Financial Inclusion Technology

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TECHNOLOGY FOR FINANCIAL INCLUSION
N D RAO
Indian Institute of Banking Finance
JAIPUR 16 DEC 08
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TECHNOLOGY FOR FINANCIAL INCLUSION Why do we need
to talk about it

• Extremely large target population
• Current Banking systems service merely 33 of
  total population
• Customer profile different
• Very low Literacy levels and Awareness
• Business Processes need re-engineering
• Existing processes can not produce desired
  results
• Independent Delivery Agencies
• Deployment of Business Correspondents/
  Facilitators
• Latest trends in Technology
• Cost-effective state-of-the-art technologies are
  available today

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TECHNOLOGY FOR FINANCIAL INCLUSION Profile of
Financial Inclusion Technology

• Capture Customer details and facilitate Unique
  Identification
• Provide non-repudiable and user-friendly
  authentication mechanism
• Ensure reliable connectivity upto the last mile
• Offer Financial products tailored for the target
  group
• Support comprehensive Credit Information System
• Support use of multimedia and innovative User
  Interfaces
• Work in rural environmental conditions
• Low Capital and Maintenance costs

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TECHNOLOGY FOR FINANCIAL INCLUSION Financial
Inclusion Processes

• CUSTOMER ACQUISITION
• Identification
• Enrolment
• Account Opening
• BANKING TRANSACTIONS
• Cash Deposit
• Cash Withdrawal
• Government Benefits/ Payments
• Transfers
• Remittances
• Micro Finance
• NON-BANKING TRANSACTIONS
• Micro Insurance
• Investments
• Value-added Services

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TECHNOLOGY FOR FINANCIAL INCLUSION Card Based
Identification

• Why Cards?
• Choice of Cards
• Magstripe Card
• Contact Smart Card
• Contactless Smart Card
• Plain PVC Card
• Plain Laminated Card

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TECHNOLOGY FOR FINANCIAL INCLUSION Card Based
Identification
MAGSTRIPE CARD
Data laid out on a magnetic strip at the back of
the card in three tracks. A magnetic stripe card
may have any of these tracks, or a combination of
these tracks. Track 3 is used for financial
transactions. ISO Standards are used for encoding
the data in the tracks. Approximate Cost Rs10 -
Rs15
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TECHNOLOGY FOR FINANCIAL INCLUSION Card Based
Identification
CONTACT SMART CARD
Smart Cards have embedded microprocessor in a
contact area, comprising several gold-plated
contact pads, which can store and process data.
They can receive input which is processed by
way of the ICC applications and delivered as an
output. Capacity 8K 64K Approximate Cost
Rs75 - Rs120
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TECHNOLOGY FOR FINANCIAL INCLUSION Card Based
Identification
CONTACTLESS SMART CARD
The chip communicates with the Card Reader
through RFID (Radio Frequency Identification)
induction technology. These cards contain an
Antenna but not gold-plated contacts and require
close proximity to the Reader to complete
transactions. Capacity 1K - 4K Approximate
Cost Rs125 - Rs200
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TECHNOLOGY FOR FINANCIAL INCLUSION Card Based
Identification
PLAIN PVC CARD PLAIN LAMINATED CARD
Plain Cards which can carry Customer
Information, a photograph, hologram and a barcode
if necessary Approximate Cost Rs2 Rs10
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TECHNOLOGY FOR FINANCIAL INCLUSION Authentication

• USER/ CUSTOMER AUTHENTICATION
• WRITTEN AUTHORIZATION
• Signature/ Thumb impression
• PIN BASED AUTHORIZATION
• What you have - What you know
• BIOMETRIC AUTHORIZATION
• Fingerprint/ Iris/ Voiceprint

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TECHNOLOGY FOR FINANCIAL INCLUSION THE RIGHT
CHOICE

• OPERATIONAL CONSIDERATIONS
• COST CONSIDERATIONS
• REGULATORY CONSIDERATIONS
• USE SMART CARDS OR CARDS SMARTLY?

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TECHNOLOGY FOR FINANCIAL INCLUSION CONNECTIVITY
ISSUES

• OFF-LINE/ ON-LINE/ REALTIME
• INTEGRATION WITH BANK SYSTEMS
• INTERNET/ V-SAT/ MOBILE COMMUNICATION
• LAST MILE CONNECTIVITY - GROUND REALITIES

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TECHNOLOGY FOR FINANCIAL INCLUSION HANDHELD
DEVICES
A simple Handheld device
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TECHNOLOGY FOR FINANCIAL INCLUSION HANDHELD
DEVICES
A Handheld device with Value-added Services
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TECHNOLOGY FOR FINANCIAL INCLUSION INNOVATIONS

• MOBILE TECHNOLOGY
• 2-D BARCODES
• BIOMETRIC LOW COST ATM
• SUPPLY CHAIN SYSTEMS

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TECHNOLOGY FOR FINANCIAL INCLUSION LOW-COST ATM
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TECHNOLOGY FOR FINANCIAL INCLUSION A Typical
Architecture
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TECHNOLOGY FOR FINANCIAL INCLUSION
QUESTIONS