I come from the space of Indian tech and banking growth. I started as an IT professional in a small firm before I joined IBM and be part of the Telecom vertical where we built the modularized version of what was an ERP built by IBM NZ for Telecom services providers and we saw the industry move from 2G to 3G happening in front of us. The overall wave of online payments and open banking has a far different organic growth that what you’ve explained in your formative chapters in your book Digital Human.
In India, the pioneers of bringing the open banking standards were not Banks. It was brought on by Telecom service providers. As mentioned in the book DIGITAL HUMAN by Chris Skinner, the movement from Web 2.0 to Web 3.0 the companies were not taking the mobile apps seriously as they left the mobile connectivity to its carriers and the two worlds converged with the advent of 3G and 4G, it was carriers like Airtel and Vodafone in India that had the first idea of a mobile wallet. I am talking about 2007 even before iPhone became the catalyst of the ecosystem that was built on it for apps and opportunities.
Carriers used to have multiple solutions in place to cater to 4 different styles of connections, Cable TV, Landline connections, Mobile Postpaid connections (which was the extension of Landline systems with a few additional features) and Prepaid mobile connections.
Note: Data only connections or such services came later with 3G adding a Data offering layer on top of the traditional service offerings.
In India, in the early 2000s, there existed a small but very aggressive sub-sector called VAS (Value Added Services) under Telecom sector, where Indian start-up ecosystem was taking shape. A lot of funky & creative ideas were coming out in the form of funny ringtones, caller tunes and what not, under this segment. Small start-ups were mushrooming to leverage more such opportunities of providing micro-content on phones. Nokia Symbian was the preferred platform then. Image above shows the promise it had and the reports from BDA and other agencies were quite gung-ho about the future of VAS in India.
That’s when Airtel proposed a balance transfer system which was fully compliant with 2G networks for its prepaid customers, as Airtel identified that it is sitting on piles of cash with the prepaid customers which were unused, and the phone number can be used as a money holding account. As soon as the service was offered, practically all banks raised their slogans that how can a telecom service provider offer this service as this operating model of money transfer is for banks and Airtel if had to do this have to take a banking license. Let me remind you this was 2006-2007.
Also, risks of using this system as money laundering and lack of KYC (as that time practically anyone could have got a prepaid burner phone in India) were raised. To circumvent this Airtel lowered down the scheme’s eligibility for only those customers which were under friends and family plan as the members of that
But SEBI restricted that use case immediately and Airtel had to discontinue the service. Now when I see PayTM doing the same after a decade I feel a severe Déjà vu!! So open banking which features as a service became prevalent under web 3.0 in the Digital Human book, for me has existed before. Now, people are calling India’s adoption of PayTM and digitization as a step to leapfrog the developed nations, I would say India would’ve done that a decade earlier had govt. been more open-minded and future looking.
The whole VAS model was crushed, and a huge opportunity was lost. One of the prime examples of how state’s lack of ideas and regulations used as a tool to kill potential markets.
Shailendra Malik has 15 years of industry experience in delivering strategic solutions on paper to real life and delivering PoC initiatives to live production systems for his clients. Known for identifying the real problems that stop a breakthrough to happen. He is working with a consulting firm in Singapore and has worked in the Singapore market for more than 8 years, working with multiple banks as his clients.
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