CIO & LEADER-November 2017 (1)

Cover Story
“Beyond
demonetization,
the big question
is how the future
unfolds”
ume businesses like retail, telecom, transport and FMCG.
A wrong assumption—like demonetization has significantly
increased the value of online transactions in India—will
result in wrong expectation and possibly wrong business
strategy. Similarly, not taking into account the significant
upsurge noticed in terms of spread of digital payments may
cost companies in terms of opportunity lost while formulating
future selling and distribution strategies.
A wider digital payment network impacts most industries,
especially B2C businesses, in more ways than one.
Most obvious, though less dramatic, impact of this democratization
of digital payment will be enhanced efficiency of
revenue cycles. This will be fairly secular across industries.
Secondly, as digital payments become more widespread,
companies can reach segments hitherto unreachable. This
will be enabled by the fintechs whose models allow them to
reach these sections at a fraction of the costs than the traditional
banks. B2C businesses can take their help to reach out
to these segments.
“As collaboration becomes more accepted, merchant and
third-party provider (TPP) partnerships are expected to
become widespread as banks are bypassed in the development
of customized offerings and innovative and secure
payments solutions,” notes World Payment Report 2017,
released by Capgemini and BNP Paribas.
And finally, certain segments such as retail can directly
leverage the hitherto unreachable to offer innovative
value ads.
“The increased digitization of services means retail merchants
must find new and better ways to engage with their
customers, and payments will be central to this,” says the
World Payment Report.
In India, many large consumer businesses have taken to
creation of their mobile wallets.
In e-commerce, it has almost become an industry standard.
While Snapdeal started it by buying Freecharge (since then it
has sold it to Axis Bank), Flipkart bought PhonePe. Amazon
has been aggressively pushing its own Amazon Pay, offering
attractive incentives to its customers for using it. Ola Cabs,
the prime challenger to Uber, has its own Ola Money. The
telecom companies—Airtel, Vodafone and Jio—have their
own wallets; not to talk of banks, which have launched them
for their non-customers too.
“India has lower per capita non-cash transactions, therefore
there is substantial opportunity for growth, particularly as
financial inclusion and digital payments initiatives are rolled
out,” it notes.
As digital allows greater flexibility, newer business
models will emerge. Payment APIs can be integrated to the
service itself.
However, like all business model shifts do, this change will
be accompanied by new questions about value chains as they
will get readjusted. Security will be a big concern, as in a digital
payment regime where all sections of society use digital
payments, the possibility of direct impact on consumers,
of a security breach, is high. One large incident at this stage
will significantly derail the shift. That is another story, for
another day.
The democratization of digital payment has laid the foundation
stone of a digital India far more realistically than disparate,
disjointed big bang digital projects. To that extent, it is
truly the beginning of a new phase
10 CIO&LEADER | November 2017