Wireless M2M Technologies - enabling financial inclusion

December 08, 2011

While financial inclusion of the unbanked population in the country is high on the development agenda of the government, there are significant challenges in making it a reality. One of the key challenges is to address the gargantuan need for building the requisite banking infrastructure to provide financial services access in the rural areas of the country. Obviously such an effort requires large scale capital investments which are not really an attractive proposition for the financial institutions.


However, in the past few years, some novel initiatives undertaken by some of the Micro Finance Institutions seemed to find a way out to address this challenge. They started appointing local youths as agents (commonly known as “bandhus”) who served as a quasi ‘doorstep bankingservice representatives for the rural and unbanked populations. However, even this model was fraught with its own set of challenges.

The key challenges were to keep the transactions costs low and immediate & secure reconciliation of accounts with the core banking network. This is because itinvolved a huge amount of paperwork and inefficient processeswhich made a physical reconciliation of accounts necessary. It involves a great deal of latency and managing the logistics of a large human network that is used to reach out to the rural population. This adds up to huge cost overheads which are consequently passed on to the end consumer anddefeated the basic premise of financial inclusion.

In such a scenario, while it is imperative that you need more feet on the ground in the form of agents or bandhus, it is all the more important to find out ways and means to reduce the overall cost per transaction. Clearly the answer lies in adoption of the right kind of technology that enables people to remotely undertake secure transactions which immediately reconciles with core banking network.

Introduction of M2M (Machine2Machine) EPOS (Electronic Point of Sale) to enable secure wireless transactions should be technologies answer to such a humungous challenge. Robust handheld terminals which have highly secure integrated wireless modules which enable the terminals to interact with the core banking network using the current GSM/GPRS cellular networks. While there are many such wireless EPOS terminals in use for various applications, however the wireless modules that is required for this kind of an application requires being much more robust and should be able to have bi-directional speeds necessary to support a large number of transactions. The solutions should be able to highly reliable, secure, providing seamless mobility that is designed to build efficiencies into the transaction process. Aside of this the wireless modules used in the handheld terminals should be robust enough for most types of climatic conditions which one would encounter while operating in rural environments.

The use of these wireless terminals significantly reduces paperwork associated with micro-banking and micro-insurance operations. This in turn saves time for the field agents so that they can focus on acquiring new customers and sell multiple products which increases profitability and ultimately reduces costs for the MFI operators.

The use of wireless is not just restricted to EPOS handheld terminals, wireless connectivity is also being used to connect ATMs. This is yet another avenue which can be used to increase banking services penetration remotely. This trend is picking up in the less developed countries as there are significant advantages of using a wireless ATM terminal.

Using wireless technology enabled ATMs offer deployment flexibility as they do not have to rely on copper-based infrastructure. Cellular-enabled ATMs can be placed anywhere network coverage exists. This is of particular use, therefore, to those people who do not necessarily live within a reasonably close distance to the nearest town with banking facilities.

Aside of this, another major advantage of deploying a cellular-enabled ATM is of increased safety and introduction of remote monitoring capabilities. When ATMs are deployed in remote locations they are often exposed to the risk of been broken into and most of the times the entire ATM machine is stolen. In such a case if the ATM machine is fitted with cellular A-GPS technology, then the entire unit can be precisely tracked even if it is indoors. Apart from that wireless connectivity can also be used to monitor transactions that are surreptitious or irregular in nature and flag the system which will help the authorities to take timely corrective measures.

Another advantage of wireless ATMs is that of delivering content on the ATM screens as the ATMs can double up as digital signage kiosk. In rural areas such ATMs can be used to deliver social messages on their screens so that people in the rural areas are made aware of key issues that are important to their livelihood.

Clearly the success of India’s financial inclusion and micro-finance industry vision relies a lot on the choice of technologies used that reduce operational costs, transaction latencies and most importantly connect the last mile to the core banking and financial networks.


- Ashish Gulati is Country Manager, Telit Communication S.p. A. and can be reached at Ashish.Gulati@telit.com. Telit is a leading global wireless technology company. It develops, manufactures and markets GSM/GPRS, UMTS/HSPA, CDMA and short range RF communication modules such as Zigbee and RF  module with full IPR for machine-to-machine (m2m) applications. The Company’s technologies and products enable other electronic devices and equipment manufacturers to utilize cellular infrastructure to relay and accept information without human intervention. m2m applications therefore enable machines, devices and vehicles to communicate via wireless networks.


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