DISRUPTION IN FINANCIAL SERVICES – TAPPING THE MISSING MIDDLE!
May 25, 2016
What an amazing note by Mr. Nilekani. We summarise what will drive disruption:
A. E-Commerce and Mobile – An extremely potent combination for India with high adaption of E-commerce and Low cost smartphone availability
B. Move to Cashless Economy – Today only 5% of personal consumption is cashless but massive change happening. Five key steps here : 1) Electronic clearing is at par with Hard clearing for the first time in India 2) IMPS- Instantaneous credit platform 24*7 (In 3 years, Volume increased on this platform is 1/3rd of total E- remittances in India). IMPS will overtake debit/ credit cards in India in the next few yrs 3) E- commerce and Digital payments expected to go 3-4 X times. A large COD (today at 80%) will shift to Digital payments 4) 3-4 Bn recharges happening per month in India and only <5% happening digitally today. Will explode eventually. 5) LPG subsidy itself is over a billion transactions in India per annum. Expanding the DBT scheme will result into over 4 bn transaction happening online.
C. Aadhar based authentications – Re-imagine the future, not a western theme. Over 900 mn Aadhar registrations. An IRIS camera takes less than $5 to add to a smart phone and will change the way authentication is done in India. In 6-9 months, 2 factor single click authentication will be accessible to everyone.
D. Jan- Dhan Accounts – Over 1 bn people now in India with Bank accounts, mobile phones and Aadhar registrations will change the digital banking paradigm.
E. Wallets – UPI and inter-operability amongst wallets will bring ATMs in everyone’s phone.
F. E-sign – Explosion of innovation due to removal to unnecessary documentation hassles moving out.
We will move from Data poor to Data rich soon – we will have a Tsunami of data and information. The Bank will be in the Mobile Phone and Banking will get disrupted. Lending will change to data and algorithms and A BILLION PEOPLE ARE GOING TO BENEFIT. Lets the games begin………