The digital divide: the wealth at the bottom of the pyramid ?

A interesting interview with Alana Semuels in marketplace podcast last week made me reflect on the digital divide, and on those at the bottom of the digital pyramid (apologies CK Prahalad). Ref: Your Amazon deliveries don't just magically appear at your door. The interview and Semuels’ detailed account of experiences as an Amazon Flex driver in The Atlantic (link) made for an interesting read. She recounts

My tech-economy experience was far less lucrative. In total, I drove about 40 miles (not counting the 26 miles I had to drive between the warehouse and my apartment). I was paid $70, but had $20 in expenses, based on the IRS mileage standards.

Semuels’ observations are significant since nearly $1 out of every $2 spent online in the US is going to Amazon (link).

Halfway across the globe in the Silicon-Valley of the East, life seems to be no different for those at the bottom of the digital pyramid. Motorists in Bengalurue are learning to avoid the ‘delivery boys’ in bikes with heavily laden bags crisscrossing gridlocked traffic

The e-commerce delivery-boys (yes, it is mostly guys who are into delivery) earn a minimum wage – about $200 to $300 per month, while accounting for other expenses.



 In the article, Alana Semuels highlights

All my frustration really hit when I went to the second office building on Market Street, home to a few big tech companies. One of them took up multiple floors, smelled strongly of pizza, and had dog leashes and kibble near the front door. Young workers milled around with laptops and lattes, talking about weekend plans. They were benefiting from the technology boom, sharing in the prosperity that comes with a company’s rapid growth. Technology was making their jobs better—they worked in offices that provided free food and drinks, and they received good salaries, benefits, and stock options. They could click a button and use Amazon to get whatever they wanted delivered to their offices—I brought 16 packages for 13 people to one office; one was so light I was sure it was a pack of gum, another felt like a bug-spray container

The e-commerce delivery-boys in India and China who are delivering packages to their tech-savvy brethren higher in the digital pyramid are bound to be echoing a similar sentiment.

There is perhaps a silver lining here as, Semuels writeup also acknowledges:

People are worried that automation is going to create a “job apocalypse,” but there will likely be thousands more driving and delivery jobs in upcoming years..... “We’re going to take the billion hours Americans spend driving to stores and taking things off shelves, and we’re going to turn it into jobs” 

Bottomline: The digital economy has defined invisible lines separating those at the top and bottom of the pyramid. However, such delivery jobs in developing economies like China and India are an opportunity for young, semi-educated youngsters to earn a living. Without such opportunities, scores of them might end up unemployed or remain under-employed.

Thanks for reading! Please click on Like, or Share, Tweet and Comment below to continue this conversation or share your favorite 'trend to watch' | Reposted from linkedIn Pulse blog | Also a link to an earlier blog on the topic: Digitization: Solutions to physical-world problems?!

Long march towards Digitization and cashless society in India

It has been a little over three weeks since the Indian government took the dramatic step of demonetizing large denomination currency notes – of Rupees 500 and 1000. A lot has been written and debated about the short and long term impact of the Government’s bold move on the lives of a billion Indians.

As an Enterprise Architect of Indian origin, I have been watching the rollout with more than casual interest. There are lessons in the ongoing Indian digitization experiment that technologists around the world can learn from.

The digital payment market in India is at a nascent stage, but nevertheless has a number of domestic and global players, each with millions of users. The market is led by players like PayTM, MobiKwik , Ola Money, Citrus Pay, PayUMoney, ICICI Pockets, Citi Masterpass among others. These Digital payment providers have begun to prepare for wider adoption for the wave following digitization.

The media and technology analysts are also adding a sense of excitement, with articles that proclaim how “India’s Cash Ban Is the Best Thing to Happen to Digital Payments” In this article, the founder of PayTm Vijay Shekhar is quoted saying

“Those fishmongers, vegetable vendors and rickshaw drivers count among the thousands who’ve signed onto India’s largest digital payments service since Prime Minister Narendra Modi triggered a nationwide cash crunch when he scrapped the country’s two largest note denominations.” ( link)

Banks and financial institutions are also looking beyond the short term roadbumps to the long-term opportunities ahead. The front-office bankers gamely took on the challenge of dealing with teeming masses waiting in lines to convert their defunct currency notes. However, banking executives and technologists are already looking ahead. For instance, ICICI, a leading private bank sent a detailed email informing customers of the “state-of-the-art digital channels of internet, mobile banking, Pockets digital wallet and cards,” highlighting services that customers can access via internet and mobile platforms

The enthusiasm among the bankers and digital payment providers and startups is contagious indeed. It is very likely that some of the new, innovative payment modes will lead to evolution in day-to-day financial transactions. The opportunity hinges on leveraging ubiquitous mobile phones in a creative, intuitive and secure manner.

I wonder if it’s too early proclaim advent of the cashless-society in India?

Designing for trust in a culture with low trust of public institutions is a challenge to be addressed. Same goes for the ability to scale payment gateways across a diverse demographic. Many of those taking to eWallets and online bill payment are already in the formal banking system: they happen to be urbane, tech-savvy middle-class professionals who were sitting on the fence when it came to digital wallets. Service providers and small-businesses catering to this clientele are grudgingly following suit. Wider adoption, however, will depend on a transformation at the bottom of the pyramid. A few examples of the millions of people who habitually transact in cash in India:

• The semiliterate, blue-collar workers in unorganized sectors working in small scale industries, factories and other jobs are generally unbanked
• Workers in informal sectors in urban India – maids, household workers, drivers, security guards, building construction workers and others drawing minimum wage
• Hawkers, vendors, small-shops, tea-stalls and roadside eateries in street corners across cities and villages
• Rural India is largely agrarian, and agricultural income earned in India is exempt from tax. Cash is the king in this sector and farmers, growers and landlords have little incentive in going cashless (link: www.incometaxindia.gov.in/Tutorials/11.Tax free incomes final.pdf )

Most of the folks in these sectors are habits of creature, and love nothing more than counting cold-hard cash after a day’s labor. Weaning them away from the culture of cash to a world where their earnings remain in virtual world in digital wallets they don’t comprehend may take some creative persuading and goading.

Another challenge that needs to be addressed is the issue of merchant-fees charged by Digital payment providers. Businesses and merchants, especially those serving customers at the bottom of the pyramid are going to be loath to shell out a fee, however small. This is not a trivial problem. Even credit card networks with American Express, Visa and Mastercard in mature markets like the US and Europe continue to struggle in courting small businesses that are hesitant to pay the 2-3% transaction fee for Point of Sale transactions. Even there, cash is sometimes the king.

Bottomline: We are talking about a cultural transformation that needs to accompany technology adoption. Those of us who have spent years in technology transformations realize that success of technology innovations hinges on user buy-in at the last mile.

(Reposted from LinkedIn pulse)