On the face of it, the task government has set out to achieve looks very simple. While completing any economic transaction, instead of taking a wad of currency notes, get every Indian to take his debit card from his wallet or pull out his mobile phone instead to complete the transaction. The big question is, how easy is it to achieve this “simple” behaviour change?
While studying the behaviour of the unbanked segment in India, we found that the majority among them do not use a bank for financial transactions not because of the physical distance from a bank branch but because of a psychological distance. The drive towards cashless India could further increase the “class divide” among the banked and unbanked in India. As Ajay Banga, chief executive officer of MasterCard, said, “We risk creating islands, where the unbanked transact with each other.” This divide could seriously affect the government’s financial inclusion initiatives.
The path to any new behaviour is always fraught with many barriers that one needs to tackle. Many a time, barriers to behaviour change are lowered during significant events. Immediately after the 9/11 terrorist attack, the number of Americans who felt the need for religion in their lives shot up exponentially. Immediately after natural disasters, there is a dramatic increase in the number of people opting to start life insurance policies.
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Demonetization was a significant event that affected everyone in India. But according to Reserve Bank of India data, at the height of cash non-availability, the number of debit card transactions and use of prepaid payment instruments barely doubled. This is an indicator that the path to building a cashless India is not going to be an easy one.
As mentioned in “Slow Ideas”, a 2013 New Yorker article by Atul Gawande, different innovations have very different speeds of adoption. According to Gawande, the use of anaesthesia spread across hospitals within months of its discovery. But the use of antiseptics took much longer. Knowing why one behaviour becomes a habit while another equally important one struggles to sustain itself is a lesson for all behaviour-change projects.
The human brain loves the status quo. It is very difficult to get the human brain to start a new behaviour. It becomes even tougher when the problems attached with the existing behaviour are not visible and cannot be experienced. In the case of anaesthesia, the problem it was solving was very visible. Many attendants had to hold a patient down before an operation could be performed. But in the case of disinfection, the germs it was fighting were not visible. In a similar vein, the common man experiences no apparent problems while transacting in cash. For that matter, the service charge, however small, that digital transactions will entail could become a visible problem that could slow down one’s transition to digital payments.
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The earnestness to find the perfect usage of anaesthesia led to the development of the science of anaesthesiology and the creation of a clear role for an anaesthesiologist during an operation procedure. Similarly, systems and infrastructure should be in place before a behaviour-change initiative can begin. The push to move the common man to digital payment platforms depends on the levels of mobile ownership, development of appropriate software, wide acceptance of digital payments across outlets, etc. But by implementing demonetization before the digital infrastructure was in place, the government was putting the cart before the horse. Demonetization would have had a very different impact on encouraging cashless transactions if the government had focused first on developing a fairly robust infrastructure for digital payments.
Even if infrastructure is in place, there is no guarantee that right behaviour will take root. The open defecation problem persisting despite the availability of toilets is a clear pointer that behaviour-change initiatives go beyond the mere construction of infrastructure. Getting people to use the infrastructure on a sustained basis is a different ball game all together.
The move to a cashless economy is different from all other behaviour-change projects of the government, particularly for one reason—there is a significantly large number of people who will try to thwart all attempts towards the change. These are the people who have conveniently hidden their tax liabilities and black money behind their cash transactions. By now, everyone can see how resilient and inventive this segment is by the innovative schemes they hatched to move their black money back into banks.
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Making India cashless is not a single-event change project like the polio eradication programme, where the behaviour required was putting only one dose of medicine in the child’s mouth. Shifting to a digital platform will call for a change in behaviour across many economic transaction contexts on a sustained basis. Exhortations by leaders, awareness campaigns and availability of the required infrastructure are all essential starting points of a behaviour-change project. But for a sustained behaviour change, the move to a cashless India has to be a habit loop that provides an emotional high to the end user and the intermediaries involved.
It has been more than 150 years since antiseptics were discovered. But even today, hospitals are struggling to get doctors to use it regularly. This is a reminder that changing the behaviour of every Indian to use a debit card instead of a currency note the next time he has to pay the sabzi wala (vegetable seller) is going to be a long, arduous journey.
Biju Dominic is the chief executive officer of Final Mile Consulting, a behaviour architecture firm.