March 7, 2012
Infosys announced last week that Bharti Airtel, India’s leading mobile service provider, has selected its WalletEdge platform to operate Airtel Money, the first mobile wallet service in India. This announcement is interesting from a few different perspectives. First, it will provide a new source of revenues for the Indian telecom industry, which has been struggling with low ARPUs for several years. Second, it’s a boon for the banking industry, which will find a way to accelerate financial inclusion initiatives in line with the recommendations from the Reserve Bank of India. Obviously, the urban Indian consumer will also benefit from the “pay anytime, anywhere” convenience of such a service.
I also look at this deal from an IT services industry perspective, and I believe that it embeds a set of very interesting attributes that will become increasingly prevalent in the way IT services vendors engage with their clients moving forward:
- IP assets and domain expertise are the building blocks for innovative services. Infosys leveraged its own existing intellectual property (IP) assets, along with strong domain expertise in the financial services and telecom sector, to build the WalletEdge solution. This included regulatory compliance, transaction management, and security best practices as well as the Finacle Digital Commerce solution on the mobile commerce front. Multichannel integration expertise combined with Infosys’ multichannel gateway were the key capabilities leveraged from a telecom point of view. In addition to this IP and domain expertise, strong architecture and system integration capabilities were also important to stitch the WalletEdge platform together.
- Scale is a key success factor for IP-based solutions. Over the past couple of years, individual mobile wallet pilots run by telecom operators in India proved unsuccessful, mostly due to the lack of economic sustainability of these solutions. The platform created by Infosys is hosted as a shared service on a private cloud infrastructure providing scale, flexibility, and robustness to handle millions of customers performing billions of transactions. Airtel is the first telecom operator to jump on the platform; over time, others will follow, driving economies of scale and making the service more affordable, which is a critical success factor in price-sensitive markets like India.
- IT services vendors are multistakeholder integration enablers. Regulatory bodies, telecom providers, banks, public sector institutions, and merchants are all key stakeholders in mobile wallet projects. Infosys has developed four key use cases (consumer-to-consumer, consumer-to-merchant, government-to-consumer, and enterprise cash management) catering to all these stakeholders.
- Reverse innovation is gaining traction as the next innovation model in IT services. IP assets will be key success factors for IT services vendors entering emerging markets. It is interesting to see that Infosys is leveraging the India domestic market to innovate in the delivery and business models of this mobile wallet platform. The company has identified opportunities in other emerging markets, such as sub-Saharan Africa, where both mobile penetration and financial inclusion objectives are high. Interestingly, developed markets are also on the radar and several European banks have shown interest in the mobile commerce solution.