Targeting the Unbanked
Wireless technologies enabled banking infrastructure and functions will connect the remotest corners with the mainstream
Although financial inclusion of the unbanked population in the country is high on the development agenda of the government, but there are significant challenges in making it a reality. One of the key challenges is to address the gargantuan need for building the requisite banking infrastructure to enable the rural areas to access financial services. Obviously, such an effort requires large-scale capital investments that are not really an attractive proposition for the financial institutions.
Reaching the Unreachable
However, in the past few years, some novel initiatives undertaken by some of the microfinance institutions seemed to find a way out to address the challenge. They started appointing local youths as agents (commonly known as ‘ bandhus’) who served as a quasi ‘doorstep banking service representatives’ for the rural and unbanked populations. However even this model was fraught with its own set of challenges.
The key challenges were to keep the transactions costs low and immediate and secure reconciliation of accounts with the core banking network. A physical reconciliation of accounts is necessary, since rural banking involved a huge amount of paperwork, inefficient processes, a great deal of latency, and managing the logistics of a large human network that is used to reach out to the rural population. This adds up to huge cost overheads that are consequently passed on to the end consumer and defeated the basic premise of financial inclusion.
Clearly, the answer of all these challenges lies in adoption of the right kind of technology that enables people to remotely undertake secure transactions that immediately reconciles with the core banking network.
Introduction of Machine to Machine (M2M) Electronic Point of Sale (EPOS) to enable secure wireless transactions should be the answer to such a humungous challenge. Hence rural India needs robust handheld terminals that have highly secure integrated wireless modules, which enable the terminals to interact with the core banking network using the current GSM/GPRS cellular networks and also function in all types of weather conditions. The wireless modules that are required for banking should be more robust and able to have bi-directional speeds necessary to support a large number of transactions.
Advantages of Wireless Technology
Wireless technology significantly reduces paperwork, saves time, and enables
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field agents to concentrate on profit and other activities associated with microbanking and micro-insurance operations. The use of wireless is not just restricted to EPOS handheld terminals, it’s also being used to connect ATMS, which can be used to increase penetration of banking services in remote areas. Wireless technology enabled ATMS offer deployment flexibility as they do not have to rely on a copper based infrastructure. Cellular enabled ATMS can be placed wherever network coverage exists. This is of particular use to those people who do not necessarily live within a reasonably close distance to the nearest town with banking facilities.
Another major advantage of deploying a cellular enabled ATM is safety and introduction of remote monitoring capabilities. Also, wireless connectivity can also be used to monitor transactions that are surreptitious or irregular in nature and flag the system, which will help the authorities to take timely corrective measures.
Simultaneously, the ATM screens can double up as a digital signage kiosk in rural areas and deliver social messages on their screens. This way, people in the rural areas can be made aware of key issues that are important to their livelihood. The author is country manager, Telit Communications S.P.A India