Raj Agrawal is the Chief Financial Officer for Western Union, a worldwide financial services company headquartered in the US. In this exclusive interview with 'India Global Business' online editor, Dr Ishita Mandrekar, he discusses the latest developments in the digital landscape in India, the RBI's sandbox programme and how Indian financial systems can survive the disruption caused by Covid-19.
How has the digital payment landscape in India evolved over the years?
There obviously have been many changes over the last couple of years, particularly in India, with demonetisation as well as the Covid-19 environment. It really has propelled some of the digital aspects of the payments market. You see technology and digital technology revelations with smartphones and cheap data availability like Jio. The payments space has witnessed the entry of many non-banking institutions like Paytm or PhonePe. Consumers, like everyone else in the world, are requiring more things to be done instantaneously. They want the one-touch type of payments, so certainly that's having an impact. I don't think we've seen the end of the regulatory landscape either - the digital Know Your Customer (KYC), the Aadhar based payments initiatives and overall the P to P lending.
Please share your thoughts on how Western Union is harnessing India's Unified Payment interface (UPI) system for cross-border remittances?
We were one of the first, and maybe still the first, money transfer operator that actually connected to the UPI payments interface. We look at providing many different channels to our customers and how they can move money. The connection with UPI really gives our customers the ability to move money to bank accounts in India without having to know all of the beneficiary details. For example, if you know the UPI id and have an interface within the RBI guidelines, it really creates a much better user experience. I send money to India all the time to my relatives and if I do not have to know all the banking details, it certainly makes life simpler for me and I'm assuming for others as well. So anywhere in the world, customers can initiate a money transfer and send it to accounts using the UPI id. We haven't seen a lot of traction there yet, but it's another channel we like to make available to our customers.
What sort of opportunities do you see in Reserve Bank of India's sandbox programme?
The RBI's sandbox, it's such a great name really, because that's exactly what it does, it allows companies to play around a little bit and introduce new products and services in a faster cycle within the guidelines that it has set. It is a great way to encourage faster technology development and faster payment types of opportunities. We operate in a number of markets around the world, we've also had the ability to do electronic KYC in different parts of the world, and in this Covid-19 environment a lot of countries have allowed us to extend how we actually evaluate who the customer is and we would look to do the same kind of thing in the Indian market. We have the concept of digital location, it means different things in different markets, but typically digital location is assisting customers in doing a money transfer, receiving money that may not be able to get to a physical location. We've also launched home delivery as a way to get to customers. So just a way to test and learn from these types of products and services is a great way to participate in the sandbox programme and we look to leverage that more in the coming months and years.
With the number of digital payments made across the globe increasing significantly, how are you mitigating the risk exposure?
Our own digital business which is largely Western Union. com is one of the fastest growing digital businesses in the world. We have a lot of great technology and processes to actually analyse customers and look at their data. We have transaction monitoring systems, and various other processes in place to validate transactions and to verify their validity and ensure that they are not fraudulent in nature. We are fully aware that customers are sharing their sensitive data with us and it is our responsibility to ensure that we are protecting customers and using their data in the right way so that they can have the confidence when they deal with Western Union that their data is protected.
How is Western Union addressing its data localisation commitments in India?
We are a global company and we operate in almost every single country in the world. We always want to and do meet the requirements of the data laws of the country we are operating in, and India is no exception. We have processes of meeting data localisation in many other countries including meeting the RBI's guidelines in India. We sometimes have to localise our data, our systems as well and we really do want to do that. In this digital age we have information that goes around the globe in a very fast way but at the same time we are also very mindful of local requirements, making sure that we are meeting those needs. For India, we are certainly meeting the requirements that are set by the RBI and that continues to be our goal no matter where we operate.
How can the Indian financial system weather the disruption caused by the current Covid-19 crisis?
In this environment it's less about how much are you growing and more about how you're going to come out this situation as a healthy company or a healthy country.
The coronavirus situation was something that was not anticipated in any part of the world. We never had to deal with something like this before. Every country is finding its way through this environment. It is challenging from the business standpoint , we have seen the impact on our own business in late March and early April. India as a country is also dealing with this just like other countries. We are based in the US and we certainly have to deal with it here too. In this environment there will be some extreme disruptions in business, there will be businesses that are not able to sustain themselves. There will be liquidity issues. I think it really teaches all of us a lesson about business continuity planning and making sure that we all think of the most extreme scenarios to plan our businesses that way. It's very important that the financial sector thinks about liquidity, making sure the businesses can sustain themselves. In this environment it's less about how much are you growing and more about how you're going to come out this situation as a healthy company or a healthy country. The RBI and the government of India have introduced many different economic measures to stimulate the economy and give money to individuals, to businesses and that's really the formula you have to have in this environment. The US and other countries have done the same kind of thing. Ultimately, the virus issue itself will go away when we find a cure or at the very least immunisation, and eventually the economic part of it will also recover. But it is going to be painful in the short term and no one should say otherwise. In the long term, I believe, India will continue to be a growth engine again, post-Covid. It will become a very healthy market to be operating in but we will have to get through the short term period first.