WhatsApp's Indian operation will shortly commence tests that make its platform a distribution channel for pensions, insurance and small loans.
The service’s plans were revealed yesterday by head of India Abhijit Bose who, speaking at the Global Fintech Fest, said that WhatsApp’s payments service is all very well but it is financial services that make a difference to peoples' lives.
The Facebook-owned service is therefore working with Indian banks to see how they can pipe their products through WhatsApp.
The company has decided its first efforts will test how to distribute pensions, insurance and capital through India.
Pensions matter, Bose said, because while India has a strong private pension system and a pool of over 300m workers who can afford retirement savings, current distribution methods don’t scale and don’t reach beyond India’s cities. Insurance is important because many Indians fall into inter-generational poverty when medical or other crises deplete their savings.
Bose also described a conversation with an Indian banking CEO who detailed the difficulties of assessing loans for small businesses in the absence of detailed digital paper trails. Banks therefore don’t loan to small businesses, Bose said, with only 15 percent borrowing from banks. As alternative sources of cash tend to offer more onerous terms, Bose suggested better access to lenders could accelerate India’s economic development.
Bose said WhatsApp has therefore been working with its banking partners to extend their reach.
“All banks have apps, we asked how we can use our reach to complement apps, optimised for a few important services.”
“Early examples have gone well and now we want to open up with more banks over the coming year to open services to rural and lower income segments.”
Bose said some of those efforts will flop, but those that show promise will become “templates” for how WhatsApp develops services around the world.
He also said that WhatsApp will not be alone in taking made-for-India services to the world.
“If chapter one of India’s technology story was about exporting services, chapter two is about solving problems for India and exporting them as templates for solutions for the world.”
And he thinks made-for-India products will succeed elsewhere because the nation’s approach to modernisation has been to use public infrastructure as a platform to build at scale, rather than waiting for business to scale. ®