Preeti Malhotra, Spice Global, group executive director
Technology will be the differentiator for us and we will focus on smart mobile banking. It is the most cost-effective solution. The cost of one physical transaction is Rs 40-60, and through a mobile is Rs 1-1.5. An ATM transaction costs Rs 15-20. Of our six lakh villages, only 5 percent are covered by commercial bank branches. Forty-six per cent of the population is still unbanked. At the same time, almost everyone has mobile phones. They access the internet through the mobile phone.
The whole objective of the government is rural penetration for financial inclusion. We will have the physical reach and set up 25 percent of our branches in rural areas, but there is no way to reach the population but by mobile banking. We can’t just rely on physical branches. We will follow the hub-and-spoke model and will have business correspondents to reach customers. The correspondents will do KYC (know your customer) and cash transactions.
Over the years, the Spice Global Group has created expertise in integrated mobile services. We exited the mobile network business, but cover everything from making handsets to providing value-added services and creating apps. Through Spice Digital, we have access to 100,000 touchpoints of which at least half are in rural or semi-rural areas. These include our own retail shops and outlets of IRCTC (which sells railway tickets) and our banking partners. We provide mobile banking platforms for SBI and Canara Bank, who are among the largest in mobile banking in India today. We also provide VAS (value-added services) to network providers and through our subsidiary Spice Labs create apps. We provide mobile ticketing services for IRCTC.
Using our services, banks provide mobile banking even on feature phones. We also make smartphones and believe that the prices of these phones will fall further.
We have an NBFC called Wall Street Finance. They are the principal agents of Western Union in India. We are listed on the BSE and we do money transfer and foreign exchange. It’s not a very big business as we wanted to drive the mobility business till now. But now the focus is financial business.
We are launching Spice Money, similar to PayPal. In Wall Street Finance, we have 6,000 sub-agents. And we have tie-ups with several banks, including Axis, ICICI, ING, HDFC, and IDBI for money transfer services as sub-agents, outward remittances and forex empanelment.
We have hired some senior bankers as consultants: Samir Bhatia, ex-head of corporate and SME banking at HDFC Bank, and managing director of Barclays’ retail and commercial banking in India, and DR Mehta, former chairman of Sebi. They helped us prepare a blueprint.
We have much more than Rs 500 crore in cash reserves. We will bring in foreign investors (banks, private equity). We will get technology and knowhow from these foreign banks. We are looking for tie-ups with banks from Singapore who are into smart banking.
(As told to Prince Mathews Thomas)
(The banking bid is being made through Smart Global Ventures Pvt Ltd)
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(This story appears in the 09 August, 2013 issue of Forbes India. To visit our Archives, click here.)