Despite Airtel Money success in African countries, the implementation of this service in India came across a variety of obstacles. For instance, stricter regulations have slowed the transformation of the financial industry in India, especially when it comes to innovations in the payment system.
Despite many businesses’ effort to penetrate this market, only a few banks started to control most of the country’s access to financing and non-cash payment methods, which has drastically influenced business operations. It is possible to compare the mCommerce in the two countries to develop a clear understanding of the steps to undertake to make it more successful in India.
Similarities and Differences Between the two Countries
In general, the introduction of mCommerce services in countries such as India has allowed access to financial instruments for the wider populations (including people with low income as well), who do not always have had the knowledge and the necessary documentation packages for the use of traditional banking services (Moss, Lambert, Majerowicz, 2015).
This can be defined as the leading similarity regarding the social and economic elaboration in the developing countries. The introduction of mobile networks and mobile banking applications has enabled paying the bills, fund transferring, and the opportunity of the immediate loan payments (Ranjan & Upadhyay, 2015). Nevertheless, the banks follow the same service model pattern, where all the services are provided remotely without the need for service offices, and along with the reliable mobile applications, which are in particular demand in India.
When comparing the Indian and African paths in introducing the service, the first difference that arises is the main user of the service as in the case of India, it was the lower middle class. Then, the Airtel Company did not declare their income from the service in India; thus making their operations not transparent enough, which gave customers clues about certain operation-related difficulties (Ranjan & Upadhyay, 2015).
Currently, the mobile payments are at an early stage of development in India, and nearly 90 percent of the population continues to pay bills in cash (Ranjan & Upadhyay, 2015). Moreover, in comparison to African countries, migrants represent a high percentage of the Indian population. This group is claimed to have low awareness of the Airtel Money service notwithstanding its particular significance related to the company’s profit. Despite the financial projections on the Indian market, the unsuited financial structure, poor literacy and low awareness of citizens led to the amiss gateway to the services.
Another difference from African countries is the high migration rate of workers from rural areas, which could have emphasized the necessity of mobile money transfer. Since Artel was a well-known brand, they hoped it would be easy to convince the users to utilize the new service; however, their expectations were not met because the workers were reluctant to try this system (Ranjan & Upadhyay, 2015).
Moreover, the banking infrastructure is strong in India, and the RBI imposes restrictions and regulations, which affect the planned activities, while the situation was just the reverse in Africa as in this region “government regulators had effectively collaborated with money transfer service providers in outlining rules and regulations” (Ranjan & Upadhyay, 2015, p. 6). Besides the economic aspects, there exist socio-cultural differences between the countries. The population of African countries, especially the younger generation, is more literate than in India.
Then, due to different attitudes within the social structure, Africans were ready to rely on third parties when conducting transactions, whereas the Indians are reluctant to do so, and prefer to use mobile banking services (Ranjan & Upadhyay, 2015). The Airtel Money took the trust factor into account and tried to implement the integrated payment; nevertheless, it did not change the situation. Despite the described constraints, the financial institution has allowed the customers without permanent residence to open accounts, which was previously a major obstacle for the migrant workers (Ismail, Ansell, & Kleyn, 2012).
The functioning of Airtel Money has been criticized for a whole range of problems, including deficiencies in conducting the basic processes and data leakage (Stair & Reynolds, 2015). The vulnerabilities and security issues of Airtel Money were discovered rather soon after the system was introduced to the population. (Stair & Reynolds, 2015). Apart from that, the inappropriate authentication and encryption system’s weaknesses allow possible unauthorized transactions. For that matter, it seems reasonable that people who do not have sufficient experience in using this type of systems are reluctant to employ it.
Strategy and its Execution
The current situation in India requires a strategy focused specifically on the Indian market and industry. The socio-cultural aspects and the existing regulations present the challenges that are characteristic strictly of India; subsequently, Airtel Money should not carry out the strategy targeted at other markets (Guillen & Garcia-Canal, 2012). An important step towards the successful execution of the strategy implies considering the economic potential of the country to emphasize the lower income consumers (Afram, 2012).
In terms of market orientation, Airtel should plan its operations based on the existing regulatory uncertainty presented by the high government intervention in the economic life of the country (Kshetri, 2014). It is advisable to conduct a focused analysis and reassess the business model prior to expanding the services or planning any strategic interventions.
Further, Airtel Money should strive for value-added activities regarding their operations and reduce the redundant operational structures. By understanding the local interconnections, the company would be able to develop the partnership with the local Indian businesses of different scale and implement the locally relevant innovation, which would be an effective strategic maneuver to meet some customer needs (Hult International Business School, 2016b).
Apart from the finance and resource planning, it is crucial to manage the budget effectively and enforce the stakeholder engagement. As one of the problems was the lack of transparency, it is crucial to be public to persuade the stakeholders in the reliability of operations (Mudida & Lago, 2015). Moreover, the strategic ambidexterity would allow compiling the efficiency of service provision and the service process innovation (Hult International Business School, 2016a). By applying this approach, the company would be able to reduce costs, while offering new services that ensure profit growth.
One of the important outcomes of the strategy should be the Airtel Money ability to attract more than a million new customers. By integrating the internal and external processes, it would be possible to enhance the customer experience (Yadav & Jain, 2012; Hult International Business School, 2016b). It should also be noted that the flexible pricing model would allow avoiding an increase in capital expenditures (Khanna & Palepu, 2013). This approach implies the differentiated and individualized approach to service delivery, regardless of the client’s social or economic background.
In conclusion, despite the success of Airtel Money in African countries, it has faced a number of obstacles in the Indian market. The socio-cultural and economic aspects, as well as the governmental restrictions, have gradually affected the service operations. The service provider should reconsider the strategy for introduction and implementation of innovation activities to be able to position the service in the highly competitive Indian market and win customer loyalty.
References
Afram, G. G. (2012). The remittance market in India. Washington, D.C.: World Bank Publications.
Guillen, M., & Garcia-Canal, E. (2012). Emerging markets rule. New York, NY: McGraw Hill Professional.
Hult International Business School. (2016a). Bottom of the pyramid.
Hult International Business School. (2016b). Competing in emerging markets.
Ismail, T., Ansell, G., & Kleyn, N. (2012). New markets, new mindsets. Johannesburg, South Africa: Jacana Media.
Khanna, T., & Palepu, K. (2013). Winning in emerging markets. Brighton, MA: Harvard Business Press.
Kshetri, N. (2014). Global entrepreneurship. London, UK: Routledge.
Moss, T., Lambert, C., & Majerowicz, S. (2015). Oil to cash. Washington, D. C.: Brookings Institution Press.
Mudida, R., & Lago, A. (2015). Five pillars for doing business in Africa. IESE insight, 24, 15-23.
Ranjan; J., & Upadhyay, P. (2015). Airtel money: Can the African success be replicated in India? Harvard Business Review, 1-10.
Stair, R., & Reynolds, G. (2015). Principles of information systems. Boston, MA: Cengage Learning.
Yadav, S. S., & Jain, P. K. (2012). Derivative markets in India. Noida, India: Tata McGraw-Hill Education.