Instant messaging platform WhatsApp intends to foray into digital banking, financial services for the masses and enable digitisation of small and medium businesses to drive the government’s financial inclusion agenda.
In a presentation at the Global Fintech Fest held virtually on July 22, the company’s top executive laid out its India plans.
While Unified Payments Interface (UPI) based payment is the starting point, enabling access to financial services and complimenting the banks’ digital offerings is the ultimate aim for WhatsApp in India, said Abhijit Bose, India head for the Facebook-owned company. The company will make all these offerings through the partnership route, working with banks, non-banking lenders, insurance companies, innovative technology service providers and fintech partners, he added.
“We will conduct multiple pilots over the next year-and-a-half to test for problems and try to solve distribution challenges. These pilots will be done with our partners and innovative tech partners in each vertical,” he said.
WhatsApp has plans to work closely with banks and other financial service providers to help low income wage earners access three basic financial services: pension, insurance and micro loans.
Citing empirical data, Bose said there are around 300 million wage earners in the country who can access pension schemes but they have not done so. The reason being complicated selling processes and lack of digital literacy among the target consumers. In order to bridge this gap, WhatsApp intends to leverage its digital distribution capabilities and reduce the cost of selling to these consumers.
What he cited for pension, he intends to replicate for micro credit and insurance as well.
As more and more consumers and businesses come online, Bose said they will have digital footprints. These can be leveraged by banks and non-banking financial companies (NBFCs) to lend to this segment. He added that banks are not being able to lend to small businesses because of the lack of data. To decide on a loan, bankers have to recreate their profit and loss statements through bank account details.
WhatsApp is eyeing this opportunity only through partnerships since large stable banks, given with the strength of their balance sheets, can actually help bridge this gap in a cost effective manner.
Bose said accelerated credit delivery will help the government achieve 67 percent of its GDP growth targets for the next five years. “Overall it will benefit the ecosystem, increase consumption and also protect the poor and vulnerable from financial shocks.”
WhatsApp for Business app now has 15 million Indian businesses connecting with their customers. The platform can leverage its business APIs (application programming interfaces) for these partnerships with more banks and financial institutions. It has tasted initial success with players like Kotak Mahindra Bank and ICICI Bank and is now ready to scale up its partnerships with more lenders.
The Facebook-owned company counts India as its largest market, with 400 million users. At a time when India is standing at the cusp of a digital revolution, WhatsApp wants to play the lead role along with banking partners. It is currently running a pilot on WhatsApp Payments and is looking to go live soon. It has also partnered with Reliance Jio to create a digital online to offline e-commerce experience for Indian consumers.
Industry insiders have often pointed out how WhatsApp wants to become the WeChat of India. With this detailed presentation, Bose has indicated the aspirations of the company clearly. As the tech giant tests and runs these pilots in India, it also want to recreate this success among its two billion user base in 180 other countries the company is present in.