Banking on biometrics
Most people tend to envision cutting-edge technologies first being used in major urban centers. However, rural areas are increasingly finding that miniaturized, mobile and wireless technologies can address important issues in areas that lack infrastructure or face other challenges – and help transform and modernize an entire nation.
One exciting example is taking place in Uttar Pradesh, India: Union Bank and technology partner FINO (Financial Information Network and Operations Ltd.) are using a combination of smartcards, biometric identification and mobile readers to bring banking services to the doorsteps of rural, often illiterate customers. “Biometric technology was initially intended to reduce security problems, yet fortunately, it has also become a great tool for banking the ‘unbanked’ in developing countries,” says Ravi Joshi, manager of business development at FINO.
Cards equipped with magnetic strips and signatures may be the most established solution for banking and credit transactions, but for many reasons they did not seem appropriate for rural India. As Joshi notes, “It is difficult for the rural and illiterate poor to transact through this mode.” Instead, a biometric solution that relies on fingerprints for authentication can provide secure solutions and open up modern banking to a much broader audience.
The solution which Union Bank and FINO created is centered on Java-enabled smartcards that store 32KB of information, including the customer’s name, date of birth, family members’ names, address, photograph and four fingerprints. Up to 15 different accounts can be stored on each card, along with the last 10 transactions for each account.
These cards can then be read by a variety of devices, including mobile PoT (point of transaction) terminals that include a thermal printer, LCD screen, onboard memory, card reader, fingerprint scanner and backup battery. Bank employees can use these devices to conduct transactions in the field, at consumer homes or businesses, and then upload the data to the bank’s core banking system via a standard phone line. Together, these constitute what is known as the “bank-on-the-field” making it possible to conduct transactions in an offline environment.
The initial trial, which began earlier this year in Uttar Pradesh’s Chandauli district, involved a three-step deployment process. First, bank representatives enrolled customers and gathered all necessary personal information, including taking their fingerprints. Second, the various technology components were coordinated, including providing account numbers, preparing the smartcards and readying the PoT terminals. Finally, these components were deployed in the field, with both customers and service representatives receiving training and encouragement to use the new solutions.
Since Union Bank’s core banking system is well-established and supports multiple customer relationships with various products across the institution, getting users comfortable with the technology was the biggest concern. Joshi describes “training of the field staff and logistics for carrying out the enrollment of the customers” as the major challenges during rollout. However, these issues were successfully addressed and 5,000 cards were issued as of May 2007.
This pilot project, along with similar initiatives from Andhra Bank and other institutions, are part of a revolution in banking taking place in India. The Reserve Bank of India has taken a particularly active role in driving the volume of electronic transactions throughout the country, and it expects the number of such transactions to double within three years, reaching 700 million or more per year.
This technology will have a particularly profound impact on the lives of the new customers, which banks can now easily – and securely – reach. “Access to affordable financial services, especially credit and insurance, enlarges livelihood opportunities and empowers the poor to take charge of their lives,” Joshi adds. “Such empowerment aids social and political stability.”
Including the rural poor in modern banking services will also encourage their inclusion in the economic growth that is taking place throughout India – and make that growth more sustainable and equitable. And it all starts with something as simple as the touch of a finger.
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