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Consumer 2.

Indicus Analytics
October, 2008
Mobile Transaction – The last frontier

At a time of increasing convergence between telecom and financial services, especially in the developing
world, where far more people have access to cell phones than banks, the imperative should be to promote
mobile transaction. The spread of mobile communications enhances economic growth by lowering the cost of
interaction, expanding market boundaries and creating better flow of information.
Countries like India have skipped land lines in favour of installing mobile phone technology only. They need
to embrace the mobile transaction opportunity similarly. It's far easier to boost rural cell coverage than it is
to build so many bank branches to serve a billion people in remote areas. Already more than 200 million
people have mobile access in India.

The potential is large, and not only in India. People who are now "unbanked" in China, India and Brazil (three
of the BRIC countries) alone could generate US$85 billion in banking revenue by 2015, according to an
estimate by the Boston Consulting Group.

Hurdles remain for wider use of mobile banking. Mobile carriers must have broad enough coverage to
connect urban and rural users, as many remittances come from urban migrants sending money back to their
family villages.

The Reserve Bank of India recently issued mobile banking guidelines. The guidelines permit only licensed
banks with a physical bank presence in India to launch mobile banking. The service should be
available to their customers regardless of their cell phone service. Only domestic Indian rupee transactions
are permitted and are capped at Rs. 5,000 per customer per day for funds transfer and Rs.10,000 per
customer per day for transactions involving purchase of goods/services. This facility would be restricted to
only bank accounts and credit card accounts, which comply to know your customer (KYC) norms. This would
cover a customer base of around 80 million people in the country.

There is also a requirement of interoperability which means third party providers who have previous
experience as USSD gateway operators, are likely to be in a favourable position. The guidelines state that
banks offering mobile banking service must ensure that customers having mobile phones of any network
operator are in a position to avail of the service. Interoperability may slow down the time to market but
should ultimately benefit the customers.

While the service needs to be widened, the first step is welcome as the big move towards a more inclusive
society. Mobile banking and payments should be high on priority given the fact that India records 8 to 9
million new customers every month, people are taking to mobile phones in a big way and vast areas of the
country are financially underserved.

The Most attractive Urban Markets

How have the urban consumer markets grown in India? Which specific pockets are growing the fastest
and are the most attractive for marketers. One of the key indicators of market attractiveness is the
income level. The data over two years are revealing. The map depicts the growth in urban incomes
over two years 2006 to 2008.
source: Indicus Premium Databases
The leading dark green districts (more than 12% growth over two years) are
Dadra & Nagar Haveli, Gandhinagar, Dhemaji, Giridih, Bokaro, East Garo Hills, Wokha, Surat,
Thiruvallur, North Tripura, North Sikkim, Thanjavur, West Tripura, Korba, Chandigarh, Tawang,
Thiruvarur, Pithoragarh, Tirap, Kohima, Gautam Buddha Nagar, Champawat, Dimapur, Raipur, Sonipat

Do Citizens want more policemen around?

The City Skyline of India captures citizen’s views from a sample of 10,000 residents across a hundred
cities. The dwellers were asked a question relating to need for more policemen. On a scale of 5 (agree
strongly, agree somewhat, adequate, disagree somewhat and disagree strongly), the results were
The most unsafe (by dwellers’ perception) appear to be
Agree Strongly that
they need more
State City policemen (%)
Andhra Pradesh Urban Areas in Rangareddi 85
Gujarat Rajkot 54
Punjab Amritsar 51
Assam Guwahati 50
Maharashtra Mumbai 49
Punjab Ludhiana 48
Uttar Pradesh Kanpur 48
Jharkhand Dhanbad 47
West Bengal Haora 47
Kerala Kochi 47

The least unsafe (by dwellers’ perception) appear to be

Disagree Strongly
that they need more
State City policemen (%)
Jharkhand Jamshedpur 14
Uttar Pradesh Kanpur 11
Jharkhand Dhanbad 11
Maharashtra Kolhapur 10
Tamil Nadu Salem 10
Haryana Faridabad 9
Madhya Pradesh Indore 8
Uttar Pradesh Ghaziabad 8
Maharashtra Pune 7
Gujarat Surat 7

Source: City Skyline of India

Did You Know?

The top ranking districts of India in terms of “Consumer loan activity” are:
Ranking based on consumer
loan activity index District
1 Mumbai (Suburban)
2 Chennai
3 Bangalore
4 Delhi
5 Hyderabad
6 Dharmapuri
7 East Godavari
8 Mumbai
9 Tirunelveli
10 West Godavari

The Consumer loan activity index reflects the current level of consumer loan activity. It is accounted
for by the variables such as - amount of loan utilized for housing, consumer durables and personal
purposes like education, credit card, etc. In addition, variables such as amount of cash loan payable by
households to Institutional and non institutional agencies, loans disbursed by SHGs (Self Help Groups)
and small business credit are also incorporated.

Source: Indian Financial Scape