits for cash and cash out it’s about cash payments, utility payments, peer to peer payments and on top of it savings, loans and credits.

If you have all these services, then only you are talking about real financial inclusion. Otherwise, you are talking just about bill payments services, etc. For financial inclusion, you need to provide all these plethora of services. That’s when you talk about financial inclusion and that’s what mobile financial services are all about. It’s about remittances, basic banking services, among others.

Voice&Data: Which are the factors that would drive mobile financial services in the near future?
Sharath Dorbala: Currently, 87.5% of mobile money transactions globally are either airtime purchases or P2P transfers. Moving ahead, the services would be used for domestic or international remittances, utility bill payments, Airtime top-up, DTH top-up, etc.

Voice&Data: What type of ecosystem is required to make mobile financial services a success?
Sharath Dorbala: In the ecosystem, we are a technology provider, when we are talking about ecosystem we are talking about let’s say from a branchless banking to a distribution network, where retailers, banking agents, etc are involved that’s one.

Then, the next level of the ecosystem involves bringing in cash into the system, so government, employers or anybody who wants to put money into the system plays a role there. Then you need an ecosystem related to merchant payments.

Once the cash is there in the system, the question is what do I do with the cash? Buy milk in a kirana store? Then you need all stores, kirana stores. All these guys need to be the part of the system. So, they need to adopt the service and then once you have all these things and you have people transacting more and they get to know about consumers more then you need to provide loan kind of services then you need to have creditors and credit score rating agencies, who can use all these data and provide credit points and you need to have loan or NBFI (non-banking financial institutions) who can actually lend, so various retailers, government, credit agencies, merchants have to become a part of the ecosystem.

Voice&Data: How far is India from that kind of an ecosystem when it comes to mobile financial services?
Sharath Dorbala: See, credit card exists because credit card companies have built that kind of an ecosystem in India. There are about 30 million cards in the country today. So people understand the concept, just like PayTM which created one ecosystem just to focus on bill payments. So there are pockets of ecosystem which have been built.
The one that launches the payment bank it is going to be aggregating all of them, it is going to be making them part of the network, it will be integrating with all of them. So, there are pockets of ecosystem that exists. Not every retailer accepts credit cards neither every kirana accepts it, they need to be accepting mobile payment, somebody doing transfers through mobile payments so they need to acquire part of the network. So, once the payments bank comes in and they are going to bring the rest of the folks also into the ecosystem.

Voice&Data: Do you think doing business in India is a bit challenging, keeping in mind the fact that a tie up with a public sector lender is mandatory for mobile financial services, Amdocs itself has tied up with State Bank of India?
Sharath Dorbala: The current government is one of the most progressive. All it takes is the willingness to pursue the system and in lot of cases regulations act in your favor. The main reason regulations exist is to protect consumers like you and me and that’s their interest.
Once we launch a service our motive is to make the service more ubiquitous and make it more acceptable everywhere we need to have some rules here and there.
For example some retailers today don't accept credit card transactions for more than $25. That’s the limit they have. So regulations basically protect the ecosystem, there’s no such system without a regulator you need a regulator, who can shape the ecosystem in the right way to protect the interest of all the parties. And I don’t see any problem in India, it is in the process of giving payments bank licenses too.

Business Plans...
Sharath Dorbala: Our interest is to serve those service providers who want to promote financial inclusion. We have the technology and services to integrate into a model to help them launch services in the market. So, anybody who is interested to provide service then we have the capability and expertise to do that.
What we are being telling the prospects in India is you launch a service , take care of the marketing and customer adoption, we can provide you the IT backbone infrastructure support as we have the know-how capabilities to provide the support.