How India is using ATMs to aid the underbanked

By : Bryan Peddie

April 18, 2017 12:00 PM

Recent efforts in India have underlined just how important ATMs can be when it comes to improving financial inclusion and addressing the underbanked - two big challenges for the global economy. Up to two billion people around the world are underbanked, according to the World Bank, while more than 233 million people in India have never visited a bank. Only 74,000 of the 600,000 villages across the country have access to a bank.


Some of the recent initiatives to address these issues in India wouldn't have been possible without the flexibility and diverse functionality offered by modern-day ATMs, which clearly still have a key role to play in consumer banking in the digital age.


Repurposing ATMs as bank branches
The Reserve Bank of India (RBI) recently announced the findings of a working-group study that explored ways of improving financial inclusion by guaranteeing that banking services are available in all regions, particularly rural areas. One of the central bank's priorities is to ensure that customers can continue to access the range of features traditionally offered in-branch, rather than being entirely dependent on digital and mobile banking. This could be achieved by maximizing the functionality of ATMs to bring them on a par with branches.


Announcing the working group's findings, the RBI said: "In the light of the rapid developments in technology and associated digital and telecom revolution, banks are looking at alternative approaches to enlarge their footprints and reach out to the unbanked and under-served centers in remote areas in a cost effective manner. With a view to facilitating financial inclusion and providing operational flexibility on the choice of delivery channel, it was considered necessary to redefine branches and permissible methods of outreach."


One of the key changes India's central bank is making is the abolition of rules that only allow banks to position security guards at ATMs. This means other bank staff can be posted at cash machines to provide information and support for customers.


The RBI stated: "Any electronic kiosks or ATM cash deposit machines, if manned by banks' staff or business correspondents for providing limited customer-based banking services for their walk-in customers, should also be treated as a banking outlet."


Progress enabled by technology
Technological innovation has laid the groundwork for other encouraging developments in India's financial system, with Ujjivan Financial Services recently announcing plans to improve engagement with its unbanked and underserved customers through the deployment of ATMs with biometric features.


The machines will allow customers to access their accounts through the thumbprint linked to their government ID card, as well as offering EMV chip capability. Samit Ghosh, chief executive and managing director of Ujjivan, said the company's primary aim was to reach out to the unbanked and provide them with "easy-to-use banking services that will help them build a better life".


Meanwhile, the State Bank of India (SBI) and NCR recently finalized the country's biggest ever single order of ATMs. Valued at more than US$50 million and due to be completed over the next seven years, the deal will see SBI deploy 7,070 SelfServ 22e machines - backed up by software solutions and support services - across the country.


NCR has also been working closely with local vendors to ensure that Indian consumers can continue to access cash, following the government's surprise decision to withdraw all existing 500 and 1,000 rupee banknotes from the financial system. People will be able to exchange their old notes for new 500 and 2,000 rupee replacements over the coming weeks.


Prime minister Narendra Modi said the move was designed to remove cash that is unaccounted for, or 'black money', and tackle corruption, which he described as "the biggest obstacles in eradicating poverty".


In the wake of the unexpected announcement, Navroze Dastur, managing director of NCR India, told the Press Trust of India: "We will cohesively work with all parties involved like banks, cash-in-transit and other service providers to ensure consumers are not impacted in any way and things get normal in the next couple of days. We have created war rooms to design strategy and appoint people who will look at the developments in specific geographic locations."


With many challenges still to overcome, further innovations and partnerships like these will prove increasingly valuable for India and other developing nations striving to give all of their citizens access to banking services.

Bryan Peddie

Solutions Marketing Manager, NCR Financial Services

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Bryan is an ATM Hardware Solution Marketing Manager and is based at NCR's R&D Centre in Dundee, Scotland. Bryan has a specific interest in technology trends and how the role of the ATM and payments are evolving