Facebook-owned WhatsApp is betting big on digital lending and financial inclusion in India and is set to run pilots in digital lending, insurance, micro-pension and digitisation of MSMEs in the country. WhatsApp, which has been waiting for regulatory nod to officially launch its UPI payments solution in India is now looking to pilot financial services by partnering with banks and financial service companies, according to WhatsApp India head Abhijit Bose. Abhijit was one of the speakers at the Global Fintech Fest organized by the Internet and Mobile Association of India (IAMAI).
â€śOver the next few years, we're committing to opening up in entrepreneurial ways we never have before. We will launch many experiments â€” digital banking, increased financial services, and digitisation of MSME (Micro, Small and Medium Enterprises) operations are a starting point, and these are already in motion,â€ť Abhijit said.
Abhijit said that these solutions will not be launched as its own, but as a solution of its partner banks and financial service companies. â€śConsumers will always decide what they want and initiate the service. We'll take risks, but we'll do it in a controlled pilot. Based on user acceptance, we will invest and scale the solutions that deliver results,â€ť he said.
These pilots, mostly based on UPI infrastructure, will then be replicated in other countries. â€śAnd once you prove it in India, template the solution here should be able to handle the complexities of any other market,â€ť Abhijit added.
Abhijit said that WhatsApp is looking at payments in India at scale, where it can customise solutions for inclusive banking, MSMEsor to accelerate distribution of products that enable financial inclusion and security. These solutions, he said, can be leveraged by 12 million small businesses that are operating on WhatsApp, and large enterprises and financial institutions that use WhatsApp Business.
Insurance and pension
However, WhatsAppâ€™s focus will be financial inclusion and offering digital lending services to the unorganised informal economy. Over the next 2-3 years, WhatsApp, along with financial institutions wants to help low wage workers in the unorganized informal economy easily access three products: insurance, microcredit, and micro-pensions.
Abhijit says that the biggest challenge right now is that these three financial services donâ€™t reach the informal economy due to various distribution problems.
â€śOver the next year and a half, WhatsApp will be supporting multiple pilots to test potential solutions and solve distribution problems. These pilots will be done jointly with our partners as well as innovative tech partners in each vertical. Each pilot will start with a small experiment to test our hypotheses and based on the results we will continue to invest and scale the ones that show promise,â€ť he said
â€śEven a small conversion of the demand will translate into significant infusion of savings into the financial system. Our ultimate goal is for every Indian to have access to an affordable micro pension and Insurance Services from our partners,â€ť Abhijit added.
WhatsApp also wants to help digitise MSMEs, which it believes will increase their access to credit, something that is currently lacking as most banks donâ€™t want to lend to MSMEs.
Abhijit said that if more MSMEs became digital through WhatsApp and other UPI apps, and if more banks can start easily lending to them, it would lead to increased growth for these enterprises, which will then lead to increased consumption.
â€śIf you look at our 2025 targets, just accelerated lending and digitisation alone could contribute to 6-7% additional GDP growth in India. Moreover, as COVID has once again clearly shown the health of the MSME economy impacts people and families, a growing MSME economy could impact 1% (200-250 million) of our country's population through increased development,â€ť Abhijit says.
Working with banks
Abhijit said that WhatsApp has also been working with banks over the past year to supplement their digital presence.
â€śThe question we asked was how can we use WhatsAppâ€™s reach, our security through end-to-end encryption, as well as a simple user experience to complement their banking app, optimized for a few but important services. Early examples from ICICI, HDFC and Kotak banks have been very well received,â€ť he added.
WhatsApp now wants to work with more banks over this year to help simplify and expand banking services, especially to the rural and lower income segments.