People & Their Problems
New Delhi, 24 February 2017
Towards Digital
Wealth
EMPATHETIC
GOVERNANCE VITAL
By Moin Qazi
The year 2017 is an important milestone for India and would
mark the transition from a cash economy to a less cash and a digital economy.
But the buzzwords like “less cash”,” cashless” and “digital” do not really
convey the range and diversity of this societal change. It is actually a
migration to a new social and cultural pattern.
The tech class has poor exposure to critical social theory
and should try to understand the impact on the ground. There is a huge empathy
deficit. The new revolution will have
better chances of success if it is driven less les by financial punditry and
more by empathetic governance. People take to
new technologies when they see clear benefits, trust the providers, find it
convenient and can afford it.
Migrating from a cash economy to a digital economy requires
a big cultural and social shift, and a recast of the whole mindset. Making
gadgets available to the society will not help unless we bring about a change
in the overall outlook and mindset. It will require thinking very hard about
the motivators that will pull the consumers into this new space. The issue is
lot more nuanced than what we are seeing today. Nuances change from culture to
culture and consumer segment to consumer segment.
The consumers will come into the digital platform
believing that if they change
their behavior and exert the effort to get into the new world then certain
specific pains will disappear. We have thus to address real pains, not
just offer benefits. “You have to look really hard and ask, ‘What problems are
being solved?’” says Nick Hughes, who shepherded the team that turned M-Pesa into
a revolutionary financial tool. “Unless problems aren’t being solved, it
becomes a bit of hype.”
The aversion of the other India to
digital finance has more to do with their aversion to everything that has to do with technology.
And this stems from their lack of trust in it. Although we must continue to make the case that
responsible digital finance is good business, we know that isn’t enough.
Independent and well-resourced regulators, consumer groups, and other organisations
are critical to ensuring the consumer protections afforded by law and
regulation are actually followed and enforced.
The Helix
Institute of Digital Finance’s latest survey of agent networks in Uganda
highlighted just how commonplace fraud and robbery is for agents, not just in
Uganda, but worldwide. And customers continue to experience trust-eroding
problems in accessing their money.
For digital finance to be the transformative tool, consumers
must have greater confidence in the markets and services should be suited to
the customers’ needs and delivered responsibly, at a cost both affordable to
customers and sustainable for providers. The painful reality is that providers
too often focus on short-term incentives at the expense of long-term consumer
trust and loyalty.
There are also marked class issues which are built into India’s
cashless transition. India
is a country that has one foot in the future and the other in the Stone Age —
almost literally. India
had the most vibrant and innovative high-tech ecosystems in the world; but
alongside it, exists a planet of hundreds of millions of people living in
villages who are happy with this technology that’s hardly more sophisticated
than a bullock cart and a plow. Only 17% of the India’s population currently has
access to a Smartphone.
Talk of “cashless societies” might be
overblown, but societies in which digital transactions can be made seamlessly
by all are by no means fiction. The biggest success story is Kenya. The Kenyans
discovered that with the right technology, exchanging money between physical
and electronic forms can be done securely, and as naturally as exchanging notes
for coins. A mobile phone operator Safaricom has developed M-Pesa (M for mobile; Pesa is payment in Swahili), a transformative mobile phone based platform
for money transfer and financial services m-pesa
comes as an app loaded on your cell phone, so everybody with a mobile phone can
use.
You can withdraw cash at tens of thousands
of agents around the country. People are using it as substitute banking.
There’s no infrastructure needed, so it’s really cheap from a banking point of
view. And relative to paying a bank fees, it’s way cheaper. There is a
huge network of 45-000 stores through
which its customers can cash in and out of their M-Pesa mobile
wallet accounts. It
offers services including money transfers, loans, money deposit and withdrawal, bill payment and microcredit provision.
To understand why financial inclusion is important you need
to go beyond the numbers. A woman in Tanzania, working on a local
market, told me how the m-pesa system for mobile financial services has
transformed her life. Before it, she had to walk for one-and-a-half hours
through rough terrain with her cash in her pocket to get to the lake and buy
fish. When she arrived, the fishermen often said that the catch had been
unusually low and that prices unfortunately were very high. With no
alternative, she had to pay up.
Today she can call the fishermen and haggle over prices,
transfer payments via her mobile and send a boy for the fish. No longer does
she have to walk alone for one-and-a-half hours. Her money is safe online and
she can pay securely; she can spend it, as women so often do, on the health and
education of her children.
Digital platforms have the potential to change financial
services in three ways. First, they may reduce financial institutions’ costs.
Second, they can increase the reach of financial products, as traditional brick
and mortar channels make it difficult to deliver financial products to people
in remote areas. And third, digital platforms can facilitate innovation in
product and service design.
Cashless is now the big buzzword in India. Seeing
the digital landscape of other developing countries, we can be certain that in
setting a huge goalpost for digital finance, we are not pursuing a chimerical
dream. But the pace of this journey will have to be determined by the ability
of our citizens to cope with it. We should not take to a highway that leaves
millions of it citizens below. There will be
challenges in shifting consumer behavior.
In Kenya, agents were incredibly
important to educating customers and assisting them with their first
transactions, building awareness and a comfort level with the technology that
eventually led to habitual usage.
The right way to drive a revolution is through empathy —not a form of empathy that comes from
superiority, but one born from a profound humility. It is an offering of
respect, a moment of listening to stand in the shoes of another. The most
successful leaders were those who recognised it and invoked it in developmental
interventions they shepherded.
When we design solutions that recognise all as equal
partners, we have a real chance of making to goalpost. Each society is at
different stages of digital financial inclusion and the necessary solutions and
interventions must be appropriate for the cultural and economic context. By
respecting the cultural outlook of the people and embracing their concerns we
enlist their buy in, and that is what paves the way for lasting and sustainable
success. ---INFA
(Copyright, India
News and Feature Alliance)
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