WhatsApp India is set to launch pilots in the segments of small-business loans, micro-pension and insurance in partnership with domestic service providers, in keeping with the Reserve Bank of India’s (RBI’s) five-year financial inclusion strategy, Abhijit Bose, Head of India, WhatsApp, said on Wednesday. The messaging/payments service app has already run service delivery pilots with lenders such as ICICI Bank, HDFC Bank and Kotak Mahindra Bank, Bose said, speaking at the Global Fintech Fest 2020.
Interestingly, WhatsApp is yet to get the central bank’s nod to launch full-fledged payments services through the Unified Payments Interface (UPI) channel and has been in the beta stage for over two years now, since February 2018.
“WhatsApp has been working for over the last one year-plus with our banking partners to see how we can supplement their presence to accelerate our current pace of access across segments and geos. The question we asked was: How can we use WhatsApp’s reach, our security through end-to-end encryption as well as our simple user experience to complement their banking app,” Bose said.
Early examples from ICICI, HDFC and Kotak banks have been very well-received, with ICICI crossing 10 lakh users within months of being launched and Kotak’s services having reached to more than 20 lakh users already. “Now, with the initial proofs of concepts in place, we now want to open up with more banks over this coming year to help simplify and expand banking services, especially to the rural and lower-income segments,” Bose added.
WhatsApp also plans to expand its experiment with partners in other product segments that the RBI has highlighted as basic financial services, starting with micro-pension and insurance. “Over the next year and a half, WhatsApp will be supporting multiple pilots to test potential solutions to solve these distribution problems. These pilots will be done jointly with our partners as well as innovative tech partners in each vertical,” Bose said. Each product will start with a small experiment and based on the results, WhatsApp will co-invest and scale the ones that show promise. “Our ultimate goal is for every Indian to have micro-pension and insurance from one of our partners,” he said.
WhatsApp is also looking at creating digital profiles of micro, small and medium enterprises (MSMEs) through banks, which will lead to smarter modes of lending. “If you look at our 2025 targets, just accelerated lending through digitisation of loans could lead to 6-7% of the government’s target GDP growth,” Bose said.
The growing MSME economy could impact 20% of India’s population through increased employment and WhatsApp will begin working with its banking and NBFC partners to test and validate this hypothesis.
“Over the next two years, we are committing to opening up in entrepreneurial ways we never have before. The solutions will not be WhatsApp solutions. They will be from our partners – banks and financial-service companies, along with their fintech partners. We will use the venture model. We will take risks, but we will do it through controlled models and based on user acceptance, we will invest and scale the solutions that deliver results,” Bose said.