The Hindu Business Line : A ‘micro branch’ for the un-banked

Leveraging the power IT: A villager carrying out a transaction for Corporation Bank by using iMFAST device of Integra Micro Systems at Kasagatta village in Karnataka.

A.J. Vinayak

Mangalore, Dec 23 Some people call it a ‘micro branch’, while some others call it ‘branchless banking’. Finally, it comes to the point of leveraging the power of IT (information technology) for implementing financial inclusion programme.

With the vast number of rural populace yet to get banking facility and the potential it provides for bankers, ‘branchless banking’ is all set to become the next killer product in the industry.

Pilot projects by some banks, in association with technology partners, have proved that new generation technology tools and the dedicated human resource base will make branchless banking a gold mine for bankers in the years to come.

Business Line spoke to some of the players involved in developing IT for rural banking and found that all of them are trying their best to reach the un-banked in their own way.

Mr Ram S., Executive Director of Integra Micro Systems, told Business Line that his company’s device iMFAST (Integra’s Mobile Financial Applications Secure Terminal) is a business correspondent or agent-assisted portable financial transaction terminal. This acts as a front-end point of service device and associated software at the back-end for identifying, authenticating the users of the system and interfacing with the bank’s existing database, for online and offline transactions.

The iMFAST identifies customers using contact-less smart cards, authenticates through live fingerprint (biometric), and non-repudiation through transaction slip printouts. The system also provides voice guidance in vernacular language. The terminal can work in offline and online modes.

“Thus iMFAST can utilise the connectivity that is most prevalent at any location. To address the power situation in rural India, iMFAST terminal has been designed to work on automotive battery too,” he said.

Mr Anurag Gupta, Founder and CEO of A.Little.World (a company which uses new generation technologies, mobile networks and a last mile local entrepreneurship ecosystem to integrate a micro-banking model), said that the operating model of their product is based on mobile phone handsets with NFC (near field communication) facility.

Terming the use of NFC as a viable method, he said in this model the business correspondent, who is the operator for transactions, uses the NFC phone for providing service to people. The customer will be provided with the low-cost RFID (radio frequency identification device) based smart card. In this model, phone acts as the reader for the card.

Mr Manish Khera, Chief Executive Officer of FINO (Financial Information and Network Operations) Ltd, said FINO’s business models for this initiative have been designed to provide cost-effective reach into rural areas by both formal financial institutions and micro-finance institutions.

The battery operated device is used to overcome electricity challenges. The biometric authentication ensures access to services by illiterate customers. Transactions using smart cards are recorded in the standalone computers at every point of transaction (PoT) connected to the server at the regional point, and from there to the central server. So even in remote areas, details of transactions at PoT can be fed into the main server using PSTN (public switched telephone network).

Product features

All the technology developers have some or the other USPs for their product. Mr Ram S. said iMFAST has been designed with unique features to address the rural environmental conditions (heat, dust and moisture, etc) and the target population (illiteracy).

It provides voice guidance in the local language for transactions and authentication.

Biometric authenticated transactions improve confidence levels among rural people. Lower cost, mobility, varied connectivity, identification, authentication and multiple applications are the USPs in a nut shell.

Mr Gupta said that use of NFC technology is its USP. One single phone can store data of around 50,000 customers. This includes four photos and 6-10 finger prints and multiple account transaction history up to five years of every customer. This can be used in both offline and online mode. “Here phone is like a micro branch,” he said.

Mr Khera said FINO has pieces such as biometric de-duping and unique identification number concept. FINO’s product covers customer from the doorstep till the actual hosting of accounts with proper MIS reports.

Most of these products carry out varied transactions. Mr Khera said that FINO’s product carries out transactions for savings, loans, insurance, remittances products. Payment of pension and National Rural Employment Guarantee Programme (NREGP) wages through smart card has begun in Karimnagar district.

Mr Ram S. said that iMFAST can make transactions such as balance enquiry, cash withdrawal, cash deposit and mini statement printing.

The application is being updated with various other features such as recurring deposit, card-to-card transfer (to own accounts), and card-to-card transfer (to other’s account). Remittance and fixed deposit are the other products planned for a later implementation, he said.

Scope for customisation

On the future for FINO’s product in the implementation of IT in rural banking, Mr Khera said that with more and more transactions being done by customers, the flow of customer information in terms of KYC details widens. It gives an enhanced representation of the customer’s requirements and usage. Since it is a shared resource the cost of transaction is not very high. The cost would come down with the number of a customer’s transaction increasing on a point of transaction device. This gives scope for financial institutions to customise services as per the rural masses requirements.

Mr Gupta said that he hoped NFC technology-based product to be present in around 800 live locations by the month-end.

Mr Ram S. said that around 70 locations will have iMFAST being successfully implemented by the end of 2007. On the cost of the product, he said that cost of the terminal is less than 10 per cent of the cost of ATM or setting up a rural branch.

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