India is a vast place with an almost unlimited amount of potential. Although most attention has been focused on its large cities, a lot of the action is taking place in its countryside. With roughly 845 million people living in rural areas, a large percentage of the population still lacks access to basic services considered standard in many countries. While it will take years to build a proper infrastructure to serve these people, the lack of access to proper banking may soon be a thing of the past.
Several mobile phone companies are in the midst of revolutionising the way money is dealt with in India, and now mobile money transfers are a market that is evolving at a fast rate.
Barriers to Banking
Opening a bank account has often been a difficult thing for India’s poor. Required documentation and minimum balances deter many people from ever having a bank account.
Even after a strong government push to increase access to banking, a majority of Indian citizens still do not have bank accounts. With 300 million migrant workers working in the big cities, there is a great need for a dependable and easy way to send money back to family in rural communities. Fortunately, the mobile phone companies have taken the lead in offering mobile money transfer services to this underserved population.
Technology Presents a Solution
Mobile money transfers are changing the way Indians think about money. With 900 million subscribers and growing by the day, the mobile phone companies have access to around 75% of the population.
With the ability to transfer and receive money, rural people will not only be able to receive money from their family working in the large cities, they will be able to use their mobile phones to pay for products and services, which should lead to more business opportunities and economic growth in these areas. The mobile phone companies are in aggressive competition to convert as many subscribers as possible into users of their mobile banking services.
Battle of the Mobile Titans
There are several companies competing for number one. Until recently, Vodafone has been leading the charge with 1.2 million subscribers in India using their M-Pesa India service. Their main competitor is Airtel Money, which is a service offered by Bharti Airtel. Airtel Money is focused on a limited number of cities including Mumbai and Delhi. Although its focus is more limited than M-Pesa, Airtel Money has already surpassed M-Pesa by signing up 1.7 million subscribers. Other big competitors include Tata DOCOMO and Idea Cellular.
The current market leaders are M-Pesa and Airtel Money, but this could quickly change. The market is still ripe for innovation and the penetration rate is quite low. New companies will continue to enter this market and new services will be offered that provide alternatives to traditional banking that currently underserved markets will embrace.
As more and more people migrate to the big cities, the need for services such as mobile money transfers and mobile payments will increase. And with opportunities for easier access to banking services and new opportunities arising, more and more people may find a way to take the first step out of poverty.