More than a billion<\/strong>\u00a0people in emerging and developing markets have cell phones but no bank accounts, credit cards or debit cards. Many low-income people store and transfer money using informal networks, but these have high transaction costs and are prone to theft. Mobile money is beginning to fill this gap by offering financial services over mobile phones, from simple person-to-person transfers to more complex banking services at much lower costs.<\/p>\n In an informal economy, most funds travel in cash via networks of relatives and friends or courier services. Such conduits can be slow, unreliable and expensive. Over wireless networks, money can move instantly, at any hour, and sending costs less than a penny. As a result, \u00a0, the poor not only have a bit more to spend but also enjoy better health because wage earners can respond more quickly to financial emergencies, such as illness. For customers, access to immobile money lowers the transaction cost of sending and receiving remittances, improves the safety and security of cash, and makes payments more convenient.<\/p>\n India has to contend with \u00a0a geographical and cultural divide of a great magnitude.. The aversion of the other India to digital finance has more to do with their aversion to\u00a0\u00a0 everything that has to do with technology. And this stems from their lack of trust in it and also partly on account of lack comfort with technology and literacy needed to fully use these services. Women often face additional barriers: less access to mobile phone, lower literacy levels, less confidence in using technology, restrictions on travel or social interaction.<\/p>\n Increasing financial and digital literacy alone will not be enough. Some things are better addressed through regulation. If there are things that are clearly negative for consumers, then they don\u2019t need to exist. But changing the financial framework is also not enough. Consumers will have to walk that extra mile if they want to reap the harvest of these new financial tools.<\/p>\n Although we must continue to make the case that responsible digital finance is good business, we know that isn\u2019t enough. Independent and well-resourced regulators, consumer groups, and other organizations are critical to ensuring the consumer protections afforded by law and regulation are actually followed and enforced. The Helix<\/em> Institute of Digital Finance\u2019s latest survey of agent networks in Uganda highlighted just how commonplace fraud and robbery is for agents, not just in Uganda, but worldwide. Customers continue to experience trust-eroding problems in their dealings.\u00a0 .<\/p>\n In India, RBI has been instrumental in enabling the development of fintech sector and espousing a cautious approach in addressing concerns around consumer protection and law enforcement. The key objective of the regulator has been around creating an environment for unhindered innovations by fintech, expanding the reach of banking services for unbanked population, regulating an efficient electronic payment and providing alternative options to the consumers.<\/p>\n Talk of \u201ccashless societies\u201d might be overblown, but societies in which digital transactions can be made seamlessly by all are by no means fiction.\u00a0 \u00a0The biggest success story is Kenya .The Kenyans discovered that with\u00a0\u00a0 the right technology, exchanging money between physical and electronic forms can be done securely, and as naturally as exchanging notes for coins.<\/p>\n The famous mobile network Safaricom developed\u00a0\u00a0 M-Pesa (M for mobile;\u00a0pesa<\/em>\u00a0is payment in Swahili), a transformative mobile phone based platform for money transfer and financial services which is the driver of Kenya\u2019s digital financial revolution.\u00a0 Launched in 2007, it quickly dominated the cash-transfer market, and grew at an astounding rate, capturing more than two-thirds of\u00a0Kenya’s adult population as customers. It now stands as the most developed mobile payment system in the world, and has heralded a development revolution impacting millions of low income Kenyan households.<\/p>\n However, a deeper slicing reveals that the granular and higher resolution picture is not necessarily so tinted. Few mobile money accounts are actively used. While money flows through these networks, most of the volume comes from users merely topping up prepaid mobile accounts in transactions averaging less than a dollar. And, when people do make remittances, those receiving the money tend to cash it in, taking the money out of the system and limiting the potential for mobile money to become a medium of exchange \u2013 a mobile wallet for buying things or to provide banking services over mobile networks.<\/p>\n A\u00a0survey of\u00a0\u00a0 accounts opened under Pradhan Mantri Jan-Dhan Yojana (PMJDY), India\u2019s flagship financial inclusion programme\u00a0\u00a0 found that only 33% of all beneficiaries were ready to use their Rupay cards. The others were bewildered by the complicated PIN and activation procedures. Inconsistent electricity and sporadic internet access further eroded customers\u2019 trust in ATMs and POS machines, with one failed transaction enough to make an entire village swear off formal financial institutions.<\/p>\n India\u00a0 should avoid the usual overstep and over haste the way \u00a0it pushed millions of new users onto the\u00a0\u00a0 digital economic grid by virtual fiat of demonetization triggering large sale social and economic disruption \u00a0\u00a0and make sure that \u00a0the pace of this journey is \u00a0determined by the ability of it people \u00a0to cope with it. In an attempt to leapfrog the cash generation to digital payment solutions, it should not take to a highway that leaves millions \u00a0\u00a0by the wayside and puts them into a limbo of the sort we saw recently.<\/p>\n There will be challenges in shifting consumer behavior, In Kenya, agents were incredibly important to educating customers and assisting them with their first transactions, building awareness and a comfort level with the technology that eventually led to habitual usage.<\/p>\n India\u2019s business correspondent (BC) model\u2014the equivalent to the agent network in Kenya\u2014remains relatively underdeveloped. The sticking point is that the commissions of Banking Correspondents who are an important piece in this ecosystem and key touchpoint\u00a0\u00a0 are low and the government is not willing to consider this issue. Recent\u00a0research\u00a0by the Helix Institute of Digital Finance revealed that in the BC model Indian agents earn a median income of $52 per month compared to agents in Kenya who earn $192 per month.<\/p>\n Managing the agent network is the most critical post launch success factor. Agents conduct the cash-in and cash-out functions, enabling customers to convert cash into electronic money and back again in convenient locations. In the eyes of the customer, the agent is the face of the company. This means the agent can either build or destroy trust and credibility. Many providers focus on building their agent networks as fast as possible, without careful attention to the agents\u2019 business case and profitability. Experts suggest three key tenets in managing an agent network: (1) grow the customer base and the network in tandem; (2) understand agent economics and risk\u2014the business case for agents is not that simple; and (3) only enroll agents who have the right skills and dedication, and be prepared to train and retrain.<\/p>\n The right way to drive a revolution of this type is through empathy \u2014not a form of empathy that comes from superiority, but one born from a profound humility. It is an offering of respect, a moment of listening to stand in the shoes of another. The most successful leaders were those who recognized it and invoked it in developmental interventions they shepherded.<\/p>\n Building inclusive digital economies requires the collective action of governments, industry, financiers, and civil society. Before speeding ahead, we need to build the infrastructure, align the policies, and create the tools that will enable the \u00a0\u00a0poor to comfortably board the digital train.<\/p>\n When we design solutions that recognize all as equal partners, we have a real chance to of making to goalpost. \u00a0Each society is at different stages of digital financial inclusion and the necessary solutions and interventions\u00a0\u00a0 must be appropriate for the cultural and economic context. By respecting the cultural outlook of the people and embracing their concerns we enlist their buy in, and that is what paves the way for lasting and sustainable success.<\/p>\n ________________________________________<\/p>\n Access to the right financial tools at critical moments can determine whether a poor household is able to capture an opportunity to move out of poverty or absorb a shock without being pushed deeper into debt. However, the existing \u201cbricks and mortar\u201d banking system doesn\u2019t work for poor people, in part because most of their transactions are conducted in cash. Handling cash transactions is costly for banks, utilities companies, and other institutions, which pass along the costs associated with storing, transporting, and processing cash to their customers.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[180],"tags":[],"class_list":["post-87779","post","type-post","status-publish","format-standard","hentry","category-brics"],"_links":{"self":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/87779","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/comments?post=87779"}],"version-history":[{"count":0,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/87779\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/media?parent=87779"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/categories?post=87779"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/tags?post=87779"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/www.transcend.org\/tms\/wp-content\/uploads\/2016\/11\/moin-qazi.jpeg\")
<\/a>Moin Qazi<\/em>, PhD Economics,\u00a0PhD English,<\/em> is the author of the bestselling book, <\/em>Village Diary of a Heretic Banker. He has worked in the development finance sector for almost four decades in India and can be reached at moinqazi123@gmail.com<\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"