Why Reliance’s $12 Jio Bharat phone would be a game changer in India

The launch of a $12 internet-enabled phone by Reliances Jio could boost financial inclusion in India, as millions still need to get online and access the country’s banking system, analysts say.

Reliance Jio, which is part of the conglomerate controlled by India’s richest man, Mukesh Ambani, this month introduced its JioBharat 4G feature phone, which includes access to its JioMoney payments platform, allowing users to make digital payments through India’s Unified Payments Interface (UPI).

The Indian government-backed UPI system links customers’ phone numbers with their bank account and allows them to effectively use their phones as a digital wallet.

UPI system support over the phone is essential to enable financial inclusion for India’s unbanked population, says Prateek Toshniwal, co-founder of Ivy Growth Associates and partner at MI Capitals.

Jio budget phone can empower millions of people who are still stuck in the 2G era by providing digital payments and access to financial services.

In a country with a population of more than 1.4 billion, there are 759 million active internet users in India, according to a report by the Internet and Mobile Association of India (IAMAI) and Kantar. The report predicts that this number will rise to 900 million by 2025.

Most citizens access the internet through their phones and India’s focus on digitization has had an effect on how people manage their finances.

India’s bet on digital public infrastructure is helping drive innovations in banking, credit, insurance and, in turn, contributing to financial inclusion, says Suja Chandy, senior vice president and chief executive officer of Zafin, a banking software enterprise platform.

At the same time, however, there are 130 million adults in India without access to formal banking services, according to the World Bank.

Most Indians still live in rural areas where a larger proportion of people are not part of the formal financial system.

Over the years, more affordable smartphones have become available, many of them offered by Indian and Chinese brands, and this has helped more people move online and access financial services over the internet.

Smartphones are one of the important reasons for digital India’s innovation and growth, says Ajay Chaurasia, vice president, marketing, product and business at RupeeRedee.

Apple opens its first retail store in India

The launch of telecommunications company Reliance Jio in 2016 made the internet even more accessible and rocked the market. It has taken the industry by storm with offers of free lifetime calls and bargain data packages. This drove some companies out of business and led to mergers, as telecom operators scrambled to stay competitive with their prices. This has resulted in a major blow to the profitability of the sector.

However, Reliance Jio’s aggressive efforts to gain market share have clearly paid off for the company. It has become India’s largest telecommunications company by number of subscribers and continues to grow. In April, Jio added 3.3 million new customers, bringing the total to 440 million. Its closest rival, Bharti Airtel, has a subscriber count of 370 million.

If we look at industry trends, data cost is the lowest in India, says Chaurasia. All of this happened after Jio was introduced to the country. Today, India is one of the biggest app markets.

But with the cheapest smartphone priced at around $60, this is still out of reach for many low-income people in India.

The Jio Bharat phone is now offering people without a full smartphone a way to access the internet and make UPI transactions.

There are still 250 million mobile phone users in India who remain trapped in the 2G era, unable to tap into the basic functionality of the internet at a time when the world is on the cusp of a 5G revolution, says Akash Ambani, president of Reliance Jio.

The phone also has access to Jio’s streaming platform and a camera. The device costs about 20% less than the average price of a feature phone in India, according to financial services firm Jefferies India. It is estimated that customers switching to Jio’s budget device to access 4G could cost Bharti Airtel the loss of 11 million subscribers annually.

With budget phones, even the underprivileged category will enter the mainstream, says Chaurasia.

The device comes with unlimited voice calls and 14GB of data for 123 rupees per month.

Analysts see the move as another push by market leader Jio to battle its rivals and win more customers in the world’s most populous nation.

India has witnessed incredible growth and developments in the recent past that will disrupt the financial landscape in the coming years, says Aalesh Avlani, co-founder of Credit Wise Capital, a financial technology company that promotes financial inclusion.

The launch of the new budget smartphone Jio has the potential to have a significant impact on financial inclusion in India. With better 4G connectivity and affordable plans, the smartphone is likely to bridge the digital divide and bring a larger segment of the population into the formal financial system.

He says that with better 4G connectivity, people in remote and underserved areas will have better access to mobile banking, online transactions and digital payment services.

This, in turn, will allow them to participate in the formal economy, take advantage of easier credit and manage their finances more efficiently, Avlani says.

Small and medium-sized businesses, especially those in rural areas, will also benefit, he adds.

They will be able to expand their customer base and improve their financial management through digital transactions.

Additionally, government and financial institutions will benefit from increased tax compliance and reduced transaction costs, he adds.

But the Jio Bharat phone is still in its beta stage, with a rollout limited to one million phones for now, Reliance says.

It remains to be seen whether the budget phone will prove to be a success.

Not all cheap phones are good. So it depends on the consumer’s response. In the end, will it solve the purpose? We will only know after the pilot is finished, says Chaurasia.

Experts also point out that apart from affordability, there are other hurdles preventing some segments of the population from participating in India’s digital revolution.

Digital literacy continues to be a major obstacle, especially in rural regions, says Toshniwal. To empower users and increase their confidence in the efficient use of these technologies, it will be essential to provide sufficient training and instruction on the use of digital financial services.

He adds that improving infrastructure is also essential to improve financial inclusion.

It’s imperative to increase network coverage and provide smooth Internet access to improve Internet connectivity in remote and underserved areas, he says.

Privacy and security are additional considerations, says Toshniwal. The importance of robust security measures and protecting user privacy has increased with the rise of digital transactions, she says. Implementing secure technologies and educating users about safe online behavior must be top priority.”

Other insiders hope that developments in digital finance and initiatives like the Jio Bharat phone could also help give women more financial freedom.

Not surprisingly, they are also underserved in the banking sector, with only one in five women in India having a bank account, Ms Chandy says.

There are huge opportunities to drive change through the development of innovative yet more affordable devices like the Jio Bharat phone, which can be a game changer and accelerate the adoption of technology in rural areas and among women.

And as more and more financial institutions, with the help of financial and banking technology companies, offer new features, develop more user-friendly mobile apps and offer more personalization, access to finance could also become easier for this half of the population, he adds.

Updated: July 24, 2023, 04:33am