A few months back we did a post about why India will be the most banked country in the world by 2020. One of the key factors we pointed out was that mobile operators would become banks.
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In August 2016, the Reserve Bank of India granted 11 new banking licenses, and two of them were mobile operators: Airtel and Vodaphone. To us both are not a surprise as Vodaphone’s M-Pesa is a huge success in Kenya and has been gaining traction in India. Airtel has it’s own competing product to M-Pesa called Airtel Money. With both having banking licenses, there will be a huge impact both within India and outside.
Impact Within India
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When it comes to India, most of the world thinks of the densely populated cities of Mumbai and Delhi. People think of uber rich, skyscrapers, luxury cars coupled with extreme poverty. However, the majority of India still is in rural areas where most people live 8 hours away from a branch. There is limited internet access. But you know what all those people have? Mobile phones. There are 1.2 Billion people in India and 960 Million phones! Now all those in rural areas can have banking services within a few taps. And with banking services, they will get all the immediate benefits that will improve their way of life.
Impact Outside of India
India is the number one country in the world for remittance. $70 Billion every year is sent from migrant workers back to their loved ones. Now they can send fiat money to their relatives right to their phones. Before the receiver could receive it to their phone but then they had to find a way to off board the money to use it in a real setting. Now they have the cash on hand and can use it to pay for things directly without needing to convert airtime. In addition, small Indian entrepreneurs who make products can sell them internationally and have funds sent right to their Airtel Bank. There is no need to go through intermediaries. Just think what Etsy in India might look like.
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Without legacy systems in place, the Asian countries have already leapfrogged the west in mobile use and now they will do the same with innovative banking technologies. Mobile operators as banks is just the start, mobile wallets will explode and then comes distributed ledgers and new networks.
India is the number one country in the world for remittance. $70 Billion every year is sent from migrant workers back to their loved ones.