Transforming the Payment Industry in Asia
Date: Monday , January 02, 2012
India – A promising market?
India is an emerging market and it is totally different from U.S., which means we have to be different in our approach. In India and most Asian countries, very small margin of consumers use the online payment services, and it is mostly for account transactions. People are yet to open up to the idea of using these online payment gateways for their day to day requirements such as paying utility bills. Though there are several establishments like government run and independent kiosks that act as a single stop for bill payments, they are still quite fragmented in their operations. The good news is that young generation is more technology enabled and is trying to leverage it in their day to day affairs, especially financial ones. They may not use it the way we do in the U.S. but they surely are opening up to the thought, especially for bill payments. Hence, currently we are trying to observe the difference and challenges in Indian market, hereby enhancing our learning. There is a lot growth factor involved in this, and after making a complete assessment, we hope to re-factor the existing technologies to suit the Indian needs or build new ones. We have set up a development centre in Bangalore that currently has 35 people and by end of next year; we hope to be 125 people strong in India. At present, these 35 people will help us sell the existing technologies by optimizing it. The primary charter is to build new technology that is India centric, but that should stop us from customizing our existing products and extend the same by innovating it into the areas which require it. Bangalore –The ideal place for an R&D
Bangalore has a legacy of being a hub for the R&D centers of several large companies. Our services are like an intersection between the applications and telecommunications. Hence, we found Bangalore to be more appropriate, as it suited the ecosystem that we have. Also, our talent in the U.S. has slightly diminished and we need people who are in the hardcore software sectors, people who are innovators, and those can give you solutions as per your market requirements. The talent pool available in Bangalore is definitely top of the class. The second reason is the innovation for the new generation systems that is specific to the Asian markets. This apart, we have global customers, who want to see our capabilities outside the U.S. Keeping all these factors in mind, Bangalore was the natural choice.
Beating the Challenges of an Emerging Market
We know India is a one of the biggest emerging markets and our first priority would be, to create an intimacy by knowing the appropriate places and using the capital in terms of relationships, into some of these banks here. The next thing would be to understand the ecosystem of the financial community. We think it is possible, because for starters several of the large banks we work with in the U.S., have their presence here. We believe we can work with those banks to get established, hence creating a foundation for us.
To summarize, we would establish a leading edge technology center that can help us develop solutions globally. We would then put the infrastructure in place to sell our products in India and other parts of the Asian markets. This is a global economy and if countries need to be successful, we cannot exist in just one country but exist globally specially when people are paying bills and moving money around the world.
Changing Trends in the Payment Instruments
I would say cash and cheques have been a predominant mode of payment in India. Credit and debit cards were the next wave of payment methods. Off late we have observed that credit cards payments are declining and debit card payments are increasing. Considering the demographics of India, more than half a million do not have access to bank accounts. As far as I know, we are going to witness the growth of prepaid cards. A lot of companies have already started and the growth seems to be very healthy. We could take this as an indication of people doing businesses and purchasing online. Therefore the payment instruments have changed over the years making it very innovative. The second is the channel through which it is done. Earlier we had walk-in counters and then we had the internet. Now we have the mobile channel. There is a huge challenge in people accepting and using mobile channel as a mode of payments on a day-to-day basis. The third is the whole concept of the network. We see the peer-to-peer network flourishing to a big extent. Now we can go anywhere and clear our bills at ease and we have multiple options available for us for the same. We provide the end to end capabilities from providing the bill to the consumer to empowering him to make the payment using a channel/payment instrument of his choice. We provide the entire treasury management services and also the conciliation services to the biller, which is very huge value addition. Therefore, this is a growing market because people are moving away from paper which used to be the first drive. It is almost for their convenience and to make it easy for the consumers to make their bills. So, the key question is how much of it is really movable to the "internet or the electronic" means. This is an interesting area and we hope to study it and help it grow.