Monday, March 9, 2009

Views: Banking for the unbanked - contd...

To continue on product innovations, to reach newer segments of the banking market i was thinking about telecom. Why there is such an explosive growth(in terms of reach to common man) in telecom industry versus a hindu rate of growth when it comes to traditional banking.

I am not talking about the 20% growth in revenues the banks are making by doling out home loans and credit cards to the consuming public at various interest rates. I am talking about parallel's to pre paid cards, small recharge tickets available at the beedi shops, life time free incoming facilities, bundled products like land line + internet + IPTV, etc that is making telecom companies add 3-4 million subscribers month on month. Is it that the need for a common man to have banking facility is minimal when compared to his need to communicate? I think the answer to this is the way we understand customer segmentation. Unlike the uniformity in need to communicate, the need to have banking services varies widely across the customer segments. i.e. the needs of student, economically backward person, middle class, high net worth individual, NRI all are extremely different. For a middle class or economically backward individual, availing these facilities is still an inhibition. An individual wanting to buy something online for a better deal has very limited options today unless he has a credit card. He either has to pay through cheque, or make a DD, pay when he receives the item in a few cases etc  which are not very convenient options when compared to paying through a credit card. I think a parallel to innovation in telecom in this case would be pre paid currencies available across small shops. If an individual wants to buy something he could top up his account with any bank with a pre paid card available in shops and use it to buy online or through mobile shopping. The balance left could be credited to his account in the bank. Even a small pan walla would use those cards to do cash deposits in bank using his mobile without having to walk into the bank or waiting for a cash collection agent! 
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