India: Whatsapp Pay’s Rural Push - From Insurance, Micro-Credit to Pension Are t...
India, July, 22 2020 -
Providing access to financial services such as insurance, micro-credit, pension and lower income segments in rural India is WhatsApp’s next big bet on the payments front.
“We want to open up with more banks in the coming year to simplify and expand banking services to rural and lower income segments,” said Abhijit Bose, head of WhatsApp India.
“Our collective aim over the next two to three years is to enable low-wage earners and the unorganised sector access insurance, micro-credit and pension.”
Bose admitted that extending payments to newer, rural customers can’t be done in isolation. “The goal is not to bring payments but services to the masses,” he said, adding, “Even the RBI's five-year financial strategy highlights the need to extend financial services to the masses.”
“Small savings could fund formalised MSME businesses.”
Speaking at the Global Fintech Summit 2020, Bose said WhatsApp India would embark on pilot projects to enable a scale-up in the rural digital ecosystem.
The aim, he said, is to ensure a steady conversion into small savings for the largely unbanked rural populace, which in turn, could open up channels of working capital for the crucial and cash-starved MSME sector: “With consumers building assets and small savings, working capital and credit for MSMEs can open up.”
Given the sluggish pace of processing MSME loans, especially for those MSMEs in rural areas, Bose said that letting rural India access financial services and small investment schemes could possibly save the day, for these companies.
“The theory is that digitisation of the MSME economy could lead to more working capital in the hands of these companies,” he said, pointing to data, which suggested that as recently as 2018, merely 15 percent of demand for loans below Rs 5 lakh by the MSMEs was being processed formal banking channels.
“If more MSMEs formalise and more banks start lending to them, thanks to digital profiles being created, it could lead to larger and smarter lending, increased MSME growth and increased consumption,” Bose said, “This accelerated lending could cover 67 percent of the government’s GDP targets for 2025.”
“MSME digitisation only the start.”
Tapping into a partially banked rural demographic that hasn’t kept its date with tech isn’t an easy task. WhatsApp is aware of this.
“Lending to those not digitised is hard, and this jump can only happen through data in the hands of our best banks,” said Bose. As on date, WhatsApp has a total of 400 million users in India, 15 million of which are small businesses.
In two years, Whatsapp is expected to launch experiments in digital banking, of which Bose said that the impending digitization of MSMEs is merely the starting point. “We want to alter existing to ensure that consumers get to decide what they want when they initiate a service,” said Bose.
“We will use the venture model, which will see us take risks but do it in controlled pilot projects.”