To lakhs of pensioners in rural Andhra Pradesh, bank means a kiosk with three equipment ? a mobile phone, a biometric identifier and a strip printer. Electronic bank branches equipped with these three devices are facilitating payment of two social services ? Mahatma Gandhi (earlier, National) Rural Employment Guarantee Scheme (MGREGS) and National Old Age Pension (NOAP) ? in many districts of the state.
Recipients don?t have to trudge to a distant bank branch, but can open their own bank account, make deposits and withdraw cash through a special GPRS ? enabled mobile phone and two supporting devices. In each district, several customer service points (CSPs) have been created by giving select women from local self-help groups a kit of the mobile phone and accessories. With these kits, they can process banking transactions electronically via real- time exchange of information with the bank?s database at the backend. ?Such services not only offer a cost-effective and convenient way of receiving payments but also serve to curb corruption among previous intermediary providers through improved documentation and transparency,? says Subhash Bhatnagar of IIM Ahmedabad. Bhatnagar had recently researched service delivery models of mobile phones and traditional Internet kiosks.
Zero Mass Foundation (ZMF) is the front-end provider of these services on behalf of the Andhra government, and its six partnering banks and the technology has been implemented by A Little World. The mobile phone being used in CSPs is enabled by a chip developed by NXP, which helps secure data communication between the phone and the RFID smart card using near-field communication technology. The biometric scanner reads finger prints, and a printer connects to the mobile phone using wireless communication.
The mobile, branchless banking experiment is gaining popularity. ZMF operates in 127 districts across 26 states in India. It has appointed nearly 6,000 CSPs, serving 15 lakh MGREGS payees and 70 lakh pensioners and nearly 70 lakh rural citizens who have opened bank accounts under the financial inclusion programme. The bulk of the accounts are in ten districts of Andhra Pradesh, but there is significant pilot- level activity in Meghalaya, Uttarakhand and West Bengal.
Such banking projects have come up as part of the Reserve Bank of India?s financial inclusion programme that permits scheduled banks to appoint business correspondents (BC) as bank agents authorised to open accounts and make deposits and withdrawals from a beneficiary account.
ZMF project is not the sole initiative in financial inclusion. Green Mobile Money Transfer, launched by Paymate, Corporation Bank and Tata Indicom, facilitates mobile money transfer for migrant workers. The service is available to migrant workers from Kerala working in Mumbai and Bangalore wanting to remit money back to friends and family in Kerala. This programme entails setting up no- frills bank accounts for customers needing to remit money, along with providing them other financial services that could include but are not limited to micro- credit, micro-insurance, direct government deposits and the like in the long term. Similarly, the ?Bank A Billion Initiative? of Grameen -Obopay ? a joint venture between Bangladesh?s Grameen Bank and US technology firm Obopay that operates in India ? aims to give the masses access to affordable financial services like cross-border remittances, money transfer, payments, savings and credit accounts.
?Mobile banking and mobile payments will act as a catalyst for achieving the finance ministry?s vision of ?One Bank Account per Indian??, says Deepak Chandnani, president-Asia and Africa, Obopay Inc. RBI?s plan envisages that the lead bank in each state should draw a roadmap by March 2010 to ensure that all villages with a population of over 20,000 would have access to financial services through a banking outlet by March 2011, for which board ? approved specific plans are to be in place by March 2010. Currently, only 40% of the population has bank accounts, 10% has life covers and 0.6% has general insurance covers.
These elementary banking models for the unbanked have tasted success in countries like Kenya, Uganda and South Africa. Insiders feel that m-government needs to find a place as an appropriate mode of delivery for certain services within the national e-governance plan framework. It is generally more expensive to operate an Internet kiosk in rural areas than in urban areas because of the need for a power back-up, problems of maintenance of computer hardware, and the lack of broadband connectivity and trained manpower. ?Typically, the cost of m-banking are a tenth of conventional banking and 40% of the e-commerce channel for a bank,? says Paymate co-founder and board director Probir Roy.
Also, mobiles will reach a much bigger chunk of the population. ?Our surveys show that 41% of the current bottom of the pyramid non-owners in India, Pakistan and Sri Lanka plans to purchase a phone within two years. In contrast, only 40% has heard of the Internet and only 0.8% has used it,? says Helani Galapaya of LirneAsia.
Clearly, mobiles can be used for disbursement of payments and for pre-and post-communication between citizens and government for services like issue of certificates and licences. ?M-payment of pensions and MGREGS wages is a worthy application that needs to be scaled up. However, it has been conceptualised and implemented by partners that do not have the authority and resources to alter policies, which will make a multi-way partnership work in an economically sustainable way,? argues Bhatnagar.
The biggest challenge is to deliver a mobile service to rural users that can not only be viable but be profitable at low levels of ?average revenue per user.? Only then can banking the poor become a rich proposition.