Banking on India's rural

Melissa Chua
04 Mar 2011
As competition between operators heats up and prices fall within margins of each other, the quality of value-added services is a crucial factor in deciding what sets one operator apart from the next. Mobile banking might just be the next big chance for carriers in India to expand their portfolios
A study on the banking habits of India’s agricultural segment commissioned by the Bill & Melinda Gates Foundation last November found 57% of respondents utilized traditional middle men to send and receive money, at a cost of roughly 4% of the transacted amount. Banks were found to cheapest method for conducting financial transactions but signified major inconveniences in terms of travel and waiting time. These findings seem to indicate healthy potential for operators seeking to cash in on as-yet-unbanked segment of the populace.
“Even a highly-educated agricultural state like Kerala has a large portion of its population that is still un-banked. There are cross-selling opportunities for this segment, where financial institutions get to offer their services to an operator’s customer base. It’s a mutually beneficial relationship,” Cyrus Daruwala, managing director at IDC Financial Insights, told Telecom Asia.
While regulations in India dictate telecom operators require tie-ups with banks and financial services institutions in order to enter the mobile banking space, having the telco function as an enabler may not prove detrimental, Angel Dobardziev, a practice leader at Ovum, told Telecom Asia. “What many don’t realize is that mobile banking often requires a degree of personal interaction. Mobile operators’ wide networks of distributors and retailers have the potential to be trained as mobile money agents. This is more efficient than having several bank branches built in the rural areas.”


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