The Pradhan Mantri Jan Dhan Yojana (PMJDY) was envisioned to provide universal financial inclusion to rural and urban households. The mission includes not only providing universal banking access to all households but also micro-insurance. The government and commercial banks have accomplished the remarkable feat of opening 12.8 crore accounts within the last six months. While this is a laudable achievement, a number of issues related to servicing these accounts, mostly in remote and far-flung areas, may need to be addressed.

Nearly 60 per cent of these accounts are in rural areas, implying that considerable infrastructural efforts could be required in extending banking, given their remote locations. Further, nearly two-third of these have zero balance implying, among other reasons, either lack of financial literacy or willingness to bank, probably because of distance from the branch or lack of confidence in business correspondents (BC). Before the PMJDY, there were 82 crore savings accounts in commercial banks with an outstanding balance of ₹18 lakh crore in 2013. The additional 12.5 crore accounts would add to the already substantial burden on branch banking by around 15 per cent.

Innovative solutions

To address the challenges from these new accounts, should commercial banks increase their staff by 15 per cent or employ more BCs?

A number of innovative solutions have been tried so far by different countries, including India, in terms of mobile banking which is currently one of the most widespread models followed in countries such as Kenya (M-Pesa) and Brazil. Another solution which has been tried, though in a limited way, is television banking (TVB).

TVB exploits television’s two-way communication property, associated with digitalisation and existing reach to provide banking services such as balance enquiry, teleshopping, account transfers, and so on. TVB has the potential to cater to a large subscriber base, educate people about the banking services/products and offer branchless banking services thereby promoting sustainable financial inclusion.

Countries such as China, the UK and Nordic nations have implemented TV banking. A recent report by the Asian Development Bank Institute makes this observation about the scale of growth in China: “…Chongqing-based Three Gorges Bank has worked with its area cable operator to deliver banking services via television... While this is a new service launched in early 2013…it will provide greater accessibility and more intuitive interfaces than personal computer banking, particularly for older urban clients.”

A Celent report illustrates how TV banking is not as popular as internet banking in Europe — 10 million users of iTV-based banking versus 30 million for internet-based users. However, it forecasts rapid growth of the adoption of this medium, given that one-third of the top 20 European banks offer some form of TV-based banking services. Nordic countries in particular have a very positive outlook for iTV banking. The Swedish Bankers’ Association predicts that in five years, 95 per cent of the Swedish population will be able to use interactive digital TV for banking. Thus globally, there has been interest in TV as a viable service delivery channel; however implementation in most cases is only in the nascent stage.

A promising solution

India has great prospects of financial inclusion when it comes to TVB. Currently the subscriber base for television in India is around 15 crore households, which therefore reaches around 75 crore people assuming an average household size of 5 members. TV is available to the complete family, including elderly parents and young children, while mobile phone is generally available with the earning member of the family. This clearly can supplement the mobile channel, which has 400 million unique subscribers. Moreover, the ease of operating and interactive interface may make TVB a very promising solution.

A sample implementation could be as follows: a dedicated digital channel for banking purposes can be provided with a split-screen feature. The input for the account holder will be provided in two steps — using a TV remote to enter the account number and unique PIN. While one of the split screens will have the options of possible transactions like PIN change, balance enquiry, balance transfer, and so on, the other part of would be dedicated to an interactive interface with a correspondent (pre-recorded) helping the account holder in the local language. A voice recognition interface with pre-set voice commands would be provided for the same.

Moreover, with the advent of rapid penetration of smart and internet-enabled TVs, real-time processing of queries could be enabled through cloud-based speech recognition software in the near future. The input provided by the user will be sent to the TV server, which will retrieve information from the respective banking server.

More advantages

There are several advantages of TVB for financial inclusion. The use of the local language will enable a more interactive environment for banking, and would help in increasing trust in the system in sharp contrast to BCs who are perceived as temporary salespersons because of the high attrition rate. Voice input will not only make transactions easier, but also provide greater security and authentication thereby reducing frauds.

There are connectivity problems with the mobiles and handsets that BCs carry but families ensure, even if through the use of inverters, that electricity supply for television is available. Finally, doing TVB in the comfort of the home will increase the overall adoption of banking habits, making financial inclusion viable. The technology for TVB needs to firm up and the government could allocate some resources to develop appropriate technology and undertake pilots to test the same. Once appropriate technology is achieved, TVB has the potential to serve the masses at low cost and mobilise resources for the formal financial sector.

Singh is RBI Chair Professor of Economics, IIM-Bangalore; Alai and Jhawar are PGP students working on financial inclusion