What’s the future of money? Or does it have a future?

From paper notes to credit cards to internet banking to mobile wallets, technology is changing the way financial transactions are being carried out. Bloomberg TV caught up with a panel of experts – Tech Mahindra CEO CP Gurnani, Nasscom President R Chandrasekhar and MasterCard’s group head for emerging payments, Sandeep Malhotra – to know the future trends in payments and consumer preferences.

While Gurnani says the world is moving from brick-and-mortar banks to tech-and-mortar, Chandrasekhar speaks of the potential of block chain technologies, the main technological innovation of Bitcoin. Malhotra cites MasterCard’s new offering MasterPass that is making shopping experience easier for consumers. While panelists were discussing the future of money, Chandrasekhar asks does it have a future?

CP, you are getting ready with the offering on the payment banks side. You have a tie-up up of Tech Mahindra and Mahindra Finance to tap into the big rural potential that Mahindra Finance offers. At what level are you and what are the early learnings from your journey?

Gurnani: I guess one thing you need to take into account is why Tech Mahindra is into payment banking.

Our firm believes that the technology has crashed boundaries. Amazon is into providing cloud services. And we can go on and on over this. But the point here is that you are seeing new industries being defined. From our point of view, while some might say that brick-and-mortar banks will crash, we believe that it is days of tech-and-mortar. For tech-and-mortar to happen you need technology. And we have been providing this technology. We have been working with companies like MasterCard. We have been working with banks in Africa. We have been working with banks in the western world. And we do understand that the first wave of branches being disappearing was through the ATMs, second wave is going to come from the smart phones and the third wave is going to come from the wearables. So the point here is that the technology is changing and is disruptive. And we strongly believe that in an emerging market where the unbanked are so high, this is the time to showcase firstly the technology, show the power of technology, make the used technology to make it all inclusive. Mahindra Finance has got a wonderful rural franchise and network and they have an existing three million customer base and they have point of sales. So I think it is a perfect marriage.

There are, of course, challenging situations over there. There is a very interesting place that Indian IT is poised. You have IT companies that fuelled some of the largest banks and technologies and today you have a whole new wave of technology rewriting the rules of the games. Where do you see the role of Indian technology firms in this context?

Chandrasekhar: I would not like to confine it to a particular class of firms but let me talk about technology and tech companies in particular. I think, as a country, we stand at a particularly exciting and interesting moment. We are struggling to ensure financial inclusion, which the government has stated as the policy objective. We had a huge IT revolution in the country and now we have the whole new start-up revolution. And now we are seeing the birth of companies, which have actually brought in mobile financial payments, promising to bring about a complete paradigm shift in the business of financial inclusion. So I think that we, as a country, are in a leading position in terms of bringing in ways by which financial inclusion is achieved.

You said the topic was future of money. And the question can be does it have a future because if you look at mobile and you look at the fact that we already have things like Aadhaar, which allows you to also establish your identity on the mobile, then the opportunity to put all of these dots together, which in themselves are very difficult to achieve. By putting all of these together you can actually bring about a situation where people are able to transact seamlessly with the mobile.

And even the old credit card and point of sale equipment – all of those really become redundant infrastructure. And, especially now with the potential of block chain technologies (blockchain is seen as the main technological innovation of Bitcoin), the ability to completely rewrite the way the whole financial system is engineered, I think is an attractive one. And the Finance Minister’s call to move towards the cashless economy is just one more indication.

about credit cards, you have talked about the old-world technologies and in India if you see credit cards have not been that successful yet. Wallets have been phenomenally successful and have doubled the size and scale of credit card in comparison. What’s gone wrong for credit cards and how MasterCard looking to take on this challenge?

Malhotra: I will go a couple of steps. We have seen over the last five centuries there have been epic shifts in the way we have revolutionised the way commerce is conducted. It is a world where more people from more places will get to do what they want. So it is to shop, to pay bills, to get benefits and to move up the pyramid. And it’s primarily driven by advancement in technology which is driving this growth. And a lot of them are coming from empowered world which is saying that those who are a part of the financial mainstream are going to make their lives better in the way they live.

The big activity that is happening is you are seeing an explosion in mobiles and a rise in connectivity and that is causing digital conversion where the walls between the physical and the digital space are blurring.

Are you at MasterCard seeing this as an opportunity?

Malhotra: We believe each of these devices – 30 billion by the end of 2020 – have the potential of becoming a commerce device. And each of these commerce devices is an opportunity for us. We have just launched MasterPass with Citi and launching with several other banks, which is a mechanism, a digital affinity of the banks for consumers.

What it is providing is an easier mechanism or an easier shopping experience for consumer – you don’t have to provide a 16-digit in your mobile device and it is a much more seamless experience.

COMMENT NOW