Branchless banking: Villagers in Kasaghatta, India, make cash deposits with a local bank representative, who confirms their identities with a fingerprint reader and a smart card. Such outreach efforts could complement cell-phone transactions by providing new ways to deal with cash.
On the day I visited, Muniyamma padded barefoot around her tidy one-room concrete home, where immaculate steel cookware was stacked in the kitchen area. A silver wedding ring encircled the second toe of her left foot; studs adorned both ears and her right nostril; a mint-green sari swathed most of the rest of her. Before long, Jayalakshmamma Doddarasaiah, a 22-year-old mother of two, arrived carrying her 17-month-old son, Mahesha. Jayalakshmamma wanted to deposit 100 rupees from a recent sale of ragi, a local crop similar to millet. She was in a hurry, as it was almost time to milk the cows in her extended family’s concrete-and-thatch compound two alleys over. Jayalakshmamma slid her smart card into a plastic slot on the side of Muniyamma’s white metal machine and, after some prompting from the audio interface, placed her left thumb on the reader. The ragi harvest had left her fingers cut and callused, so the machine was unable to recognize her. But other villagers who stopped by had no problems, and the technology is clearly widening their opportunities. For example, a 55-year-old village man named Karehanumaiah was able to deposit 150 rupees. Until early 2008, he’d never had a bank account or access to formal credit. Borrowing 1,800 rupees from an informal lender to buy a goat would have cost him as much as 10 percent monthly interest. Now he has a savings account and can borrow from his bank.
Such approaches have their critics; Swamy is one. He says that India could, in fact, become utterly cashless; a man like Karehanumaiah could be paid for his farm labor electronically and buy goods and services the same way. Given that many areas of India have no banking infrastructure at all, he argues, it makes no sense to try to build kiosks and machines. “Those are nonscalable models and very labor-intensive models,” Swamy says. “If he can do it in his village, he can do it in his pocket [with his cell phone]. That is our perspective.” Still, most experts say a wholesale changeover to electronic transactions is unrealistic, and that mobile banking will require some connection to the cash economy.
Either way, the technology is there; the issue now is creating the environment necessary to cultivate it. “First, it will take changes in regulation,” says CGAP’s Ignacio Mas. “Second, it will take a mind shift by the banks to see opportunities where they haven’t before. And it will take partnerships: how will the [telecom companies] and banks come together with companies like mChek and other vendors who can bring together the [retail] agents?”
Nobody has specifically proposed using cell phones for banking in Kasaghatta. But it is plain to see that in the village, all the elements are in place. Not long after watching Jayalakshmamma’s failed effort to deposit 100 rupees, I visited her home. The scene was one of bare-bones rural living; her parents sat on a floor of packed dirt, holding her daughter. Two cows munched grass nearby. Reaching the interior of the one-room concrete hut required passing through a thatched enclosure housing more cows. But it turned out that Jayalakshmamma’s husband, like Sabira Khanam, owns a cell phone. I asked Muniyamma how many people had bank accounts in the village, and the answer came back: 190 of the 700 residents. Then I asked how many owned cell phones. The number was 300, and counting.
David Talbot is Technology Review’s chief correspondent.