It would offer Airtel's customers the ability to make retail payments and do basic banking using their mobile phones and Airtel's network.
You've heard Samua Munda's story before. He's a migrant laborer in Mumbai, who hails from Harubeda, a tiny hamlet in the Hazaribagh district of Jharkhand. His Maoist-infested village comprises 84 huts, one school in an utter state of neglect, no banks, no hospitals, and spasming lights that work about two hours a day.
But, amazingly, despite this lack of infrastructure, Munda sends money to the family he's left back at home, bang on the first every month, regular as clockwork.
Thanks to Airtel Money.
It's an Airtel TVC that will never be made. But that's only because it's an idea, like free lemonade on a hot day, that doesn't need the indignity of being hawked. Since it launched as a pilot in June 2011, over a million people have already subscribed to Airtel Money, just one indicator of the demand for the service.
In 2011, Airtel Money was an idea whose time had come. Consider this. Rural India, which houses 70 percent of the country's population, has access to only 30 percent of the country's bank branches, 24 percent of any type of banking point-of-sales, and a measly 5 percent of India's ATMs.
"India has a large un-banked population. With the widespread reach that Airtel has, Airtel Money is an attempt to bridge that financial inclusion gap," says Amrita Gangotra, Director-IT (India and South Asia) at Bharti Airtel.
As noble as that emotion is, Airtel Money is also a new way for India's largest telco to make a pile of money. Although they couldn't have known it then, the company would need it with low ARPU's (average revenue per user) and the hailstorm of scandals and regulations that would hit the industry. The question back in 2010, when the idea was unheard of, was: Could they figure out how to implement Airtel Money?
The Smart Money
Circa 2010. The management and board at Airtel began to notice a number of trends that would impact their business. For one, the market was starting to get flooded with smartphones. Then mobile penetration in urban India was fast approaching saturation.
"We had an intensive brainstorming session to see how we could build new sources of revenue. We were looking at what telcos around the world were doing," recalls Gangotra.
One such idea was an open wallet-like service. It would offer Airtel's customers the ability to make retail payments and do basic banking using their mobile phones and Airtel's network.
From an IT perspective, however, it was a daunting conversation. "The focus of such an initiative is very different from the demands of a monolith like Airtel, which has its procedures, stable workflows, and infrastructure all grounded," says Gangotra.
So one of the first things Airtel did was to carve out a separate company for the new idea. It would, says Gangotra, give the new undertaking more freedom, and the flexibility to take into stride the specific trials the venture would face.
"We had to make separate niche systems from scratch because we realized that as the product goes through various phases of evolution, requirements would change accordingly," she says. "Making those changes in the already stable systems made no sense."
Since there weren't any existing standards, Gangotra decided to build a separate system and integrate it as and when systems stabilized. From a management perspective, the company hired a new CEO, while Gangotra reached out to people who were skilled in the banking domain and could work in tandem with the telco expertise that she and her team came with.
The new team focused on open-wallet use cases by studying and collecting examples of how these services were consumed across the world, who consumed them, and for what purposes. "We collected intelligence like the corridors where money transfer happens a lot (Mumbai and Bihar, for example, due to migrant laborers), and where maximum recharges happened," says Gangotra.
Like many pioneers, Gangotra says that an important learning for them was to first understand the landscape and draw clear boundaries. In this case, one of the questions that arose was how much of the project was about banking and how much was about being a telco. They also needed to convince regulators to get on the same page. "It has not been an easy task to convince the RBI to do things like this," says Gangotra.
From a technology point of view, Gangotra had some options open to her. "Initially, we wanted to use a STK (SIM Tool Kit) where the application was preloaded on the SIM. But we realized that would hassle customers by requiring them to come to a retailer, change their SIM, and reconnect to the network," says Gangotra.
So the team, says Gangotra, decided to switch to the USSB model.
She also realized that unlike telcos in the West, Airtel couldn't use J2Me applications. "J2ME applications need a data connection and though India has a substantial voice connectivity, data penetration is low in rural India," says Gangotra.
"Our attempt was to get to the bottom of the pyramid. So we launched our services on SMS and USSD." (USSD or Unstructured Service Supplementary Data, is a GSM technology, that uses asterisk or gate (or hash) characters "*" or "#" and then a combination of numerals.)
Cashing In
After a series of pilots, Bharti Airtel, through its wholly-owned subsidiary Airtel M Commerce Services, went live with Airtel Money in March 2012. Today the service is available in 300 Indian cities, and allows Airtel customers to load cash on their mobile devices, pay utility bills, top up recharges, transfer money to other Airtel accounts. And crucially, and this what really differentiates it from a service like ngpay, Airtel customers can make payments at retail outlets and are offered a cash-in and cash-out facilities (with select merchants, Airtel customers can trade virtual money with real cash, making merchants ATMs of sort).
For Gangotra, it has been a stressful two years. "When you are creating something for the emerging market, it needs a different type of agility, learning and exposure," she says.
She realizes that after all the work she's put in, Airtel's competition is following suit. "Many of our competitors have started small pilots and we know that they will catch up soon," she says. "But we were the first."
