Case Analysis Of The Indian Apex Bank

1.4. Case description

The Indian apex bank, the RBI argued that the context in India was different from that of other countries which had launched successful mobile money services (for example M-Pesa in Kenya), and therefore developed a prescriptive regulatory framework for India (Gupta & Tahilyani, 2013). In particular, they were of the opinion that other countries: a) had services which focused only on remittances, and not a complete set of mobile banking tools such as bank accounts, fixed deposits, recurring deposits and insurance, which the RBI wanted deployed in India, b) had relatively poor banking infrastructure compared to India, c) had a national identification number which could be used to facilitate transactions, which India did

In order to meet regulatory requirements on financial inclusion, banks appoint BCs, such as Alpha, to reach unbanked customers and help them open accounts, make deposits and withdrawals, and send remittances (Joseph & Mazzotta, 2014a). Alpha’s initial marketing slogan was “khata kholo har darwaza kholo” (open an account, open every door). To start with, Alpha reached out to its potential customers in their neighbourhood through fliers, street plays, and street signs. Additionally, the CSPs (such as the local convenience stores called kiranas) demonstrated Alpha’s product to their regular customers and coaxed them to give it a try (Joseph & Mazzotta, 2014a). Alpha also initially marketed and promoted its products in the state of Bihar but stopped doing so after realising the high expenditures involved. While building an initial mass of customers, Alpha did not charge a fee to open an account or make deposits or withdrawals (as it was not permitted by the

Both entailed an initial account opening fee of 100 rupees (US$2 at the time), and paid an interest rate of 3.5 percent on an account balance greater than 500 rupees. The premium plan required a flat fee of 100 rupees, and there were no limits on the transactions that could be made in any year. The basic plan, on the other hand, charged a fee of 2 rupees per transaction—be it deposit or withdrawal. However, in June 2011, Alpha dropped its dual pricing strategy to adopt a single pricing model . It has stuck with this model since then, with minor adjustments (Joseph & Mazzotta, 2014a). Alpha currently operates in two regions of India covering a total of ten states (Delhi, Bihar, Maharashtra, Uttar Pradesh, Telangana, Rajasthan, Gujarat, Haryana, West Bengal and Punjab) (Mas & McCaffrey, 2015). Each region has a head, and each area has a manager, and through this small hierarchy, they manage about 3,000 agents. Alpha selected a master agent model to build its network of agents called customer service points (CSPs), recruiting small fast moving consumer goods distributors and stockists. Each CSP is exclusive and offers services for only one bank. At first, it focused on recruiting airtime distributors to become master agents by converting the retailers they managed into agents. However, that proved difficult, as the commissions were not competitive compared to airtime sales, the retailers did not have