Thursday, September 24, 2009

What I learned about India [Part 1]

Preparing for a ceremony in Rishikesh

  • "Did you see they have 'Hello to the King' here?"
  • "What's 'Hello to the King'?"
  • "It's basically a 'Hello to the Queen', only with a Bhagsu cake"
  • "What's a Bhagsu cake?"
  • "It's basically a Banoffie pie, only without the bananas"
  • "I give up"
(Two Israeli backpackers, Dharamsala)

I'm not such a big traveler, but it seems to me that there is no single country you can capture in a blog post after less than a month of travel. That wouldn't be fair, but nonetheless, I have to say something other than "WOW". India is amazing, colorful, and extravagantly diverse; it is also noisy, dirty at times and completely frustrating when western perceptions of time and place collide with the Indian way of getting things done. But hey, you don't go on a backpacking trip to get five star treatments, do you?
India, at least the parts I visited, still seems very conservative. Sometimes it's obvious (you wouldn't believe how much of a standard Jason Biggs flick is censored in some Indian channels); sometimes it's subtle, though, like the highly sophisticated techie, sitting next to me in Barista coffee in Connaught place, holding an E71 but reading the caste-sorted "groom wanted" ads in the Hindustan times. It's there, and coming from a somewhat religious, symbolic country I appreciate the contradictions this creates. But the thing that amazed me the most is the fact that anything on the crust of this culture, ever so slow in its rituals and conventions, is by definition ever changing, at lightning fast pace. I'm not only talking about the highly western desserts those backpackers from my prelude discuss; what I'm actually thinking about is technology – and specifically, mobile phones.
They're everywhere. And not only are they everywhere (I had a 3G signal in the hills of Parvati valley! This actually beats some major US cities), it seems that they're actually used not as a luxury but indeed as THE major gadget. The taxi driver uses it instead of a radio; the young man on the bus to Kasol watched his favorite videos; and the old man, carrying a huge pack of firewood outside of Tosh, walks barefoot but talks on his mobile. And there's another part to it: I've explained in the past why using your mobile to pay isn't another steps towards the "stash", since the operators bill to a credit card or a bank account, not manage the user's money directly. But the case is different in India; many people do now have any financial entities in a financial institution, and a large chunk of the mobile market is prepaid. This means that other than cash, the mobile phone is the type of "currency" these people carry. Developing a mobile-phone-based, easy to use P2P payment solution is a must, the next step in payment evolution and something that will boost India's economy. This goes way beyond being able to send more ringtones and premium online content – this actually means gaining control over people's financial entities. If you can pay with a mobile phone, why not let it be your bank?

So why doesn't this happen? For various reasons (that can be overcome, but are still obstacles). One of them is the fact that a prepaid model prevents proper identification. This limits the ability to manage identities from afar, without any details from the user. It can be overcome (from installing a client, though models of incremental identification requirements when initiating payments, to rigorous vetting processes), but creates a major challenge. Another major problem is the fact that old phones have little processing power, and cannot sustain any type of payments application; if you don't install any type of software, you have a high unsecure medium, that can be easily breached and allow access to user credentials. These are the two major technical and risk related issues, and I'll discuss near-field communications and mobile authentication in future posts. The two other obstacles I learned about when I was in India are very interesting as well: one is consumer adoption, in a world of cash payments and little to no money; and the other, for which I would love to get comments from readers, is the fact that the Indian VC industry is smaller than needed, and geared towards American standards for business models and success. This is a very interesting reasons I would like to investigate, and will share my findings as soon as possible.

Bottom line, if you're looking for your next startup, maybe P2P mobile payments in India is your best guess. What's better than driving progress and technology into rural areas, while reaching amazing business success? And you get to taste "Hello to the King" as well. Next one's on me.


prashant said...

thanks for loving India, and believing that the next ePayments Mobile Boom will take place.
Yes, it will take place, the curve has already started.

upasana taku said...

hey Ohad

there are a bunch of mobile payments companies in India already but none going anywhere just yet...

Ohad Samet said...

Thank you Prashant and Upasana for replying. I'm sure I'm not the first one to recognize the potential, however I ask myself what are the main drivers for mpayments not going anywhere just yet. If anyone can comment or suggest an Indian mpayment entrepreneur whose brains I can pick, I would be happy to learn!

Chinmaya Meher said...

This is a brilliant analogy of travel experience leading to a bsuiness opertrunity. I work for bank and I know a host of banks offer mobile banking facility in India however there is a long way to go. Only a miniscule % of the opertunity in hand is tapped. Also the regulator has come up with stringent policy which doesn't allow bulk transactions beyond a value.