Environment | infrastructure | rural India
Vikram Akula of SKS Microfinance Touts Mobile Banking as the Future of Microfinance
In a recent interview with IndiaKnowledge@Wharton, Vikram Akula of SKS Microfinance touted mobile banking (conventionally used for performing balance checks, account transactions, payments etc. via a mobile device such as a mobile phone) as the future of microfinance, but cited India’s regulatory environment as a significant limiting factor in expanding mobile banking networks (click here for a related article from our archives). According to Akula,
“It doesn’t make sense to try and build a retail brick-and-mortar infrastructure in rural India. From a cost perspective, it makes no sense at all. Mobile technology today is robust enough that you can actually very easily do banking. We actually have a very successful pilot that we’ve done.”
The prohibitive regulatory environment cited by Akula may soon change, as RBI “has begun to realise that the ‘rapid expansion of this mode of communication has thrown up a new delivery channel for banks.’” In order for the mobile banking market to fully realize its full potential, however, further incentives/mechanisms need to be put in place that stimulate, rather than stifle growth, especially since the mobile “banking” sector in India is currently “limited only to enquiries, alerts, and certain kinds of bill payments,” and has yet to become “transactional.”
To watch a video of the interview, which focuses on issues beyond mobile banking, including capacity building, capital infusion, cost defrayal, and the notion that microfinance institutions’ operational models should be akin to those of businesses, see below:
[youtube=http://www.youtube.com/watch?v=Nf98RPvwJ8U]
One Comment on “Vikram Akula of SKS Microfinance Touts Mobile Banking as the Future of Microfinance”
I fully agree with your post. Mobile banking offers a wide range of benefits to the poor and even if it isnt used to make micro loans, the incidence of saving is encouraged through this platform, which in itself is a great benefit to the economy. The phenomenal growth of emerging economies has translated into high-growth telecom sectors that penetrate the bottom of the social pyramid which is still huge. This provides a potential avenue for telecom firms to partner with microfinance banks and its only a matter of time before this opportunity is realised in India.