September 12, 2013
In the megapolises of the emerging world, from Manila to Lagos, infrastructure is being upgraded and smart ecosystems are being built. Key to this is transport and payments form an integral, critical part of transport. Singapore is expanding its’ MRT footprint. Abuja is on its’ way to getting a new light railway system. Manila, Bangkok and Jakarta are building or planning to build new mass transit systems. This is where a convergence is taking shape between three networks-transport, telecoms and payments. Devices predominate in the interaction between the service provider and the customer-acceptance terminals, top-up kiosks, issuance form factors. There are other possibilities, too- can I post a complaint where I am topping up my wallet? Is it possible to pull up an interactive map? Will the service provider be able to push a coupon to my phone giving me an offer at the Subway at my station?
We are seeing some of these and the logical trajectory would be the connectivity between disparate objects and the establishment of a single, unified transactional flow for the end user. Today, you can scan QR codes placed on some posters and displays in MRT stations. You can press a button and speak to a customer service person. Getting a day ticket or topping up a prepaid card from a machine is relatively easy. But these are still fragmented- you cannot use the same machine to see a map, file a complaint, buy a ticket and redeem a coupon. You may step into the same station everyday but the station does not see you as a unique person with specific needs that it can address. This is where the Internet of Things really comes into play. Orchestrating the numerous devices being used, processing transactions in real time and responding to consumer actions through unified interfaces requires a robust and supple backend, state-of-art processing and tight integration between front end form factors, secure information vaults, issuance and acquiring platforms, service catalogs, CRM, billing, processing and bank interfaces. Like the worldwide web we are so used to, the key to successful engagement between machine environments and people is the ease with which different kinds of information and services can be accessed through a simple interface. Payments is as much about human engagement as it is about the end transaction.
The Internet of Things has potential in financial inclusion as well. Creating new branches through virtualization is possible, a lean and cost effective proposition for the long term. With a relatively simple front-end, such as a banking correspondent in a small shop or office, the virtual branch can become integral to the customers’ daily habit- less intimidating, more intimate and definitely far more fulfilling. At the same time, customer data captured at the correspondent level would be considerably rich due to the numerous transaction categories. Resources on call through APIs, rather than investment in expensive infrastructure, can remake the entire backend, bringing about deep impact on the old cost versus Quality of Service question. While ATM's and mobile are the current extensions to traditional banking, these may not be able to replace the special person-to-person engagement that is often desired and is, indeed, quite necessary. The virtual branch aligned with the banking correspondent would make that eminently possible.
From two related but different perspectives then-financial inclusion and everyday micro transactions-the Internet of Things has the capability and potential to drive cashless economies. While we debate launches and applications, particular attention to this heavy lifter is essential to better understand how far emerging payments can go. By redefining existing notions of cost, service and indeed the way we consider infrastructure, it is able to bring about profound changes in the way we think of banking and payments.