Digital Economy

Mobile Financial Services for Developing Communities

Guest Authored by: Srihari Hulikal Muralidhar, Aarhus University, Denmark

ICTD research has been grappling with the question of how to harness the potential benefits of technology towards various developmental goals in the contexts of education, healthcare and so on for a long time. Technology’s ‘reach’ gets extended through the diffusion of smartphones and internet, as they enable new possibilities in terms of designing suitable products, services and targeted interventions. The Government of India, taking note of this trend, charted a ‘Digital India’ vision, wherein it wants to enable citizens to avail certain public services via their smartphones[1]. As a first step, under the Prime Minister’s Financial Inclusion Mission, banks were mandated to open at least one account for every household in the country. The next step in this process was linking the beneficiaries’ unique national ID and tax number to their bank accounts. Subsequent to this, the government moved welfare payments (pensions) and subsidies (such as fuel subsidies to poor households) from cash to digital, where the benefits were transferred electronically to the beneficiaries’ bank accounts. Some estimates claim that this reduced corruption and pilferage by more than 40% (Business Standard 2018). The biggest challenge, however, has been with the ‘last mile connectivity’ i.e. making certain essential services accessible to citizens. It is here that smartphones and affordable data are expected to offer novel opportunities.

One of the biggest problems with mobile money usage in India has been the siloed use. Mobile money services have been used only for particular activities because of a lack of adequate support, training, and proper integration with the larger ecosystem within which the technologies are embedded (O’Neill, Dhareshwar and Muralidhar 2017, Nandhi 2018). However, with app-based services becoming increasingly prevalent (such as Uber, Ola, Swiggy), some changes have occurred. One positive spillover is that they have enabled gig workers such as delivery executives and drivers to acquire a certain level of digital literacy wherein they have learnt to use smartphones and become familiar and comfortable using the internet[2]. Rickshaw drivers and Swiggy delivery executives, for instance, now use Google Maps as part of their everyday work. Previous studies on digital payments adoption have shown that there’s a path dependency exhibited wherein people already familiar with and using technology are more likely to perceive digital payments as beneficial and adopt it, and those unfamiliar might be hesitant because of concerns over trust and security (Pal et al 2018). However, with technological innovations changing the socio-economic landscape, benefits from technology use are enabled even for those who might not be comfortable using it through intermediated use (Sambasivan et al 2010), often by family members. 

In this context, certain initiatives such as the BHIM (Bharat Interface for Money) app launched by the Indian Government, which is based on UPI (Unified Payment Interface)[3] show some initial promise. For instance, with this app, a user can create a unique UPI ID (which can be something as simple as their mobile number@upi), link their bank account to the ID, and conduct financial transactions such as P2P transfers, bill payments, and so on. The user can also access their bank account balance on the app itself. In addition to the government-launched BHIM, private players have also entered the mobile payments market in the country, with PayTM, PhonePe, and Google Pay being the most prominent examples. Two important factors need to be considered in this context. First, urban low-income communities such as rickshaw and cab drivers in India have not used devices like desktops or laptops and will probably never use it. Consequently, smartphone adoption and use has been a case of technological ‘leapfrogging’ and enabled digital inclusion. It has also been their first ever experience with the internet. Second, a vast majority of internet users in India use WhatsApp; in fact, India accounts for the largest user-base for WhatsApp[4]. Realizing the potential that the mobile payments market in India holds, WhatsApp is set to roll out its Payments app soon[5].

The idea of a chat application with an embedded payment interface (which allows the user to directly access their bank account from the app, amongst other things) offers new possibilities in terms of development interventions even for low-literate, low-income users. That said, the point is not claim that access alone will be sufficient in achieving financial inclusion. Rather, interfaces built on top of chat-based platforms, with which even low-literate, novice users are familiar, can be a viable way of making digital financial services accessible for them. These interventions can take a variety of forms (such as assisting with accessing financial info, tracking of personal finances, and so on) and by no means need to only be about payments. It also makes sense to think about designing interventions around supporting users’ existing financial practices and not just replace them with digital technology. Previous research has also highlighted the highly collaborative nature of household financial management (Snow and Vyas 2015), and therefore, directions for future work could also include how to design for collaboration than eliminate it.

References

Nandhi, Mani A. 2018. Effects of Mobile Banking on the Savings Practices of Low-Income Users – The Indian Experience. In Money at the Margins: Global Perspectives on Technology, Financial Inclusion and Design. Bill Maurer, Smoki Musaraj and Ivan Small (Eds.). pp. 266-286. Berghahn Books. 

O’Neill, Jacki, Anupama Dhareshwar, and Srihari H Muralidhar. 2017. Working Digital Money into a Cash Economy: The Collaborative Work of Loan Payment. Journal of Computer Supported Cooperative Work. Vol. 26. Pp. 733-768. Springer.

Pal, Joyojeet, Priyank Chandra, Vaishnav Kameswaran, Aakanksha Parameshwar, Sneha Joshi, and Aditya Johri. 2018. Digital Payment and its Discontents: Street Shops and the Indian Government’s Push for Cashless Transactions. In Proceedings of CHI’18. ACM. 

Sambasivan, Nithya, Ed Cutrell, Kentaro Toyama, and Bonnie Nardi. 2010. Intermediated Technology Use in Developing Communities. In Proceedings of CHI’10. Pp. 2583-2592. ACM.

Snow, Stephen, and Dhaval Vyas. 2015. Fostering Collaboration in the Management of Family Finances. In Proceedings of OzCHI’15. Pp. 380-387. ACM.

Standard, Business. 2018. 190mn Indian adults don’t have bank account, says World Bank report. April 19, 2018. Retrieved from https://www.business-standard.com/article/finance/190-mn-indian-adults-don-t-have-bank-account-says-world-bank-report-118041900972_1.html  

Notes

[1] https://www.digitalindia.gov.in/

[2] Our own experience in the field has shown, however, that use of internet is often limited to most popular applications such as WhatsApp, YouTube, Google Maps and sometimes Facebook.

[3] Unified Payments Interface is a real-time payment system developed by the National Payments Corporation of India (NPCI) to enable multiple financial services such as P2P transfers, merchant payments, and so on to be availed through a mobile application. Unlike M-PESA (Kenya), which is a feature phone app only, or Swish (Sweden) which can be used only on smartphone, UPI can be used by both smartphone (via an app) and non-smartphone users (via USSD code). https://www.npci.org.in/product-overview/upi-product-overview 

[4] https://venturebeat.com/2018/07/04/whatsapp-says-collective-action-required-to-combat-the-spread-of-misinformation-in-india/

[5] WhatsApp had applied for a UPI license almost a year ago but the Government is yet to approve because of concerns over privacy and data storage. The Indian Government, in the aftermath of the Cambridge Analytica scandal, was wary of user data from India being stored outside of the country and insisted on local data storage. Facebook, which owns WhatsApp, only recently acceded to this stipulation. 


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