Elina Mattila, Executive Director, Mobey Forum
India’s emergence as a digital payment powerhouse is an unlikely story.
Until recently, cash accounted for 95% of transactions, 85% of workers were paid in cash, and 70% of online shoppers chose ‘cash on delivery’ as their preferred payment option.1 Yet, the Indian mobile wallet market is set to grow by 150% over the next five years, with transactions totalling $4.4 billion.2
Even though its circumstances are unique, the regulatory, technological and commercial drivers of India’s digital payment revolution reveal important lessons for the delivery of compelling mobile wallet platforms around the world.
Pulling the trigger
The main driver of the mobile wallet market in India to date has undoubtedly been demonetisation.
In November 2016, a national banknote demonetisation removed 500 and 1,000-rupee notes from circulation, overnight.
This accounted for 86% of all currency in India.
Demonetisation has historically been the last desperate roll of the dice for failing economies battling hyperinflation or crippling public debt. This was different. The government aimed to use demonetisation as a proactive tool to promote digital payments, foster financial inclusion and promote transparency.
Whether demonetisation has been a success is the subject of an intense political debate that shows no sign of abating. Indeed, it may be many years until the impact of demonetisation is fully understood. What is clear, however, is that it has given a massive shot in the arm to Indian mobile wallet providers. For example, Paytm doubled its user base in a year, increasing from 140 million in October 2016 to 270 million in November 2017. 500 million users by 2020 is the next target.3
For banks, service providers, regulators and governments across the globe looking for ways to encourage mass adoption of digital payments, demonetisation clearly shows that directly disincentivising cash-use is effective. Whether the ends of demonetisation justify the means, however, is open for debate.
More broadly, we can also see the transformative impact of regulation. Although demonetisation is an extreme example, there are parallels across other markets. Consider PSD2 in Europe. Banks have an opportunity to capitalise on potential changes in consumer behaviour to drive adoption of new digital services, particularly in consistently conservative markets where uptake of digital payments has been modest.
Breaking down the barriers
Due to its proven ability to dramatically simplify the know your customer (KYC) process, Aadhaar (possibly the world’s biggest biometric database) has also played a critical role in supporting the development of the mobile wallet ecosystem in India.
KYC has traditionally been a face-to-face, in-branch process. In addition, KYC usually requires extensive documentation, such as full address histories and utility bills. In countries with isolated, rural communities like India, the rigours of the KYC process have prevented access to financial services and have contributed to a significant ‘unbanked’ population.
Biometric verification technologies are recognised as key to making the KYC process faster, easier and more inclusive, as they remove the requirement to present extensive documentation. Aadhaar is a perfect case in point. To date, 270 million bank accounts have been opened using only an Aadhaar ID and a fingerprint.4 Subsequently, the number of users able to access mobile wallet platforms has increased accordingly.
Financial exclusion, however, is a worldwide issue. Mobile wallet platforms should not just be the preserve of young, urban professionals. As banks increasingly move toward a fully mobile and digitised service experience, simplifying the KYC process with biometrics has the potential to enable wider access to innovative financial technologies.
Moving beyond ‘just payments’
The importance of value-added services (VAS) in driving sustained usage of mobile payment platforms is well-recognised across the industry. Beyond convenience, users need a compelling reason to use mobile wallets on a regular basis.
The continued growth of the Indian mobile wallet market demonstrates the power of VAS. Wallet platforms can be used to recharge mobile phone credit, secure loans, pay utility bills, book a holiday, buy entertainment tickets, travel on the metro, and even trade gold.
To improve the value proposition of a mobile wallet offering, banks should look to replicate the approach of delivering a comprehensive range of financial and product services within a single digital interface. Banks can leverage regulation such as PSD2 to partner with quality third party providers, combining the products and services that consumers want and need. It is imperative banks recognise this opportunity and seize the day.
The importance of collaboration
Overall, the rapid development of the Indian mobile wallet market demonstrates the importance of reactivity and adaptability. Huge opportunities await those who can successfully navigate the transformative impact of regulation, emerging technologies and shifting consumer expectations. For this reason, the ability to collaborate and learn lessons from players across the world remains as important as ever.
Duo glide around world’s largest fountain in Dubai
Paragliders Llorens and Goberna take magical flight above the Palm Fountain.
Horacio Llorens and Rafael Goberna defied gravity to perform The Breaking Pointe flight around the world’s biggest fountain at The Pointe, Palm Jumeirah in Dubai. Here is all you need to know:
– Spaniard Llorens is a five-time world champion and Infinity Tumbling Guinness World Record holder, who has performed a series of spectacular projects during the last five years including paragliding with a flock of starlings and with the beautiful Aurora Borealis as a backdrop.
– Brazilian Goberna was a Guinness Book of World Records winner at only 12-years-old and, in December 2016, he took to the skies above one of the seven wonders of the natural world when paragliding at Iguazu Falls.
– This time around, the duo teamed up in Dubai to showcase The Palm Fountain at the Pointe, Palm Jumeirah. They overcame a tricky preparation period to expertly glide between the fountain’s powerful jets of water.
– Spanning across the boulevard, the Palm Fountain features two giant floating platforms covering 14,000 square metres of sea water. Reaching an impressive 105 metres high and lighting up the Dubai sky with 3,000 LED lights, the fountain “dances” to hit songs from sunset until midnight.
– They undertook training first at Paramotor Desert Adventure on January 12 to test out their brakes and motors with technician Ramon Lopez finally arriving after being held up by the heavy snow in Madrid.
– Training was crucial for the challenge of flying during the night with low visibility as safety director Alan Gayton ensured they had a reserve parachute in case of a technical issue with the main parachute. Llorens and Goberna also had to study the movement of the water with great precision in order not to get caught up in the jets of water
– Flying over water, it was also mandatory to have a lifejacket with rescue boats, jet skis and divers on hand which came handy when Goberna suffered a technical malfunction on the first January 14 practice run.
– After repairs long into the night, they returned to Paramotor Desert Adventure to test out the motors again before completing the stunning flight on January 15 with Llorens and Goberna performing in harmony.
– Llorens, 38, revealed: “As soon as we got the opportunity, we wanted to fly there. We needed to know the area really well beforehand and we needed to know how to ‘play’ with the fountain – this was new for us. Such strong streams of water shooting 100 metres up is a lot, so we had to be really prepared.”
– Goberna, 26, explained: “The motor wasn’t flying so good because, prior to arriving in Dubai, it was last used in Europe at high altitude. I needed to adjust the carburettor in the air inside the motor. In the first practice flight over the water, I broke one propeller. I really couldn’t understand what was happening and then another one broke. Eventually, a backup motor was required. After a long journey, the final result was beautiful! The team worked incredibly hard to make it.”
– Llorens added: “The highlight for me was playing between the super shooters with Rafael, because it’s something we’ve never done before; it felt really new and really powerful.”
EU sets itself jobs, training and equality targets for 2030
By Jan Strupczewski
BRUSSELS (Reuters) – The European Commission on Thursday announced goals for the 27-nation bloc to reduce poverty, inequality and boost training and jobs by 2030 as part of a post-pandemic economic overhaul financed by jointly borrowed funds.
The EU executive arm said the European Union should boost employment to 78% in 2030 from 73% in 2019, halve the gap between the number of employed women and men and cut the number of young people neither working nor studying to 9% from 12.6%
“With unemployment and inequalities expected to increase as a fallout of the pandemic, focusing our policy efforts on quality job creation, up- and reskilling and reducing poverty and exclusion is therefore essential to channel our resources where they are most needed,” the commission said.
The goals, which will have to be endorsed by EU leaders, also include an increase in the number of adults getting training every year to adapt to the EU’s transition to a greener and more digitalised economy to 60% from 40% now.
Finally, over the next 10 years, the EU should reduce the number of people at risk of poverty or social exclusion by 15 million from 91 million in 2019.
“These three 2030 headline targets are deemed ambitious and realistic at the same time,” the commission said.
The goals are part of the EU’s set of 20 social rights, agreed on in 2017, to make the EU more appealing to voters and counter eurosceptic sentiment across the bloc.
They say everybody has the right to quality education throughout their lives and that men and women must have equal opportunities in all areas and be paid the same for work of equal value.
The unemployed have the right to “personalised, continuous and consistent support”, while workers have the right “to fair wages that provide for a decent standard of living”.
(Reporting by Jan Strupczewski; Editing by Nick Macfie)
UK aero-engineer Meggitt eyes return to growth after pandemic slump
LONDON (Reuters) – British engineer Meggitt said that it could return to profit growth in 2021 provided there are no further lockdowns, despite a weakening in the struggling aviation market at the end of 2020 and early this year.
Pandemic restrictions halted much flying globally last year and forced plane makers Boeing and Airbus to cut production rates, dragging down suppliers like Meggitt, which makes and services parts for such aircraft.
Meggitt’s underlying operating profit plunged by 53% to 191 million pounds ($267 million) in 2020, it said on Thursday, despite continued growth in its defence business which makes parts for military jets and accounts for about 45% of the business.
Meggitt, however, said it expected air traffic to recover in the second half of the year which would help it return to profit growth over the year, although its guidance for flat revenue disappointed analysts who had expected growth of 6%.
Meggitt’s Chief Executive Tony Wood said in November that he had expected flying to start to recover by Easter, but new variants have led to more restrictions and delayed the recovery.
“It has gone back a couple of months… it’s now very much in the summer,” Wood said of the recovery in an interview on Thursday.
Further in the future, Meggitt is positioning itself for the move to lower emissions flying, and its sensors and electric motors will be used on electric urban air mobility platforms, such as flying taxis, and in hybrid aeroplanes being developed.
But Meggitt said new tax breaks announced in Britain’s annual budget on Wednesday aimed at encouraging investment would not change its plans.
“Yes, it will be a benefit. Are we looking at any acceleration as a result specifically of that? Not really,” Woods said.
Shares in Meggitt were down 1% to 427 pence at 0943 GMT. The stock has risen by 50% since news of a COVID-19 vaccine last November, but is still down 23% on where it was pre-pandemic.
($1 = 0.7165 pounds)
(Reporting by Sarah Young; Editing by Alistair Smout and Susan Fenton)
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