WhatsApp is planning to introduce multiple pilot programs in India over the next few years to develop and scale-up financial services solutions that will help it in providing small scale banking solutions on the app, including pension and insurance, especially to the unorganised sector.
WhatsApp is one of the biggest messaging platforms in the world, but so far, it has not really been able to devise a real way of generating revenue. Facebook, the parent company of the messaging service, has been trying to push for financial services on the platform, especially in India. It has been offering banking services for over an year now through UPI based transactions. And even though still in testing, it seems to run into one problem into another.
However, that does not mean that the services have not seen any success over this trial period. Some of India’s biggest banks such as ICICI Bank, HDFC Bank and Kotak Mahindra Bank have forged partnerships with WhatsApp, and have launched banking services over the app. The move has been quite successful, with the banks now reaching 3 million more customers, courtesy of WhatsApp. This ‘proof of concept’ has ensured WhatsApp that it has a real chance of making monetary profits in India, and has thus, inspired the company to launch various pilot programs.
“All banks have their mobile banking app, with comprehensive and rich functionality. The question we asked, how can we use WhatsApp’s reach, security through end-to-end encryption as well as simple user experience to complement their banking app optimised for a few but important services. Early examples from ICICI, HDFC and Kotak Bank have been very well received. Now, with the initial proofs of concepts in place, we now want to open up, with more banks over the coming year, to help simplify and expand banking services, especially to the rural and lower-income segments,” WhatsApp’s India head Abhijeet Bose said during the Global Fintech Fest.
He laid out the company’s plan, where it would work to provide the unorganised sector access to products like insurance, micro-credit and pensions, launching various pilot programs to devise solutions for the same.
“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. Each pilot will start with a small experiment and based on the result, we will co-invest and scale the ones that show promise. Even a small conversion of demand will translate into significant infusion of savings into the financial system,” Bose said.
WhatsApp finds its biggest market in India, at least in terms of sheer users, where it boasts 400 million subscribers. Thus, if the company can convert a small portion of this number to use its financial services, WhatsApp might be looking at some serious cash.
Moreover, this is in line with Facebook’s recent goal of increasing its presence in India, to which end it invested $5.7 billion in Mukesh Ambani’s Reliance Jio. The two companies have announced that they will work together to find ways to increase their foothold in the retail market, and WhatsApp’s arrival as a fintech platform can go a long way towards realising that goal.