2. The Needs & Enablers of Modern Banking People Financial Institutions Technology Save for a rainy day Advent of micro-computers Diffusion of Internet Automation in related functions of other businesses Evolution of Smart Card Technology Mobile technology Cash on the go Bank in the wallet Anywhere anytime banking Reduce operational costs High value added services Product bundling & Cross Selling Piggy Banks Traditional Banking Modern Banking (online) Interest Protection against theft Transfer large sums of money Trade Instruments Interest Service Charges
3. Banking & Technology Driving further technological innovation Technology Enables Impact on Business
6. The Growth of ATMs - India 22110 25247 34547 44857 20 % 20 % 37 % 30 % 2005-06 2006-07 2007-08 2009-10 2010-11E > 60000 Source – CyberMedia Research DQ Estimates
7. Adoption of CBS & RTGS - India Source – Report on Trend & Progress of Banking in India – RBI * - As of March, 2009 # - As of August, 2009
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9. % of Un-banked Rural Households Source - Rural Financial Access Survey (RFAS – 2003 ) Landholding Marginal farming households < 1 acre Small farming households = 1 to 4 acres Large farming households > 4 acres
10. Penetration of Banks & ATMs 1 Bank Branch for 20 Villages Number of ATMs per million of population (Mar-2009) Year Average Population Served by a Bank Branch in India (Approx.) 2005 16000 Source: ASSOCHAM’s Report on Investment Prospects in Indian Economy (2008-09) Global ATM Market & Forecasts 2013 report published by Retail Banking Research (RBR) 6,34,321 Villages 32,227 Rural Bank Branches Country Number Country Number Country Number Country Number India <40 China 98 Singapore 419 South Korea 1600
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13. Challenges in Rural Banking & Viability But Banks & BCs are unable to operate a profitable model based on large number of tiny accounts and micro-transactions Revenue Cost Gap Large & Scattered Rural Population Financial Illiteracy & Unfamiliarity with Technology Inadequate Infrastructure – Power, Connectivity etc. BC/BF Model Simplified KYC Norms “ No Frills” Bank Accounts
16. Mobile Subscribers Vs Bank A/c Holders (Rural) Rural Mobile Subscribers (in millions) Total Number of No Frills Accounts (in millions) 280 136 56 320 112 40
24. Framework for delivery of Basic Financial Services Back End Once a Micro Account is opened, the citizen can use his mobile phone to perform basic transactions Alternatively, citizens who do not have a mobile phone or find it inconvenient to use one, can approach a BC to perform a transaction An Account Mapper that intelligently identifies the bank & micro account associated with a mobile number A central payments switch to route the transaction to the issuing & receiving bank A shared depository for hosting and maintenance of micro accounts Middleware Front End Micro Account s in the CBS of Banks or Outsourced Partners of Banks
31. Early Data on Viability of BC model for Banks Revenue per client is only one-fourth of the total Cost Source: Business Correspondents & Facilitators - Pathway to Financial Inclusion? ( Retreat on the BC Model – CAB, RBI, ACCESS)
