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

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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.


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.

December 17, 2015

Persistence of Paper in B2B Payment

-by Kuljit Singh and Maruvarkuzhali Subramanian

The ways of transferring money for a transaction have evolved along with the evolution of the world of payments. One would be inclined to believe that the use of paper checks, which have been the most popular non-cash payment method over centuries, are finally on the brink of extinction.

Such an understanding is partially correct because if we observe the consumer side of the entire payment ecosystem, the use of checks has declined drastically over the years due to the spectacular increase in the choices that consumers today have in the form of mobile and internet payments. However, where one's understanding of the decline of paper check goes amiss, is when one includes B2B payments into the equation.

Thus, if there has been a drastic decline in checks in P2P payments, the opposite is also true in the case of B2B payments, as businesses are writing more checks than ever before.

The statistics of a reputed association of financial professionals in the US says that 50% of B2B payments are made in the form of paper checks. Though this, in itself, is astounding but again it doesn't present the complete picture as the businesses considered in the above statistical number are big businesses with an annual revenue of more than US$1 billion. If we include the small businesses, the picture becomes grimmer, as experts claim that in such a scenario, the percentage use of paper checks would jump up to 90%.

In terms of numbers, a survey has found that 8 billion payments in the form of remittances are made by paper checks annually in the US. The overall damage of issuing and processing these 8 billion checks and 8 billion invoices cost US businesses around US$100 billion annually. And this does not consider the cost of check frauds.

So why do businesses willfully turn a blind eye to such huge losses, instead of going for more effective and cheaper options? Frankly, there aren't many options that can blend both the qualities stated above. ACH is marketed by banks for B2B payments, exclusively for larger clients. The large size of B2B payments makes the credit card fees exorbitant, and when it comes to wire transfers, though it is real-time, it is also unsafe, high-priced, and laborious.

Banks also offer bank pay solution, but only about 2% of businesses opt for this option in the US as it doesn't integrate into businesses' accounting or ERP systems. Thus, when businesses try to make payments to vendors through their ERP systems, such systems end up producing checks, as payments alternatives offered by banks, such as ACH, are poorly integrated with systems that are used by businesses. This deep divide is what is resulting in the issuing of paper checks for B2B payments.

The silver lining on this dark cloud is beginning to appear in the form of NACHA approving same-day ACH to move payments faster. This is a part of the Federal Reserve System's modernization push, which would result in a shorter clearing window, in addition to faster payments. With such efforts, the opportunities for fraud are also likely to diminish. Also, with the use of a new breed of simple and affordable solutions, the issues of integration and cost are likely to be resolved in the days to come.