More than half the population of the developing world is financially secluded. Banks in these regions have taken several initiatives, such as rolling out biometric ATMs to bring down this number. For instance, Nigeria saw its first biometric ATM in February 2011. This cash machine, installed by First Bank of Nigeria, allowed the bank’s customers to identify themselves by their fingerprints. Recently, it also introduced the cardless ATM transfer service which does away with a bank account for conducting ATM transactions, making it easier for the unbanked to access financial services.
Several other banks in developing countries, such as Opportunity International Bank of Malawi, Turkey’s Isbank and India’s State Bank of India and Punjab National Bank, to name a few, also have biometric ATMs. Most devices identify customers by their previously scanned and saved fingerprints. (Other methods include face, voice, iris and retina recognition). Customers need only place their finger(s) on the scanner to authenticate themselves before conducting a transaction.
But, why have biometric ATMs at all when there is a cheaper, easier alternative channel of inclusion in mobile banking?
A key reason is that the rural poor are still not as tech-savvy as their urban counterparts; for some, even punching the keys is a problem. Then there’s the issue of security. Biometric ATMs score over mobile banking, by not only overcoming these challenges, but also making the banking process user-friendly with help features, including voice-based support in the local language and also visual graphics. Not just that, some of these machines also dispense social security payouts and other benefits. Best of all, the authentication mechanism is nearly foolproof.
While biometric ATMs may cost more than mobile banking, they are nonetheless a cost efficient option. For example, in India local vendors have brought down the capital cost of these machines. Also, because the ATMs are compact in size, they don’t call for a large real estate investment, nor do they cost much to run. Some are even solar-powered!
These factors and the encouraging acceptance by consumers (many State Bank of India rural ATMs see more than 200 transactions per day) have fueled banks’ plans to install more biometric ATMs. At this point, they do seem to be the quickest way to draw the unbanked inside the financial fold.
Related posts:
- BankInnovation: Now Credit Unions Can Use Video ATMs for Underbanked: Here’s How It Works | Bank Innovation http://t.co/USNRMinT #atms #branchbanking #banks
- India and the Race to Financial Inclusion
- Financial Inclusion Initiatives In India
Original Post: http://www.infosysblogs.com/finacle/2012/09/biometrics_atms.html
Having led mobile banking projects in Africa and South Asia, I think this is fantastic.
A few notes though:
- In some developing countries, the bank notes are worth so little that a few medium value transactions drain all of the notes out of the ATM. Also, poor note quality sometimes clogs up the machine. Having locals run it (rather than centralised cash management) will help alleviate this.
- Having helped service millions of customers, I have realised that when money is involved, people are really fast learners as long as things are kept relatively simple. So mobile banking itself can catch on really fast. People often confuse numeracy (primarily needed to navigate menus) with Literacy – numeracy is much higher. So training of customers has been hard, but not impossible!
- Agent commissions usually make up the single largest running expense of mobile banking deployments. To this end, having cash machines takes away a huge cost for cash-out transactions.