The Post Bank (India Post Payments
Bank) the Prime Minister spoke so affectionately about from the ramparts of the
Red Fort shouldn't end up being another public sector entity in an already
crowded financial services sector.
(The writer is Joint Secretary,
Ministry of Finance)
Digital India requires not just
vanilla bank accounts but widespread ability to make and receive electronic
payments. The Post bank, designed as a service platform for the financial
services sector rather than a narrow competing entity, can play an important
role in fast tracking cashless India. We look here at the first scaled up
application of the India stack.
Governments do better facilitating
and servicing their corporate than competing with them. The Post Bank funded
out of public exchequer, leveraging the network of the post office, reach of
the postman and brand value of the Government of India needs to transmit
resultant value to the entire industry rather appropriate it by itself.
From the customer point of view,
this will translate into walking into a post office (more than 155,000),
tapping the postman (more than 300,000) or logging on to a single application
on a smart device to transact with a service provider of choice.
For retail financial service
providers like banks, payment service providers, mutual funds, insurance companies,
pension fund managers, forex service providers and money transfer companies, it
will mean extended reach to customers and cost saving on high street presence.
For the Post Bank, a platform
approach will have several advantages. For one, it will work from a known
position of strength of a common service provider rather than a competing
agency, something the public sector is not adept.Second, it will be able to
garner numbers in a high volume, low margin business. Third, it will attract
foot falls from across the board providing cross-selling opportunities. Click
below to know more
Fourth, it will serve a larger
public purpose as a publicly funded entity . Fifth, it will be able to leverage
consequential market intelligence to design and retail its own products much
like a multi brand store attracting eye balls for its own products while
retailing those of competitors.
As far as financial inclusion is
concerned, resultant economies of scale and business efficiencies will make
opening and servicing small accounts viable. Global experience suggests the
first ladder of financial inclusion is remittance service, second saving
accounts and third access to credit. Analytics flowing from the platform can be
leveraged for credit scoring of individuals families. The Post Bank, while not
licensed to operate credit services, can support related third-party services.
Two developments make the Post Bank
an attractive service platform. The requirement of the entity to be registered
as a body corporate and regulated by the RBI will imbibe confidence in other
players to use its services without being overawed by dealing with the
Government of India. Second, the proliferation of interoperable technology in
financial services will obviate the development of supporting technology
platforms from scratch.
The micro ATM pioneered by the UIDAI
and the UPI of NPCI make for immediate roll-out of interoperable banking
solutions. Visa and Mastercard have equally smart ready-to-use solutions.
The
suggestion is not to down play the Post Bank. contrary, it will be nothing
short of the proverbial game changer as the first mover in the financial
services aggregator space. In fact, entry barriers will be high for
considerable time before a competitor steps in. Systemically, this could be a
major shot at deepening the financial services market, promoting cashless
economy and supporting Direct Benefit Transfers.
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