India is a colossal market with similarly sized opportunities to offer banking products to millions of people coming online for the first time – with WhatsApp, Facebook is planning to make a play for finance among its largest user base, a move likely to carry global ramifications.
Facebook has aspirations to finance, and in fact beyond finance into payments and even currency as last year’s fraught announcement of Libra showed. But making in-roads in markets with high bank account penetration will be tough; India’s fast-changing financial and payments sector, meanwhile, presents a wave worth riding.
According to reports from TechCrunch, Facebook’s WhatsApp has been working with a handful of banks in India, including Kotak Mahindra, HDFC, and ICICI, over the last 12 months to explore how the messaging service (which boasts more than 400 million users in India) could be used to bring financial services to the unbanked.
Already, says Abhjit Bose, head of India at WhatsApp, ICICI and Kotak Mahindra have gained more than three million additional users through the messaging app’s reach.
Now WhatsApp is exploring how it could bring more advanced financial services including micro-credit, pension services, and insurance to workers outside the formal economy.
“Based on the results, we will co-invest and scale. Even a small conversion of the demand will translate into an infusion of significant savings into the financial system,” he told the Global Fintech Fest conference, held digitally. “We will launch many experiments,” he added.
Many of Facebook’s attempted entries to financial services have met regulatory scrutiny that has rained on the company’s parade. Since 2018, WhatsApp has operated WhatsApp Pay but regulatory problems have meant it hasn’t yet been able to roll out nationally.
A similar story follows the payments feature launch in Brazil; after a week it was put on ice by the country’s central bank, according to Bloomberg.
Still, the prize remains large enough if it can overcome these regulatory hurdles: Credit Suisse estimates that the payments market in India could be worth $1 trillion by 2023.
Sourced from TechCrunch, Bloomberg, WARC