“Banks to experiment with new mobile applications and voice-enabled gadgets to enhance both delivery and contextual personalization”—Saket Agarwal, Global CEO, Spice Money

Banking sector is increasingly becoming strategically focused and technologically advanced to meet up to the consumer expectations. All this while trying to defend the market share against an increasing barrage of competitors. Digitization of fundamental business processes and reassessment of the organizational structures and internal talent is being stressed upon for preparing better for the future of banking – the digital banking.

We took an exclusive interview of Saket Agarwal, Global CEO, Spice Money. Read on as he discusses the trends that will shape the banking sector in 2019, challenges Indian financial and digital payment industry face today, as well as how Spice Money uses latest technologies to deliver seamless financial services to its end customers.

1. To begin with, please give our readers a brief introduction to Spice Money.

We are a tech-enabled hyper local payments player offering cash-in & cash-out, bill payments, airtime recharge and mPoS (mobile point of sale) services.

Our target segment is the urban-rural and rural India by geography. Within that we have a range of customer segments like local government executives, professionals like teachers and doctors, local traders, retailers, agriculture workers and people receiving subsidy support from the government.

While the customer segments seem diverse, the common theme is the lack of traditional financial products and services relevant for them. This part of India is spread out with much lesser density and therefore the traditional asset heavy banking infrastructure hasn’t been able to create a feasible reach and relevance.

With our asset-lite model of using the existing infrastructure coupled with technology, we seem to have been able to solve the reach problem and also the relevance problem for few products. The challenge and opportunity for us is to now solve the relevance problem for a wider range of products and services.

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Spice Money has a deep presence in “Bharat” with nearly 85% of the cumulative 100,000 Customer Service Points (CSPs) in semi-urban and rural India. We have dense footprints in BIMARU states, 66% footprint in Bihar, Jharkhand, Madhya Pradesh, Rajasthan, Chhattisgarh & Uttar Pradesh; accounting for ~65% of India’s population.

Major growith drivers for Spice Money are :

• Aadhaar Enabled Payment System (AePS)

  • Micro – ATM using Aadhaar Number as payment address
  • Cash withdrawal & balance inquiry
  • Most of the banks are part of AEPS ecosystem
  • We are inter-operable, allowing serving of any customer of any bank

• Domestic Money Transfer (DMT)

  • Cash based money transfer & deposit to any bank account in India
  • Service beyond banking hours, this service is available 16×7
  • Cash deposit/remittance to 165+ banks

• Bill Pay – Mobile, DTH & Utlity Bills like: electricity, water & gas bill

  • Any time, any where bill payments
  • Recharge pre/post paid of all telco and DTH
  • 80+ electricity, 10 gas and 5 water billers

• mPOS – Accept Payments using Cards

  • Accept payment using Debit & Credit Cards
  • Cash withdrawal upto 2000/- per day

2. You have been in the banking sector for long. How has the banking industry evolved during the past decade?

Banks no more see FinTech companies as disruptors; today they are partners,

banking industry is beginning to incorporate different traits and practices that were once the considered the domain of fintech startups. Banks have become more comfortable with a quicker pace of innovation, leveraging data and analytics extensively and digitizing processes rather than simply turning paper into PDFs.

Banking sector is becoming both more strategically focused and technologically advanced to respond to the consumer expectations, while trying to defend market share against an increasing array of competitors. Emphasis is now being placed on making fundamental business processes ‘digital’ and reassessing internal talent and organizational structure for better preparation for the future of banking. This transformation shows the increasing wish to become a ‘digital bank’.

The importance of innovation and development of new solutions that take advantage of advanced analytics, data, digital technologies and new age delivery platforms has never been more important. We now see organizations innovate in targeting, re-configuring delivery channels, expanding services, delivering proactive advice, integrating payments and applying blockchain technology.

3. Spice Money uses latest technologies to deliver seamless financial services to its end customers. Share your thoughts on how technology is driving financial inclusion.

The new innovative means of branch less banking through Spicemoney agents, when packed with its latest technology, identifies the need of customer mapped with pointed challenges on the basis of region, population, awareness and social blocks helps build the solutions much needed by the individuals.

While internet penetration has happened across geographical boundaries of the country, there are still areas where in major population is not able to reach bank branches or not able to get benefit of those online services of banks in the absence of understanding and awareness.

Even those who do have bank accounts still experience barriers to accessing banking opportunities. Instead of educating all, Spicemoney identify the need and appoint agents in such areas and equip them with the platform wherein the services come handy, user friendly and easy UI/UX and in such a redundant form that it becomes easy for the end customers to avail the services through agent assisted model.

4. Do you think progressive technologies like blockchain will play a major role in the future in securing digital payments and other financial transactions.

Yes, implementing blockchains as part of the infrastructure of financial institutions will be imperative.

A blockchain is a list of records linked together that act as a secure, permanent ledger of interactions between two or more parties. This will become more important as hackers become more sophisticated and financial institutions seek to rebuild the trust of consumers.

5. What technology/systems do you use to deliver a secure payment platform to your customers?

A flexible architecture for the much-needed dynamics of business spikes is being handled through hyper-converged infrastructure through Nutanix where in the secured hyper-visor of Acropolis helps make the platform stable and secure. Entire application stack resides on enterprise stack of secured Redhat environment, clubbed with Oracle DB deployed in cluster with its enterprise version packed and used for security, encryption and logical partitioning.

The WEB part of the platform is secured with WAF securing the infra for major web-based attacks and ensuring the system is secured for top 10 OWASP vulnerabilities. End to end encrypted algorithms through HSM devices make the integrations with partners more secure, safe and robust. Process driven approach on security and development is being followed as organisation is ISO 27k1 and CMMI L3.

Adoption of Akamai CDN, SSL security, Web Acceleration, DDoS and other features ensure that the platform is suited up with latest technology on the security innovations.

Suggested reading: “AI, IoT and ML will enable businesses to become highly adapted and suitable to customer needs”— CA Vikram Seth, CEO and Founder, Software@Work

6. Please let us know something about Spice Money UPI.

Spice Money UPI provides UPI services to recharge wallet. Our channel can use a quick response code (QR) to scan through any payment app like PayTM, Google Tez, PhonePe etc.  All agents have been given a VPA using which the amount gets credited to their Spice Money wallet directly, instantaneously. This is one of the unique solutions we are offering to our channel.

Agent can print the QR code and customers can simply scan the QR, enter amount and pay for the services (DMT, Railways, Flights, Hotel etc) they want to choose. This is easy and simple way.

The integration of this mode on Spice Money app is quite seamless and experience is wonderful. This is one of the highest used options.

Apart from this typical pay and collect based UPI, wallet recharge option is also available. Agents can use any of their available VPAs to recharge their wallet. Request is initiated through VPA which agent chooses and the agent then accepts the UPI request. Once the request is accepted (within 30 mins) the wallet of the agent is credited.

Both modes are highly appreciated and used by the channel.  Brief process can be depicted as:

7. What are the challenges that exist in the Indian financial and digital payment industry?

The traditional banking or financial services infrastructure lacks relevant products for this segment. Banks, even though some have rural presence but typically are focused on the urban customers (that’s where their moat is). Similar is the case with new age fintech companies. For example, most of the customers do not have a credit bureau score and that is what the banks need to extend them credit. Our objective is to understand the needs of this customer segment and bring them the products that they need.  Whether it is credit, insurance, savings and beyond…

Digital payments are growing rapidly in urban India driven by mobile based payment solutions like wallets and UPI. We do expect semi urban and rural India to also adopt digital payments. However, the difference is in the pace of adoption. This part of India is at a very early stage of adoption of smartphones and mobile data. Their adoption has started with social connect and entertainment (whatsapp and youtube), where they are being increasingly assisted by their peers.

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While this part of India is getting prosperous and is aspirational, they fundamentally are different from the urban India in terms of literacy levels, language preferences (there are multiple regional languages in India), and exposure to transacting on their smartphones.

Financial transactions are typically in the last quadrant when it comes to adoption intent and complexity. There is lack of trust. They need assistance in getting onboarded on to digital platforms and that is the opportunity that Spice Money is going after.

As it stands today, because of lack of banking infrastructure coupled with the preference for assistance, we have millions of customers walking in to our customer service points for depositing, withdrawing ad remitting cash to the bank accounts. We have early signs of people now transacting for making bill payments, booking tickets etc. Our objective is to assist them in their journey to adopt digital payments and be their preferred partner in this journey.

8. What according to you are the five major trends that will shape the financial service market in 2019.

As global financial and tech giants revolutionize the financial services arena, banks will also experiment with new mobile applications and voice-enabled gadgets to enhance both delivery and contextual personalization. As technologies continue to evolve, the banking sector will continue to accelerate its investments in innovation and digital enhancements.

A lot of innovation & experimentation is happing in banking sector on aspects like:

1. Open APIs
2. Data Analytics, AI & Machine Learning
3. Conversational Interfaces (AI, ML & NLP enabled) – Chatbots & Voice Interfaces
4. Robotic Process Automation (RPA)
5. Secure & Agile Architecture

These efforts will only increase in 2019.

9. What’s in your roadmap for 2019?

From basic product line of cash-in and cash-out products, we are on course to launch next level of products from savings to investment to insurance to credit. We have built phenomenal transactional data for the channel to be able to be now part of formal credit economy and in a mix of own book to leveraging partners, we shall be able to move to the next level of financial inclusion and literacy for the channel.