Ronnie05's Blog

Mobile Money: Setting the Context

In a first of its kind, Bharti Airtel has been given the go ahead by the central regulatory bank in India to execute mobile money services. This would allow users to exchange physical cash for virtual money to pay for goods/services less than 5,000 rupees.

For starters, Mobile money is defined as the use of the mobile phone as a channel to conduct payments, account management and other financial services.

Relevance of Mobile Money to India: Given below is a representation of the World Economic Pyramid and financial service access across the three tiers of global markets.

India is a typical case of co-existence of all three markets and if at all, the disparities are likely to be bigger and more stark compared to any other geography in the global context. One common reason for lack of access and reach across geographies in India is the cost of last mile connectivity which is significantly higher than revenue/margins accrued. That is where Mobile Money Services can be very effective. For a banking perspective, Mobile money services can reduce cost of transaction 500 times.

While Mobile Money/Mobile financial services pan across different segments of usage such as Payments, MicroFinance and Mobile Banking, the real potential of Financial services through mobile is accrued when an amalgamation of services such as Healthcare, Insurance, Access to Credit services drives efficiencies in Survival markets.

Easy and Cost –effective access to Healthcare through a combination of Mobile Financial services and 3G services can be very instrumental in taking Healthcare services into rural Hinterlands. Inspite of the best efforts by Government of India, Healthcare services is unable to surmount the last mile given deficiency of doctors and trained staff available for Rural Healthcare services.

Micro-credit extension to the relevant and the needy can be a huge enabler in sorting the “New Variant Famine” Hypothesis of Alex De Waal. Micro Credit access has other cascading effects on HIV, Malnutrition, Infant Mortalities. Combined with access to information, Micro Credits can be huge enabler to making the survival markets more economically self dependent.An example in this regard is Syngenta’s Kilimo Salama in Kenya which has helped reducing risks and increased investments through mobile micro Insurance for small holder farmers.

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