Technology Can Speed Up Financial Inclusion: M.A. Nayagam, Canara Bank

How can technology help in the financial inclusion of millions of unbanked people?

With the help of technology, implementation of financial inclusion can be done in many areas as millions of people live outside cities. Technology is going to be used by business correspondents who are the front end-guides, to help consumers avail money. The business correspondents guide the consumers on how to operate the system.  To create faith in the financial system, the banks need to have devices which are user-friendly. Without technology, it is impossible to take the idea of financial inclusion forward.

What kind of technological innovative approach has Canara Bank implemented to meet the requirements of people in the unbanked sector?  

In 2006, we implemented the concept of financial inclusion in a village at Devanahalli, Karnataka. Canara Bank made a study with the rural people to see how much faith they have in financial inclusion. Based on their feedback, we appointed a local person as a business correspondent.  We trained him with the procedures and started to develop on technology. We found a handheld device, where application can be loaded and devised a smartcard to store the fingerprint of the person.These finger prints were stored in the datacenter which was later used to validate the identity of the customer. To make sure the person understands the operation, we introduced voice into the system and made a library of words and figures. Once the matching is done, the system gives an option to withdraw or deposit amount.  The business correspondent, then punches the amount and authenticates the voice.  

Also, we introduced an ATM in the village where a person can use a smart card in the absence of a business correspondent. Canara Bank trained 150 beneficiaries.

Till now, we have covered 15,000 villages and employed 3,500 business correspondents. With so many financial inclusion initiatives taken by the government, Canara Bank’s target is to cover one crore villages across the country.

What are the challenges you faced while implementing this solution and how did you overcome them? 

Mobility was a big problem because business correspondents were on the move and had to change villages every two hours. We provided a vehicle, so that they can easily move around.  Charging the battery for the device used for thumb impressions and smart cards was becoming difficult. Subsequently, we created a battery bank and installed it in the vehicle.  But tracking 3,500 correspondents manually, proved to be cumbersome. Though mobile connectivity in villages was a problem, GSM connections have been the solution.

What are the technology capabilities banks must have to ensure financial Inclusion?  

At the moment, Canara bank has six crore accounts and with Pradhan Mantri Jan Dan Yojana, we have opened another 60 lakh accounts. As business correspondents are outside the core banking system the data collected by them should have the capability to seamlessly integrate with the core banking solution of the banks.

Moreover, the devices used in the villages should have a redundancy built in.  They should have an alternative plan in case the device becomes dysfunctional. Banks need to lay paramount focus on protecting the data. Also, banks should ensure interoperability. The business correspondents should also be in a position to operate other bank accounts of the rural people.