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Can the villagers spell A-T-M?

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2 March 2009
Gone are the days when only the rich withdrew money from ATMs in India. India has seen exponential growth in ATMs, with a cumulative annual growth of about 70% since 2000. During 2007-2008 alone, the number of ATMs grew by 28.4%. However, there has been a clear lack of symmetry in their spread. The ATMs in India are concentrated in urban areas, and penetration into the rural market has been slow and lethargic. Around 70% of India's population, with a literacy rate of about 60%, lives in the rural regions. To access the unbanked population, banks are looking to expand into the rural and semi-urban areas. With many of the rural population unable to read or write, how are banks tackling the problem of making the ATMs accessible to them? The Celent Report The Dragon and Tiger of the ATM Markets: China and India touches upon the usage of innovative channels like Biometric ATMs (with authentication through face, iris, and fingerprint recognition technologies) and handheld PDAs. As an update to the report, State Bank of India, the largest public sector bank, announced that it will be installing 150 biometric ATMs in the country by the end of March 2009. Other banks have installed biometric ATMs as proofs of concept at different villages all over the country. Most of these biometric ATMs work on fingerprint technology as the means of authentication. NCR and Diebold are the major players providing biometric ATMs in India. Other products like Grammteller, a low-cost ATM developed by IIT-M TeNet group and Vortex, have also entered the market and promise to significantly reduce the cost of operations for the bank. Despite such advances, some issues remain for the banks to sort out.
  • Connectivity. Without proper broadband penetration, banks will have trouble setting up ATMs in remote villages.
  • Energy. With many villages receiving less than eight hours of electricity per day, uninterrupted power is something that the banks need to think about
  • Maintenance. Remote villages will lack technical expertise to handle ATMs.
  • Security. Both the network security and the physical security of the ATM booths need to be handled.
The silver lining is that the rural population has been showing technological affinity for mobile and e-commerce. The process would be slow, but the banks should be able to reap the benefits over a period of time. How long? We will be there to find it out.

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