Financial business model innovation for emerging markets

Abstract

Indian economy has been experiencing phenomenal growth over last decade. Rising income, huge demand of household, huge young earning population has paved way for incredible appetite of consumer credit. On the other side world class financial infrastructure, prudent and conservative but gradually opening regulatory regime has led to stable growth of banking credit to consumers. But there have been abysmally low penetration (1%) of plastic card based financial services owing to multiple factors including unorganized retail, poor risk assessment, low experience with plastic money of market as whole and sizeable part of economy following cash based transactions. While Internet based financial transaction connected to e-Commerce services has grown substantially and educated market place for further financial innovations, but still large part of consumers are still not using e-commerce based services or card based services for various reasons including very poor broadband penetration. However mega trend of incredible growth of mobile penetration has not only enabled connectivity but cheap smart phones and reasonable mobile data rates have enabled new age financial innovations to focus on Mobile as a platform rather than a device similar to computer has viewed as a platform and ecosystem rather than a devices. This study analysis and proposes a viable way to bring financial services including consumer credit delivered over mobile platform and enabling enormous chunk of consumers and retailers who have been so far either untapped or under-tapped, to participate and use the financial services. Study also analysis the risks, and offers argument as to how some of the risks can be addressed and how in the ever increasing competitive landscape, the proposed product can be managed to remain unique.