Mahesh Ramachandran18th Nov 2016SPICON 2016

Trends & Innovation in #FinTechthat will change customer expectation and experience forever

Hello!I am Mahesh Ramachandran

Mahesh Ramachandran

Distinguished Sloan Fellow of London BusinessSchool

Masters ofScience in Leadership & Management from London Business School, University of London

MBA from University of Westminster

Director, Commonwealth Inclusive Growth Services Ltd

Chartered Member of TiE (www.tie.org). Chair TiE #FinTech SIG.

Director (International Business), Commonwealth Investment Corporation (CIC)

Serial Entrepreneur in theareas of Targeted Messaging, Peer to Peer Foreign Exchange portal. Mentor for several startups and SocialBusiness.

Corporate experience includes Dun & Bradstreet, Ford Motor Company (UK), TCS (EMEA)

Change is not only inevitable, but essential too…

Change is not only inevitable, but essential too…

… especially after demonetisation of Rs.500 and Rs.1000 J

DemonetisationCustomer Service @ Doorstep

In the Villages

Use Tablet with Biometric

Connect to Aadhaar Server

Connect to Core Banking

Accept Deposit

Disburse Cash

Trends in #FinTech(that will alter customer

expectation and experience)

The Future Is Already Here…

It’s Just Not Evenly Distributed

Strong integration with Smart phones• Biometric • User-Friendly • Convenient

Mobile Payment’s Kissing Cousin

Challenge in Predicting the Future

“The horse is here to stay but theautomobile is

only a novelty – a fad.”

President of the Michigan Savings Bank advising HenryFord’s lawyer, Horace Rackham, not to invest in the Ford Motor Company in1903

“… there is a world market for maybe fivecomputers.”

Thomas Watson, IBM Chairman in 1943

“Cellular phones will absolutelynot replace local wire systems.”

MartinCooper, Inventorof CellPhone in 1981

FewPredictions

The best way to predictthe future is

“The best way to predict the future is to invent it” –Alan Kay

To invent it

Mobile First Banks On Rise

Peer-to-Peer Lending getting regulatory approval

Say Hello ToYour New Broker- RoboAdvisor

BLOCKCHAINTECHNOLOGY

Appliances will reorder

Digital Money will Permeate

Wallet will transform

Payment Queues will bereduced(after Dec 30!)

Interchange fee will reduce

Crowd Funding will Dominate

Biometrics will take over

Quick Service Restaurantswill be really quick

Connected Cars will be commerce platform

Micro Businesses will go Digital

How Many Trends did IPredict?

Unified Payments Interface (UPI)

innovation from

What is Unified Payment Interface ?

• Unified Payments Interface (UPI) is a simple and effective way to transfer money between two bank accounts in India by using a Smartphone.

• Built on IMPS

• Uses Virtual Payment Address (VPA)

• No need of account number and IFSC details of beneficiary.

What is Unified Payment Interface ?

• The payments can be both sender (payer) and receiver (payee) initiated and are carried out in a secure, convenient, and integrated fashionPush & Pull Payments

• The unified payment system is expected to further propel easy instantpayments via mobile, web, and other applicationsEasy Instant Payments

• This next generation payment system provides an ecosystem drivenscalable architecture and a set of APIs taking full advantage of massadoption of smartphone

1 Click 2FA & Virtual address• Virtual payment addresses, single click 2 factor authentication, Aadhaar

integration, use of payer’s smartphone for secure credential capture,etc. are some of the core features

Scalable Architecture

What’s New in UPI that makes payment experience seamless?

Pull Payment for P2P – Hitherto not available

Virtual Address (‘Username@domain.Name’) – Unique single identifier for both Push & Pull

Transfer using Single identifier like Mobile No, Aadhaar No (It will use NPCI Mapper)

New Entities i.e. Payment Service Provider (PSP), who will provide App to customers of any bank

One App for all Payments

1 Click 2FA – seamless customer experience

Steps

Steps 2.1: Generate PIN for Transactions

Step 2: Adding Bank

Account

Step 1: Download of PSP App and

Profile Creation

Benefits – Ecosystem Participants

Simplified (Single click 2FA)

Universal App for Payments

Leveraging existing Infrastructure

Secure

Payments basis Single/UniqueIdentifier

Opportunity to tap C2B segment

Opportunity to tap E-commerce & M-commerce

Benefits to Banks

No risk of storing customer’s virtual address like in Cards

Can tap customers not havingcredit/debit cards

Suitable for e-Commerce & m-Commerce

Single click 2FA facility to thecustomer leading to seamless Pull

In-App Payments (IAP)

Benefits to Merchants

Seamless fund collection fromcustomers using single identifiers

Single click 2FA – Seamless check out

Can work across various interfaces (PULL):

Payments through Single Identifier

Choice of a single interface with multiple bank accounts

Benefits to CustomersPrivacy: Transfer funds using justtheir personal details like MobileNo.

Multiple Utility: Collect Request can be initiated to pull funds

What are the Implications of UPI?

Before UPI - Low volume, High Value, High Cost

After UPI - High Volume, Low Value, Low Cost

40

Expected population growth, Internet andMobileInternet Penetration present attractiveopportunities

354M213M 314M

500M

Mobile InternetUsersInternet Users

2015 2017 2015 2017

India : 1.27b

Population

China : 1.35b US : 318m

India is a unique and exciting market

41

• Youngest economy in the world• 68% of populationunder

• the age of35

• 3rd largest internet

• user base• 460M internet usersgrowing to 700M+ in2020

• Mobile-first access Smartphone

penetration 54% in2020

• 76% of incrementalinternet

• users from mobile

• E-commerce growth potential ~$800B retail,• only 8% organized and <1% is online. Etail totouch 159B in2020

• Limited use of cards Only ~20M

credit cardsand stagnant

• 450M debit cards but<10% active

• Cash on delivery dominates e-tail• ~60% of e-tailtransactions are CoD, mainly driven by trust

A changing society where cash stilldominates(though Demonetisation will change user behaviour)

TRUST AND SOCIETY FINANCIAL CLIMATE

SOCIAL ATTITUDETOMONEY

SAVING VS CREDITCASH FOCUS

FINANCIAL EDUCATION

Aadhaar UPI

PaymentsBank

BBPS

Be Prepared for a Platform PlayBe aPlatformOr be the Platform

Uniform Payment Experience

Identification

Web Mobile

Authentication

Offline New Channel

Frictionless Invisible

Habit Velocity

Loyalty

Data is the new Oil, new Gold. Don’t Just sit,Analyse

Regulation, Mindit!!

PEOPLE & TRUST

AcknowledgementThe content of this presentation has been assimilated from contacts who are considered industry veterans in payment system process and have been in various Leadership – in particular, Mr. Ramesh Vijayakumar of National Payment Corporation of India (npci.org.in ), Unique ID Authority of India (uidai.gov.in), Nandan Nilekani’s presentations on #FinTech, Pradeep head of PayPal Incubation (paypal.com), Innovative Startups, Christopher Woolard of Financial Conduct Authority, UK

Mahesh RamachandranChairperson, FinTech Special Interest Group

The Indus Entrepreneurs (TiE)

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CONTACT

Email: mahesh@cigs.in

Mobile: +919940660409

Landline: +914430989999 Ext199