Virtual Banked Universal Money Management by Phone.
Author: P. Abraham Paul. http://wp.me/p1ZsI2-4g
Introduction: Universal money management using phone, a path breaking state of the art idea to enable all sorts of day to day money transactions through phones is a non-banking product that will accelerate ‘Financial Inclusion’ of people in lower economic strata across the country and will become an effective tool for supporting their Micro Finance needs in addition to facility to communicate.
Money through Mobile (MTM), is just an acronym used herein that explain in short the idea, features, products, services, the technology involved, the business aspects and the need and advantages it can provide to society as a whole with a vision that in nearest future converged Mobile and Fixed devices will become simple tools that would enable comfortable life style for everyone; young and old, from ultra rich to the extreme poorest in the country.
1. Money through Mobile (MTM) is different from Mobile Banking.
Money through Mobile (MTM) system as proposed herein is not to be confused with mobility in Banking service or service of e-banking using Mobile phones as being currently provided by banks as ‘Mobile Banking’.
‘Money through Mobile’ (MTM) system is transparent to regular Banking industry. All transactions in MTM service, involving Banks, Post Offices and other Financial institutions; will be in the same position and functional level, using same technology,product and features, at par with what are available to all MTM users.
2. Virtual money better be handled by Virtual banking system.
Whatever said and done, currently most banks, both PSU and PRIVATE are white elephants always with an eye on profit and hence will never be able to satisfy the needs of low value account holders.
2.2. High volume of low value accounts will burden the banking system to extent most get collapsed due to severe HR constraints and gross customer dissatisfaction. It is therefore, that the set up as proposed herein can be termed and treated as an autonomous Virtual ‘BANK’ exclusively set up to handle all sorts of Money Management Using Phones across the networks all over the country. Call it ‘MTM Bank’ or ‘Jan Dhan Yojana Bank’ or whatever.
In fact MTM technology system that handle all sorts of money transactions using phones in itself can function as an exclusive virtual bank incorporated with required supporting banking mechanism in it to handle its clients’ needs transparently without much human intervention at day to day operation level.
3. Universal nature of MTM system:
The system proposed in essence is Universal in nature as it can provide service across disparate Telecom systems, Mobile as well as Land line phones and also for people who are not owning phone, across the country without involvement of banks or INTERNET.
It is meaningless to wait for digitization happen in every remote area to provide service that can be done without the need of digital connectivity and INTERNET access. There never can be a ‘Perfect’ solution in any planning strategy. Hence it is prudent to go ahead making best use of contemporary systems, products and solutions to the possible extent wherever eco systems readily available to start with, instead of waiting for years for digitization happen in every village and remote places. Accordingly, the proposal has taken into constraints and limitations regarding non availability of conducive eco-system such as non availability of regular power supply and non-reach of telecom network in vast areas of rural and remote areas.
3.1. Money through Mobile (MTM) will not disrupt Banking Industry.
There is this biggest myth that Un-banked Pay-by-Phone service will be disruptive to Banking industry. From the foregoing it can be seen that the fact is actually other way around.
4. Roll out the project, beginning form places where eco system needed is readily available.
There nothing known as perfect in planning. It is pragmatic to use contemporary Technology, systems, products and services to start with an eye on the future. Without waiting for digitization of entire country, plans of Financial Inclusion of people in the lower social and economic strata, shall be taken up in Urban areas, its suburbs, towns and villages where required infrastructure, power supply and telecom facilities are readily available, and then move towards remote areas as the needed eco system and the environment are made ready. Till such time, these areas are also to be covered with improvised systems with short term solutions and products as explained below.
5. Use Satellite connectivity for accessing MTM system from remote areas.
Government should make use of already achieved high density telephone coverage to implement the system as proposed in this paper, in the Urban and suburban rural areas where ever telephone connectivity is already there and in remote places where there is no telecom facility with MTM Franchisee outlets that can provide services using MTM set top boxes or Specially designed TABLETS with connectivity to MTM system through Satellite links.
6. With Aadhaar in place, DBT using MTM will be the biggest game changer:
MTM can enable Direct Benefit Transfer in lieu of PDS and payments under various Government welfare schemes. DBT can help to scrap most of the subsidies that will be a big step towards reviving of economy.
MTM system linked with Aadhaar, it is possible to provide MTM service to people who do not own a phone through MTM Franchisees, Public call phones provided in Post offices, Panchayat offices etc.
However, making Aadhaar a pre-requisite for ensuring ‘Financial Inclusion of poor’ will be like putting the cart before the horse. It is impractical and meaningless to wait for years to become Aadhaar made available to everyone to commence the service. Aadhaar is after all an Unique Universal ID that can be provided at the implementation stage and later upgraded as a biometric tool instead of waiting years to ensure Aadhaar given to all beneficiaries across the country as a pre-condition to implement DBT & DCT in liue of subsidiaries to beneficiaries.
7. Money Management using phone has great potential to infuse liquidity.
India will have a billion phones (Mobile plus Landlines) soon.
With an average of Rs. 10,000/-month the virtual money transaction will be about
Rs. 12,0,000 billion which is above seven times the 2013-14 Union budgetary provision.
8. MTM can boost up nation’s economy. It is time Government / RBI take necessary steps to mobilize, regulate and tap this great potential to revive Indian economy.
What need to be done is to create a virtual bank to handle all forms of money management using phones to regulate and mobilize it and exploit its great potential for the benefit of the people and the country. There are 150,000 Post offices of which 89% in rural areas. Department of posts can be given banking license and entrusted with to set up virtual mTm bank with BSNL The huge surplus human resource in BSNL/MTNL could be used as mTm franchisees, authorised agents, technical O&M and logistics of MTM system across the country that can save BSNL from liquidation.
9. All forms of Money Management using phones must be regulated.
Setting up of disparate Money management systems, product and services by various parties without any regulatory arrangement will not deliver desirable results especially for financial inclusion and empowerment of people in the lower strata across the country.
Over and above, the various methods and procedure involved are likely to have adverse impact on economy due to various reasons.
10. Unless regulated, virtual money businesses can gobble up real money.
The fast mushrooming Virtual Money businesses can gobble up real money disrupting nation’s economy. For example printing and supplying money coupons by various money management service providers can end up as a parallel economy that can interfere with countries economy. This aspect shall be thought of and actions to avoid such situation to be taken by Government without delay.
The way out is that ownership of Virual money shall rest with Government. The Virtual money needed for such business shall be generated by RBI in the form of encoded and encrypted and pre-authenticated ‘data strips’ with distinctive UR code for each denomination that can be used only with RBI’s authentication. Every MTM user is given unique code and authentication to use virtual money at the time of registration. The system is such that every virtual money transaction undergoes an authentication process in the MTM system.
All prepaid or post paid money coupons etc needed for MTM system shall be generated and issued by RBI by against equivalent amount of physical cash from the mTm service provider. These data coupons shall be fail proof and tamper proof with no scope of creating counterfeit.
Therefore, government should take immediate steps to bring in un-banked money management service under regulatory controls through National Payments Corporation of India (NPCI) under the ambit of RBI.
If the government desire to keep it under the control of RBI, a solution to resolve the impasse between Government and telecom Service providers is to have an exclusive virtual banking system associated with the MTM service provider that is set up as a 3rd party system by the consortium of Telecom Service providers.
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Abraham Paul. P.
M.D. Future Communication Networks (FCOMNET) / Ex. VP (TS) SIEMENS ICN, / G.M & SMT-TBG, BPL Mobile India, / TES (I) DOT India.