Mobile Banking for Rural India: SBI and Airtel Launch a JV, Vodafone and ICICI Team Up.

Last year, RBI (Reserve Bank of India) approved banks to appoint for-profit companies as BCs (Business Correspondents) and this has closed one of the most heated debates in the telecom space – Should Telco serve as a Bank (and vice versa).

State Bank of India, India’s largest commercial bank, and Bharti Airtel have entered into a joint Venture (JV) agreement to make available banking services to India’s unbanked millions.

The newly formed entity, will harness the power of state bank’s strengths and Airtel’s mobile telephony to add value to the banking and financial services sector and empower millions of financially excluded in the country to enhance their livelihood and quality of life. The Joint Venture will become the BC (i.e. Business Correspondent) of SBI and offer banking products and services at affordable cost to the citizens in unbanked and other areas.

The JV as Business Correspondent will engage Airtel’s retailers as Customer Service Points (CSP) all over India in a phased manner. With this, existing and new airtel mobile customers will be able to visit these outlets and open new SBI bank accounts and avail of other banking products and services available at the CSPs. Additionally, existing SBI customers will also get serviced at these outlets.

Vodafone and ICICI

Vodafone and ICICI have also teamed up (its not a JV) to offer mobile banking services in the country. Though the details aren’t yet out, this partnership is on the same lines as SBI/Airtel.

The biggest challenge in this business is to bring down one’s transaction cost and Airtel/SBI JV will *hopefully* bring the scale (plus network effect) that can potentially bring down the transaction cost in the long run.

Eko, a pioneer in this space recently raised funding and such JVs/partnerships between telecom operators and banks do validate their business proposition and help them grow the market.  The pressure is also on them to keep innovating and grow its network at a rapid pace.

What’s your take on m-payment VAS services?

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