Commentaries and insightful analyses on the world of finance, technology and IT.

April 21, 2016

Bionic Advisors: A Human & Technology Mash Up!

It's April - a new financial year; a time when terms like 'higher taxable income,' 'investments,' and 'Sections 80C, 80D, 80E,' keep buzzing in my head. Now, although tax planning is certainly on my cards, the 'when, where, and how' of investing is still unclear, thus driving me to seek financial advice. To avoid the hassles associated with traditional financial advisors, I initially thought of using automated advisors that are popularly known as robo-advisors; but, then I realized that these models will not provide personalized advice in important matters. That's when I found the perfect answer to my investment woes - 'bionic-advisors.' Yes, you read it right; not 'robo,' but 'bionic'.

'Bionic-advisors' make use of technology to enhance client relationships. They use a specialized, automated advice software to create reports that are used as a base for all client interactions, which happen either via web portals or mobile devices. Additionally, these advisors use automation in various areas, such as creating customized client reports, paperless onboarding processes, and rationalizing KYC processes. As a result, bionic-advisors save time and increase efficiency, allowing them to focus better on client interactions. Although bionic-advisors are very similar to robo-advisors -- especially in terms of cost effectiveness and transparency -- they still score over robo-advisors, thanks to the human element in the bionic model.

Individuals like me, who have certain financial goals, but still require personalized advice; will prefer bionic-advisors. They provide automated portfolios and reports that investors can use at any point of time and, most importantly, they give us access to  interact with financial advisors when we feel the need for them. Interestingly, more than low-net-worth individuals, it is the high-net-worth individuals (HNIs) who seem to benefit the most from bionic-advisors. Most HNIs want their preferences to be incorporated into their huge portfolios, and demand customized financial advice for their complex investments. Consequently, they prefer a bionic mix over other advisory models.

Off late, 'financial advice' has been going beyond the realm of investing and instead, has taken the shape of financial planning. The mere presence of automated advisors will not completely quench the evolving financial needs of today's investors - a fact that only strengthens the case for bionic-advisors. Firms like AdviseSure are already making headlines. Launched in 2015 in India, AdviceSure is a bionic-advisor, providing advisory services across multiple product categories, such as mutual funds, capital market, shares and stocks, systematic investment plans (SIPs), tax-saving schemes, national pension system (NPS), etc. And now, they are in talks with venture capitalists to raise funds worth US$5-8 million, which will be used for marketing their service and improving their technology in the future.

The bionic-advisory model is a lot like hot chocolate fudge sundae. Everybody loves vanilla ice cream, just as they love chocolate sauce; but it's when the two come together that the final product becomes truly delightful. The bionic-advisory model's USP is that it integrates automation with human interaction, thus ensuring the best advisory solutions for investors. In the end, it is the measure of delight that bionic-advisors will offer their investors, which will decide the model's sustainability in the long run.

April 13, 2016

Don't ignore SME Lending: Alternative Lenders are here

-by Kiran Kalmadi and Durga Prasad Balmuri

The next focus in the David Fintechs Vs Goliath Banks series is on SME lending. In 2014, 28 million small and medium-sized enterprises (SMEs) in America contributed to over 50% of the U.S. non-farm GDP. Yet, most of them find it very challenging to secure the capital required to either run their daily operations, or invest in business expansion; as small business lending is largely neglected in many countries.

At the same time, many banks have also seen a dip in their share of lending to small businesses over the past few years. For example, loans issued by the top, 10, U.S. banks dipped to US$44.7 billion in 2014 vis-à-vis US$72.5 billion in 2006. This could be attributed to the fact that banks find it unviable to cater to this segment due to a number of factors such as the small loan size, strict regulations, heavy paperwork, etc. These factors make lending expensive, considering the relatively low returns that they generate. In addition, banks also expect borrowers to perform well on three parameters - credit scores, collaterals, and cash flows - before extending loans; and not all SMEs can meet these criteria.

Luckily, every cloud has a silver lining and these challenges have catalyzed the growth of a new type of online non-bank lender or tech-based alternative lender. They disburse loans via online platforms using advanced, underwriting algorithms and new credit appraisal methodologies. Unlike traditional banks, these lenders refuse to depend on just the three parameters, and analyze additional parameters like bank transaction history, tax filings, credit card history, invoice volumes, etc., before disbursing loans. The insights gained from these additional data points greatly improve the chances of granting loans to SMEs. This way, platform-based companies can quickly underwrite loans of small-ticket sizes that banks find trouble servicing.

What's more, by leveraging technology, online platforms, and innovative risk assessment methodologies; most alternative lenders take only a few minutes to assess if an applicant qualifies for a loan. In other words, approval mostly happens on the same day and is ideal for most businesses that need regular financing and cannot wait for weeks every time they need funds.

Such customer-centric processes make alternative lenders like OnDeck, Kabbage, Fundation, Funding Circle, and many others; rockstars in the SME lending ecosystem. Stars who take on a lot of risks including unclear regulations and a higher probability of loans defaults. Under these circumstances, alternate lenders are reducing risks by charging higher interest rates that could reduce in the near future once they become more mainstream, secure funds at cheaper rates by partnering with banks, and establish firm roots in the lending space.

The bottom line remains that alternative lenders may turn out to be more favorable to SMEs than traditional banks. By offering a life-line to small business owners, they might soon start gnawing at the balance sheets of banks; implying that banks must come out of their comfort zone and act upon their inherent challenges faster than ever before.

April 5, 2016

Robotic Process Automation (RPA) in Financial Services (FS) - A Game changer?

-by Souna Uthappa and Naveen PV

Over the years, robotics has become a key driver of growth and efficiency across various industries such as manufacturing and hi-tech. The financial services (FS) sector, however, remained a step behind being cautious of automation, but thankfully, only for a while! It has recently taken baby steps and adopted robotic process Automation (RPA) to overcome the challenges of complex regulations, sluggish macro-economic factors, and the emergence of disruptive technologies.

Interestingly, the recent familiarization has unveiled more opportunities for RPA to have far-reaching impact on the FS sector -- beyond traditional process automation that focuses on automating individual tasks! The spotlight has now turned to a fundamental tenant of RPA called artificial intelligence (AI) that is being extensively used to capture, interpret, and analyze complex financial transactions and real-time interactions between various platforms and software applications.

The fact that new-age AI applications can carry out complex tasks, unassisted, by leveraging inherent problem-solving capabilities, is setting the stage for ground-breaking solutions in FS. Some areas where RPA can have tremendous impact include:

• Exception management
• Tasks involving high volumes of data
• Cross-system manual processing
• Data gathering and reporting
• Reconciliation activities
• Monthly account closure
• Bulk data updates
• Regulatory reporting
• Balance sheet reconciliation
• Capital markets
• Affidavit creation (loans)
• Audit trail creation
• Template maintenance
• Customer services
  
At this very moment, many firms are utilizing RPA to achieve short-term benefits such as cost reduction, agility, efficiency, accuracy, speed, greater performance, and quality. That's not all, many enterprises are also realizing long-term benefits such as re-deployment of resources for more strategic, value-added initiatives, while creating more agile organizations that can improve customer experience.

Yes, leaders are driving the RPA trend!

MasterCard, Visa, Lloyds Banking Group, Deutsche Bank, Merrill Lynch Wealth Management, ANZ Banking Group, and Barclays are some of the frontrunners in RPA adoption. For instance, when ANZ implemented RPA to fix time-consuming errors which occurred daily in one area of payments, they were able to reduce resources from 40 to 2 and redeployed them to other areas where they could make an impact.
Barclays also implemented RPA across a wide range of processes including accounts receivables, fraudulent account closure, loan application opening, 'right of setoff', etc. Consequently, they were able to save around 120 FTEs and reduce their bad debt provision by £175 million per annum.

The bottom line is that businesses have high expectations from RPA-related initiatives, especially where cost reduction through effective staff utilization and the right sizing of resources are major focus areas. Even though RPA adoption comes with inherent challenges such as misplaced expectations and resistance from employee unions, it is emerging as a major game changer, helping the industry to become more agile, smart and lean.

Credit Scoring: Ripe for Disruption

-by Kiran Kalmadi and Durga Prasad Balmuri

Continuing with our David Fintechs Vs Goliath Banks series, this blog focuses on another important disruption, i.e. Credit Scoring. With each passing day, the probability of our mailboxes being inundated with emails from various credit scoring start-ups is on the rise. E-mails advertising, 'Get a free credit check-up online', 'Get your credit score and analysis online'; and 'Unlock your credit potential' clog inboxes compelling us to activate spam filters! Having said that, these e-mails are also indicative of the rise of credit scoring start-ups. A new generation of Fintech start-ups like Credit Karma, Credithood, Kreditech, and Aire have begun to challenge industry behemoths like FICO, Experian, Equifax, etc.

Now, why credit scores? Credit scores are essential in many countries. No score or an insufficient credit score can affect a person's ability to buy a car (auto loan), purchase a home (home loan), rent a house (landlords check credit scores), or even gain romantic alliances (read the Federal Reserve study of Credit Scores and Committed Relationship)! This problem affects migrants, recent graduates (students), new entrepreneurs, etc. and it is widely estimated that there are 53 million Americans with no credit scores. Likewise, in many countries a good number of population do not have credit scores. Over the years, there have been many attempts to provide credit scores, but the issue continues as most of the solutions are based on historical transaction data of loans, credit cards, and mortgage payments. Thankfully, traditional credit scoring companies have also started calculating credit scores on few more additional metrics such as utilities payments, rent payments data, etc. However, there is also a strong need to better assess credit risk by creating accurate customers profiles and assessing their eligibility using multiple factors -- educational background, job profile, social profile, and more.

New-age scorers

The onset of on-demand services ushers in a requirement to assess an individual within few minutes. This assessment must determine if he/she should receive credit and at what rate. It's therefore predictable that new-age scorers are leveraging big data algorithms, automated processes, cloud computing, and analytics (consumer behavior analytics) to generate scores for those who have been ignored all these years. What's more, to calculate credit scores, these firms are also analyzing new and modern data sources such as education history (course studied, university name, postgraduate income, etc.), mobile phone statistics, monthly cash flows, cable bills, property records, employment background, online behavior and preferences (how active the user is online, sites visited frequently, product categories looked at), and history of bill payments. The bottom line is that this is an ongoing effort and new-age Fintech firms that have started on a clean slate are finding innovative ways to provide people accurate credit scores. For instance, Social Finance (SoFi) a lending startup, said that it is moving away from FICO scores and called this strategy a 'FICO Free Zone.'In the process, fintech firms  are bringing a lot of unbanked population to the mainstream. Simultaneously, the existing credit scoring systems in developing countries could transform as empowered customers and lenders will demand faster and more innovative scoring methodologies, thereby disrupting the market. Only time will tell if this is just a one-off case or whether it will evolve into a trend!

Stay tuned for more action.

P.S: For those interested in knowing what happened to our inbox inundation, our next task is to set up our spam filter!

April 4, 2016

Banks and fintechs: Conflict, confrontation and collaboration

-by Kuljit Singh and Varun Narang

Mahatma Gandhi once famously said, "First they ignore you, then they laugh at you, then they fight you, then you win." Who would have thought that these wise words from the hero of the Indian freedom struggle would reflect the attitude of banks towards fintechs? Having passed the first two stages of ignoring and mocking fintechs, they are now realizing that indeed, fintechs are a threat worth taking seriously, especially, when you consider the billions of dollars banks stand to lose if they continue turning a Nelson's eye to the challenge. According to a report by Goldman Sachs, financial services are at a risk of losing USD 4.7 trillion in revenue to these new tech-enabled or fintech entrants.

Now that the realization has dawned on banks about how real and present the threat is, they are beginning to buckle up to take the fight to not only defending their bastion, but also taking a more aggressive posture to beat fintechs in their own game. To this end, banks such as ABN, BBVA, Citigroup, Barclays, Deutsche Bank, and others are attempting to rewrite the rules of business by setting up innovation labs, accelerated programs, and venture capital funds to stimulate the technological experiment and match the customer services offered by fintechs.

Few cases in point are: Citibank is establishing a new fintech unit and is also testing an eye-scanning ATM. Goldman Sachs has formed a new venture for enterprise mobile technology. Morgan Stanley is investing in data warehouse solutions, mobile apps, BI and analytics tools, application development tools, PaaS, etc. ABN AMRO Bank is letting prospective customers sign up for a new account with their smartphone and face recognition. Barclays has signed deals with Blockchain startups and Deutsche Bank has launched a computerized investment advisory service called 'AnlageFinder'.

Though these are innovative approaches, they have some serious cons as well, which could make it hard to justify the energy and money put into them. This struggle could make many 'follow the herd' attitude banks to abandon their approach of innovation and nurture more practical and sustainable approaches.

Of all the approaches being adopted by banks, in our opinion, the most pragmatic and sustainable one is that of collaboration. It would be wise to follow the dictum, 'if you can't fight them, join them'. This is especially true in cases where the cost of innovation is prohibitive. This type of collaboration is happening not only between banks and fintechs but also among banks. An example of the former is investment by almost all major banks in start-ups and tie-ups with Apple, Android, and Samsung, etc. An example of the latter is the R3 where consortium which was formed when over 40 banks joined hands to encourage the development of blockchain usage in the financial system.

In conclusion, we are reminded of a famous quote by Mark Twain who said, "You can't depend on your eyes when your imagination is out of focus". Banks need to get their focus on the most critical component of this entire tussle with fintechs, i.e., customer services. Once that focus and goal becomes clear, their eyes will begin seeing the path that is most appropriate to reach the goal.

March 30, 2016

David Fintechs vs. Goliath Banks

-by Kiran Kalmadi and Durga Prasad Balmuri

How many of us know that 'Minions' which released in 2015 is a prequel to the 'Despicable Me' which released in 2010? Likewise, how many of us know that this blog "David Fintechs Vs Goliath Banks" is a prequel to the blog Robo-advisers: Terminator or Transformer? We are just not stopping here, and likewise the trend of sequels, we have our sequels lined up too. Keep watching this space for more!

It's a battle out there. The financial services industry is witnessing an on-going battle between David fintechs and Goliath banks. Fintechs are building new business models and generating new revenue opportunities by leveraging technology, thereby compelling banks to rethink their business models. Mobility, big data, cloud, personalization, convenience, security, etc., are just some of the weapons in the fintech armory that are giving them the competitive advantage. And that is why banks are getting restless and anxious to compete across various business segments; be it lending, payments, or wealth management. To add to the woes of banks, fintechs are simultaneously investing in many other areas including - but not limited to - credit scoring, personal financial management, biometrics, risk solutions, etc., and the list only keeps growing with every passing day.

Does this signify the end of the road for Goliath banks? After all, these institutions face many challenges, such as regulatory restraints, dismal innovation culture, long development cycles, legacy problems, etc. Thankfully, all is not lost. To stay relevant and competent, banks must leverage cutting-edge technologies to innovate and meet the never-ending, constantly changing demands of the customer, in addition to reducing costs and improving effectiveness - all of which fintech firms are already doing at a faster clip, thanks to their nimbleness.

In fact, many of the traditional banks are taking concerted efforts to take on the competition from fintechs through a collaborative route. They are increasingly investing in start-ups (for instance, Goldman Sachs invested in the likes of Square, Circle, Motif Investing, Bluefin, and many more), setting up innovation labs (UBS, Citigroup, Commonwealth Bank, etc.), launching start-up accelerator programs (Barclays, Nordea Bank, Wells Fargo, etc.), and organizing competitions (American Express, RBS, etc.). Banks have woken up to the fact that they need to innovate and respond as fast as fintechs do. Bill Gates in the '90s said, "We need banking, but we don't need banks anymore." If the Goliath Banks do not take the challenges posed by the David fintech firms seriously, Bill Gates' words could become prophetic in the years to come.

March 14, 2016

Quantum computing - Enabling a quantum leap in financial technology

by Mayur Bansal and Sweenie Dabas

"There are only 10 to the 80th power atoms in the universe and a quantum computer can cycle through 10 to the 154th power potential answers to a problem." This statement from Vern Brownell, CEO of D-Wave Systems, the world's earliest quantum computing firm shows the immense potential of a quantum computer. D-Wave provided a glimpse of this huge power in 2013 when its quantum computer outperformed a conventional high-end desktop computer by performing a complex calculation 3600 times faster. This capability has wide ranging implications - not the least in financial services wherein it can be used for portfolio optimization, Monte Carlo simulation, fraud / risk analytics, exploiting minute differences in market prices and pricing of complex derivative structures.

So what makes quantum computers the superheroes in the world of ordinary computers? Quantum computers work on the principles of quantum physics and quantum mechanics (laws that govern the realm of sub-atomic particles) as opposed to the familiar physics that governs "conventional" computers. Simply put, present-day processors store bits of information in one state (0 or 1) at a time. Quantum computers, on the other hand, process information as 'qubits' (quantum bits) that can be a 0, 1 or both 0 and 1 at the same time. This enables them to assess an exponentially larger number of combinations in parallel and compute much faster than what is possible with the current computer hardware capabilities. This ability had made cryptography as one of the key application areas for quantum computing. However, anything that requires large amount of data analysis is a potential use case - simulation of natural scenarios, machine learning algorithms, and search engine optimization.

Leading financial firms have been exploring this potential for some time. Goldman Sachs has been an investor in D-Wave Systems for long. In fact, CEO of D-Wave, Vern Brownell, is a former CTO of Goldman Sachs. Apart from D-Wave, 1QBit Information Technologies, a Canadian software firm has CME Group as an investor and is working with a few financial institutions such as Royal Bank of Scotland for developing software for quantum computers. And recently, quantum computing is gaining more traction. A quantum computing-based fintech startup, QxBranch, was launched in Hong Kong in 2014 and is working with global investment banks and hedge funds. In last December, Commonwealth Bank of Australia pledged an additional AU$10 million in funding to support University of NSW's research effort to build the first silicon-based quantum computer. Another research effort led by Guggenheim and Morgan Stanley demonstrated utility of quantum computers to produce an optimized portfolio with the best risk-adjusted return.

For all the interest and investment it has generated, the technology remains extremely complicated and very expensive, its actual power remains debatable and it will take some time to go mainstream. However, with some of the biggest names - from Microsoft, Google, IBM, Intel to Amazon and Alibaba to NASA and NSA - leading the research efforts, quantum computing is all set to revolutionize the world of information technology.

Now it's only a question of when and how.


January 19, 2016

Payment Industry: Bridging the Breaches with Biometrics

-by Kuljit Singh and Varun Narang

What could be the natural course of action for an industry grappling with multiple demons, such as hacking, theft, infringement, and transgressions? The solution lies not in prayers, but in technology; especially one that is difficult to violate. Almost like a quintessential blessing, the rise of biometric could be the solution that the payments industry truly needs to tide this crisis over. The solution seem promising and over time it is likely to overcome its current shortcomings to be able to bridge the breaches and if it is able to do so, it would be significant step in making payment channels more secure.

Experts say that 65 percent of mobile commerce transactions, expected to generate US$36.4 billion in revenue by 2020, will come through the use of mobile biometrics. This is incentive enough for everyone to take biometrics seriously; and it is being taken so by many players already. Examples of this include MasterCard, which is testing facial recognition technology to authorize transactions; and ecommerce giant Alibaba, which is exploring the idea of capturing selfies for payment.  Meanwhile, Samsung is also combining fingerprint, voice, and iris-recognition; to make its proprietary payments service - Samsung Pay - safer and more convenient. Apple too has launched fingerprint-authorization for payments made through Apple Pay and purchases made through iTunes.

Biometrics is being looked at quite favorably by industry giants, and is thus expected to become the next-big-thing in payments. However, issues concerning compliance with security and law, behavior, and technology refinement, need to be addressed before its ubiquitous adoption.

While biometric solutions provide numerous benefits, they can also get hazardous when misused. Therefore, it is important to monitor closely, because the consequences accompanying such contraventions could prove catastrophic - not only to the consumer, but to the entire industry. The fundamental concern being that when biometric data gets compromised, it is difficult to fix; and unlike stolen cards, it cannot be changed!

Thus, while staying cognizant of the associated risks, the payments industry should continue working with biometrics technology. Their objective should be to make it more robust and bring to light the best possible solution - both for merchants, as well as consumers - to thwart the nefarious designs of hackers.

December 22, 2015

Tennis and big data: A partnership to watch

I vividly remember that memorable quarter final match of US Open between Andre Agassi and Pete Sampras in 2001. The match, which went down in history as a classic, lasted three and a half hours and saw Sampras serving 25 aces to Agassi's 18. When the match finally ended, some three and a half hours later with Sampras winning, the players got a standing ovation at midnight from a stadium full of die-hard fans.

Recently I had the privilege of attending this edition of the ATP tournament in London for which Infosys was one of the proud sponsors. What amazed me this time, in contrast to 2001, was the sheer amount of data.

• For example, did you know that this year at the ATP tournament, Roger Federer saved 64 per cent of all break points, while Novak Djokovic's saves stood at 60 per cent?

• Also that Federer holds the record for most second-serve points won (55 per cent) followed closely by Djokovic (54 per cent).

• And yet in the keenly contested finals, Djokovic managed to win a mind-blowing 84 per cent of his second-serve points.

Fascinating isn't it? How such insights bring out the multiflorous facets of what the lay person might assume to be a simple game. Sports fans are religious about details and statistics. We consider them our holy grail; knowing and remembering who faced off whom, when and the percentage of wins against each other, information that sets a true fan apart.

What makes this data even more special to me is this has been crunched by us using Infosys Information Platform (IIP). IIP has given a new perspective to the game of tennis. It has enabled ATP to leverage its data capabilities to provide fans, players and analysts with interesting facts and stats about the game they love. With the tie-up ATP hopes to take advantage of Infosys's data analytics capabilities while Infosys aims to leverage 40 years' worth of ATP data to provide deep analysis.

All the clients I spoke to were appreciative of these data points, however most surprising was the fact that players wanted a piece of the data as well. They were keen to use it in training for analysing detailed information on their performances and dive deeper into data driven patterns of the sport.

IIP provides immense data analytics capability. With IIP 2,40,000 records and 12 million data points can be analysed in real time and provided to the viewers so that they have a more enjoyable watching experience. With the customized platform being flexible for deployment over cloud (because of Hadoop and Apache Spark), users across media spectrum will get uninterrupted access to data wherever they are.

For fans fortunate enough to watch the match live at venues, special apps allowed for personalised offers, instant replays and the ability to connect with friends attending. Virtual reality and live data streaming added a new level of enjoyment for those catching the match on screens. With the attention span of audience growing shorter, the idea was to provide as much information as possible to enhance user experience and engage more fans to join in the match excitement. What the world saw this year at ATP was only the tip of IIP capability and we are confident that over years we have the potential to become the preferred platform for analysing vast amount of data and helping effectively predict outcomes.

As Mr Murthy rightly said, "In god we trust, for all others bring data". And we are truly on the path of bringing accurate and reliable data insights to the world.

Go IIP!

December 21, 2015

Mobile Wallet: The catalyst for a cashless economy and financial inclusion

Technology innovations over the last few decades paved the way for plastic money, which brought easy portability of money along with security. It also helped governments to deal with the challenge of money laundering by providing an effective and consistent trail of all the transactions. However, the benefits of plastic money could only be reaped by people who were included in the banking system or the banking network. As it happens, banks cannot reach out to every person or be participants in every financial activity, and this points us to a longstanding problem - a significant portion of the world's population is still unbanked and survives on paper money. The percentage of unbanked population is especially high in most African and South Asian countries. This makes it difficult for the governments in these regions to draw an effective economic policy, to extend financial benefits to its citizens, or even curb financial irregularities for that matter. A possible solution to these problems could be the mobile wallet - a recent technology that can pave the way for a cashless economy and lead to global financial inclusion.

The internet and mobile phones have a far better penetration in all parts of the world when compared to any banking system. This makes the mobile wallet a more relevant choice from among the new-age technologies that can take banking to the unbanked population of the world.

This is because one requires neither a bank account, nor any credit checks to possess a mobile wallet. They offer support for multiple channels, such as SMS, WAP browser, mobile apps, and GPS (Apple's Passbook automatically brings up coupons and tickets on the phone's screen based on the user's location). This technology overcomes the hassles associated even with low value transactions such as valet parking and tips given at restaurants. In fact, MiPayWay has begun testing a mobile payment system that allows tipping without cash.

Nordic countries are fast headed towards becoming truly cashless economies. The Mobile Pay app launched by Danske Bank in Denmark already has 1.8 million users in a nation of 5.6 million people.

Coming back to financial inclusion, M-Pesa presents to the industry a success story of a mobile payment solution that has now gathered millions of consumers in Kenya. Due to the lack of a banking network, lesser than 25% of the Kenyan rural population was included in the banking system. Even where there were banks, the lengthy credit check processes and the minimum balance requirements posed serious challenges to consumers. However, with a high mobile adoption rate and an attractive transaction fee structure, M-Pesa became a preferred service among consumers as well as businesses in Kenya. Today, almost 70 percent of the Kenyan adult population uses M-Pesa.

In India, one of fastest growing economies in the world, currency notes in circulation account for 12.3% of the gross domestic product (GDP), whereas globally, they account for 2.5% to 8%. Also, bank account penetration is just around 53%, which is lower than the world average. A study by IAMAI and KPMG suggests that the number of mobile internet users in India will cross the 300 million mark by 2017 - that's almost double of the 159 million users in 2014. India is one of the largest markets for smart phones and thus, the mobile wallet can prove to be a technology revolution that achieves what traditional banking has not been able to, so far.

Today, there is a race in the market among players from different industries offering mobile wallet solutions. This includes various institutions, such as banks, telecom companies, tech giants (such as Google and Apple), and even merchants, each with their own strengths and weaknesses. Where banks enjoy the trust of customers for being the all-time custodians of their money, tech companies are beating everyone on the innovation front. Additionally, other players are bringing rewards, offers, and other value propositions, based on the nature of their respective industries.

However, to realize the bigger picture of tapping the unbanked population and replacing paper money, we need to have mobile wallets form the basis of all financial activities, instead of restricting them to a particular industry, select products, specific transactions, or even the current generation of customers. A large number of people are still uncomfortable handling money matters electronically. This is either due to old habits or a lack of education and awareness on the matter. To increase the adoption of mobile wallets, end users' concerns around identity theft, hacking of devices, or loss of personal information during transactions need to be satisfactorily addressed. Different players enabling the mobile wallet ecosystem, such as banks, merchants, telecom service providers, device manufacturers, and payment processors, need to develop a common platform that serves all financial activities in a consistent and convenient manner.

Not just individuals, but also businesses need to move to mobile wallets. A common payment platform for all the merchants is the need of the hour. Various mobile wallet solutions, operating independently today in the market, should allow money movement or transfer between each other - in the same manner banks allowed customers to withdraw money from any ATM. Governments can also play an active role by associating perks and rewards with mobile wallet transactions. Given the fact that there is a significant cost associated with the handling of paper money, which is borne today by the governments, reducing the use of paper money can certainly lead to significant savings. In the end, governments need to pass these benefits on to the end users and merchants.

A truly cashless economy will have fewer frauds, consistent audit trails, more compliance, and an effective management of money movement. All this is achievable by effectively leveraging available technology to replace physical money with virtual money and thereby ensure safety and convenience for the end users.