New commerce

nc1 A barber in Bangladesh could not afford the rent for a shop space. So he bought a mobile phone and a motorbike instead, scheduling appointments by phone and going to his clients' homes. This was more convenient for clients and he was able to serve a larger client base and charge higher fees.

Mobility is opening up new business possibilities. Digitization and Virtualization are overcoming the geographic barriers for the knowledge-driven industry. Business treaties among countries are causing talent to be mobile. In emerging economies for instance, where penetration of credit cards is low, approximately four billion people have mobile phones. With mobile phones now so commonplace, new opportunities beckon. Mobile money, for instance, allows cash to travel as quickly as a text message.

Common payment areas are coming of age in countries that have huge volumes of trade and closely integrated financial systems. The European Union has already set up the Single European Payment Area. China is calling for the introduction of a new reserve currency. The Gulf Cooperation Council is contemplating a common currency for its member states. All this points to a new order where trade transactions, payments and banking systems will be harmonized and made seamless across borders.

With the evolution of technology, consumer behavior is changing like never before – consumers increasingly want to pay for a song and not for the entire album; someone wants an article and not the entire book. Sellers are responding by inventing new ways to address micro demands. Typical instruments like credit cards find it tough to enable purchases below US $1. Opportunities in micro payments lie in enabling technology to support a huge volume of low-value transactions.

Small-value transactions usher in an inclusive commerce – microfinance and rural banking have emerged as bottom-of-the-pyramid commerce solutions. There are about 1.7 billion working adults in the world who earn less than US $2 a day, and have no access to basic banking and financial services. This is the long tail of banking that can be tapped and served. Microfinance is spreading into developed economies too – institutions from the developing world are opening microfinance branches in countries such as the U.S. Incidentally, Finacle™ is deployed across 2,000 branches of regional rural banks in India, leading the financial inclusivity initiatives in the country.

Technology has morphed commerce in a manner that has made it mobile, enabled it to shrink to micro chunks and crisscross into the lives of more people like the barber from Bangladesh.