Phone-banking services in India – bringing banking to the masses and a tidy profit
There are so few instances where services for underdeveloped areas are profitable that Vodafone's new phone-based banking program warrants attention.
Vodafone's Indian sector has recently formed an alliance with one of the major banks in India to create a phone-based banking system designed to boost profits for Vodafone after competition lowered their margins. Recently competition has pushed Vodafone's cell phone rates below $.005 per minute in India, seriously damaging their profit margins. These lowered profits are the motivation behind why the cell phone giant has created this new mobile phone banking program.
The new plan from Vodafone has them partnering up to give banking services via mobile phones, a service that (possibly inadvertently) would reach out to the unreachable in India.
Vodafone has partnered up with ICICI Bank (the second largest banking institution in the country) to bring electronics payment capabilities to Vodafone cell phone users. In the works are additional plans to provide other banking services as well, via mobiles.
While this service was created intentionally by Vodafone to boost profits the program will help bring essential banking service to remote areas of India. According to a 2001 census stated in Wikipedia over 74% of the Indian population lives in remote rural areas, in a country of over 1 billion people.
Vodafone CEO Marten Pieters says that the "move to allow for-profit companies to be Business Correspondents is a welcome move that will enable the population better access to financial services."
In a similar bid the country's largest cell provider Bharti Airtel has teamed up with India's largest financial institution, the State Bank of India, to provide a similar service. Bharti's Chairman Sunil Bharti Mittal said in a briefing that he believes that "telecom today by far is the most powerful tool available for financial inclusion anywhere in the world," and that "in our country we have seen the advent of mobile-phone telephony from a rich man's tool to now a facility that is available for all classes of society."
The move will mean that the more than 50% of Indians without access to financial services will be included in India's rapidly modernizing society. Seeing as the cell phone penetration in the country recently climbed to 45%, this will mean record-breaking access to banking never before seen in the rural areas of the country.
Similar programs have been implemented in developing regions in Africa as well, including South Africa, Kenya and other nations.
It is this type of intersection of helpful development, corporate success and technological vision that will drive success in the future for global corporations and global citizens.