The socio economic development of rural India is stalled due to the lack of sustainable Information & communication technology channels to bring them micro financing options. Such rural areas need to be served on the doorstep as they do not have access to modern banking facilities. It was decided that technology needs to be used to reach out to rural areas where brick-and-mortar banking is not possible.
Thus, Bank of Baroda, under the initiatives taken for Financial Inclusion (FI), started looking for a cost-effective technology solution to be implemented in rural areas and amongst low income groups. For this, they wanted to partner with an IT vendor who could provide a secured smartcard based solution that could be easily integrated with the bank's existing core banking systems and also had provision to support cash deposits/withdrawal, loan, funds transfer, mini statements, balance enquiries and other third party products such as Insurance, Pension etc.
Company Scenario |
Before deployment: Rural areas around the country needed to be served at the doorstep as they do not have access to modern banking facilities.
What was deployed: The bank has come up with a model that incorporates biometric signatures, where executives carry Point of Service (POS) devices for villagers to carry out transactions on the spot and in real time. After deployment: Since the implementation of the project, over 1000 villages have been covered in the Financial Inclusion drive by the bank in just a couple of months. Moreover, the bank has allotted over 700 more villages to be covered under this project. Other impressive impacts of the project include statistics such as nearly 2.4 lakh new accounts have been opened within a year. |
Implementation partner: HCL Infosystems Ltd. |
The Deployed Solution
The bank has come up with a model that incorporates biometric signatures, where executives carry Point of Service (POS) devices for villagers to carry out transactions on the spot and in real time. The bank's implementation partner, HCL, provided each BC (Business Correspondents) with supporting technology that provided "financial services in a box" - a small point-of-sale terminal that included smartcard read/write capability, biometric customer authentication, a printer, and a speaker. These work through using GRPS technology. Also, mobile vans which are connected to the banking system through CDMA technology service selected villages, where citizens can perform any online banking through the hardware hooked up in the van itself. Account opening, as well as other transactions, can be done using just the facilities of the minivans. The bank is operating five mobile vans operating in Gujarat, Bihar, Goa & Uttar Pradesh. The bank has entered into agreement with CSC e-governance Ltd to enroll their CSCs in their service area as BCAs on KIOSK platform under FI.
The Challenges Faced
Needless to mention, there were several challenges that Bank of Baroda faced to roll out this project. One of the top challenges was identification of suitable corporate BCs (Business Correspondents) for the rollout of the FI Project. Also, another big hurdle was the state of network connectivity in the rural areas of the country. Another key challenge was the arrangement of uploading of humongous customer data into Bank's database from these rural locations.
Project Head's Perspective: Kishore Kharat , GM-IT, Bank of Baroda |
How did you convince the key stakeholders (management, seniors, etc) for rolling out this project?
Financial inclusion is delivery of banking services at an affordable cost to the vast sections of disadvantaged and low income groups. As financial inclusion has gained high priority on the Government, RBI & Bank's agenda convincing the stakeholders was not very difficult for us. In addition to the compliance to government guidelines FI activities also gave us business opportunity and helped us tapping the unbanked areas through extended coverage. Our Banking products are being offered thorough technology provided by HCL and it is giving us opportunity to serve the citizens at affordable cost. As the technology Service Provider, HCL has provided us robust and error proof technology. How did you overcome user resistance for using this deployment? The major strategy was to make the user aware about the benefits they will be getting after their accounts opened under FI. The account was opened with out any initial deposit and no charges are being levied on them for maintaining the account with the bank. There is no requirement for them to maintain a minimum balance in the account. We have organized various financial literacy camps in the villages with the help of our branches and the local Gram Sarpanch or Gram Sevak to motivate the villagers and make them aware about the benefits of banking systems & products. The major advantage to the villagers who are beneficiaries of any type of Government Scheme such as scholarships, pensions, MG NAREGA wages etc. can withdraw the money in their village at their door step, rather than traveling to the nearest branch with could have been 5-20 K.M. from their village. Also, with biometric authentication the safety factor for them is sure in addition to removal of the hassle of filling up forms for withdrawal and depositing money into the account. Hence, the villager has a dual advantage of hassle free banking facility with in the vicinity of his home and he will be saving his time and money spent to travel to the branch. What is the next big IT project that you're working on? Bank has prepared a board approved plan to cover around 22000 allotted to us as our service area villages in the next three years i.e. 2013-16. With the help of technology we are planning to scale up the FI initiative to all these villages. We have launched a low cost Micro-insurance product through our BC network and are planning offer several other products through technology platform. We envision expanding our FI initiative through innovative models and customized products for the financial inclusion customers. |
Result of the Implementation
Since the implementation of the project, over 1000 villages have been covered in the Financial Inclusion drive by the bank in just a couple of months. Moreover, the bank has allotted over 700 more villages to be covered under this project. Other impressive impacts of the project include statistics such as nearly 2.4 lakh new accounts have been opened within a year; the operational cost of running the branches was significantly reduced by 70% vis-a-vis brick-and-mortar model; transaction verification has been secured via biometric finger printing for the uneducated people; and it has also reduced load on bank's branches for distribution of various scheme payment by the government (pension, MNREGA-Mahatma Gandhi National Rural Employment Guarantee Act.
And since this project is also on-going by nature, all government schemes such as MNREGA, OAP(Old age pension), Women welfare schemes, subsidies like- LPG, kerosene, ration card privileges etc. can be offered to rural population / low income group people. Going further, all the payments for the scheme run by the government will have to be routed through this channel to avoid money laundering, reduce corruption etc.
As for societal benefits, this project has served well in creating value for the poorest of poor in the country; and is to quite an extent a means to diminish the digital divide between the urban and rural/low income groups. On a larger perspective, this project envisions improved livelihood of people and creation of a bridge between people (rural/low income) and government welfare initiatives for rural population.