India has found itself in the midst of a dynamic, growing business environment. The 90’s marked an important time in India’s growth journey because markets were finally opened up owing to liberalisation and globalisation which brought with it greater growth opportunities .
It was the information technology sector that has had one of the biggest impacts on the way we function not just as people but also as businesses and as a nation. In turn, the digital revolution has opened up avenues that were previously never explored before.
Companies are able to process, store and retrieve a large amount of data at ever-dwindling costs. And we are direct witnesses of new trends such as the emergence of the mobile platform for doing business and cloud computing to handle large volumes of data. These new technologies and platforms have created numerous opportunities for companies to derive strategic business advantages and stay ahead of the competition.
One of the sectors that have perhaps benefited most from this digital penetration in India is the telecom industry where digitization has offered telecom companies the opportunity to delve into more complex business systems, build up their market positions and create customized offerings for customers. In fact, it could enable telecom operators to improve their profits by as much as 35 percent in the coming years, as opposed to the current 9%.
FinTech and Telecom go Hand in Hand
Just stepping out in public can reveal how hooked people are to their devices and it just goes to show how the adoption of technologies such as mobile, artificial intelligence and cloud technology is crucially changing the way we live and connect with the world around us.
With demonetisation just over our shoulders, it comes as no surprise that according to a Google-BCG report, the number of mobile wallet users is already three times the number of credit cards issued in the country (24 million in 2015-16).
The telecom infrastructure has facilitated the necessary building blocks – access, interconnectivity and applications – to enable the digital revolution to take place and shape the future of the country.
Defying the tangible properties of time and distance, the telecom industry together with the fintech sector, has brought the world to our screens, with anytime and anywhere access. It has enabled us to shop, trade in stocks, transact with banks, and so much more at the touch of a button. The key to this evolution are digital payment apps that focus on integration. Down to brass tacks, it is more equitable and more convenient for everyone that mobile payments work for both basic mobile phones as well as smart phones. And smartphone usage and data consumption is touted to reach 55% and 1,869 petabytes per month by 2020 respectively.
Inching Towards a Completely Digital India
Digitisation has taken us further, yet brought us closer. The markets that felt so immensely far from us before have now been brought to our doorsteps. While at the same time, maintaining relationships, be it personal or professional has become exponentially simpler.
The government too has shown immense interest in converting India’s developing economy into a digital one. It has set the pace with initiatives like Digital India which aims at bridging the digital divide, increasing global competitiveness, fostering innovation and creating jobs definitely seem achievable.
Corporates too are increasingly moving towards reshaping their digital strategies to keep up with the changing times. According to PricewaterhouseCoopers’ report, “Industry 4.0: Building the Digital Enterprise”, more than a quarter (27 per cent) of the industrial companies in the survey have rated their level of digitisation as high, and this value is expected to rise to 65 per cent within the next five years in India. Globally, this number is expected to grow from 33 per cent to 72 per cent during this period.
With total payments conducted via digital payment instruments set to reach $500 billion by 2020, it is clear that businesses are showing inclination towards digitising their monetary transactions as well. The main contributors to this boom are consumer-to-merchant transactions at the point of sale, followed by B2B and peer-to-peer transactions.
Enhanced internet penetration and high rate of of smartphones subscriptions in the Indian market has altogether moulded India’s payments landscape in favour of digital payments. Here’s how the telecom industry can create revolutionary growth not only for itself but also for the economy with digital payments:
• Lowers operational costs: Digitisation helps make and receive payments faster, besides helping businesses reduce processing costs, and provide a more efficient way to track and control expenditures.
• Increases efficiency: Moving from cash-based to digital payments has the potential of making them more efficient by lowering the cost of disbursing and receiving payments and increasing corporates’ risk management capacity.
• Eliminate price wars: Key digital trends have triggered operators’ transformation toward being digital service providers. Mobile phones provide a one-stop solution for last mile delivery but the price war amongst the Indian telecom sector and the intense competition brings new challenges to the fore, slowing the full potential of digital payments.
• Enhances security and transparency: Digital payments can be made more securely as they increase the transparency of payments, thus making it less likely for there to be a leakage between the sender and the receiver.
• Leverage big data: The telecom industry is both a consumer and provider of big data services. The exponential growth in the volume and velocity of data generated is creating huge opportunities in big data.
• Save time: As compared to cash payments, digital payments are virtually instantaneous, regardless of whether the sender and the receiver are in the same town, district, or country.
The Way Forward
India is the second largest telecom market with more than 1 billion subscribers reported in 2015, and the sector saw a growing 3G footprint and data usage that year. And it is with the recent record-shattering changes in the telecom industry that digital penetration has been higher than speculated. And if the government truly visualises a Digital India, it can only be achieved with the help of the telecom industry.
With millions of subscriber relationships and decades of experience in driving interoperability and collaboration, these telecomm are uniquely positioned to compete in the platform economy. And the obstacles that stand in the way of a completely Digital India can only be overcome only if the telecom sectors works alongside the policymakers to ensure that the infrastructural portions are sound, available and affordable.
(The author is CEO & Founder, Paymate India)