Bringing M-Banking services to the fingertips of rural India

Mobile banking services emerged as a tool to facilitate transaction of money for bank customers in developed countries involving domestic and international remittances, mobile payments such as merchant payments or payment of utility bills. However, in recent years, its scope and coverage has widened quite significantly.

Mobile banking today has become very popular in developing world as well to provide better services for existing customers as well as acquire new ones who are living in remote areas and where even the nearest bank could be quite far off. It is because of this reason that this mode is being adopted by various non-conventional sectors in recent times. Microfinance institutions are also realizing that using mobile financial services is much more efficient and convenient, and much less costly than the traditional model when it comes to delivering microfinance services.  

The microfinance institutions in India have played an important role in bringing the low income people into the mainstream of financial services. However, there is still a huge population in India which is yet to be tapped for microfinance services, and one of the possible reasons may be the on the part of microfinance institutions not utilizing the modern technology. 

Microfinance institutions face two key barriers to achieving scale. One is the operational inefficiency and the other is high operational cost. Both these factors are responsible for high interest rates. Most microfinance companies are concerned about ways and means through which infrastructure and operational costs can be reduced, and branchless banking is one such viable solution for them.

Looking at the state of development of mobile technology as well as a greater affordability of mobile devices including smart phone as compared to the situation a few years back, mobile money has great potential to help microfinance institutions transform their business model and achieve economy of scale. This is particularly true in a developing country such as India, where a person from lower economic strata is more likely to have a smart phone than a bank account. And the rate at which mobile subscription is increasing day by day, it is only a matter of time before every company adopts mobile banking as its principal mode of financial inclusion.

M-Banking could mean better reach to poor and rural people more efficient operation which may allow MFI’s lower loan costs and higher repayment rate. Mobile banking that provides banking facilities in an efficient and convenient way can play an important role in facilitating microfinance services to population so far out of the system. Adopting M-Banking platforms by microfinance institutions as an alternative delivery channel can facilitate greater outreach to remote areas, reduce costs and enhance existing customer convenience. It can be used for loan repayment, checking account balance and voluntary savings deposits. M-banking can provide microfinance clients greater flexibility by managing their payment and deposits right at their fingertip.

Mobile phones have not only the potential to develop more cost-effective microfinance business models, but can also provide an opportunity to expand financial inclusion by way of reaching the unbanked. Moreover, the mobile phone can also improve existing services through greater transparency and more convenient access to various services outside the normal banking hours.

Mobile banking has been adopted very successfully in some countries, such as Kenya. However, while mobile banking was a rapid phenomenon in Kenya, its adoption rate was painstakingly slow in even the neighbouring countries of Kenya, such as Tanzania, Rwanda and Uganda. In India, a few pilot projects focusing on mobile banking services in microfinance were carried out in a few states. But, the key learning from such experiments is that every mobile financial services package has to be tailored not only to the country, but to the region as well, and it is even more important in a country like India having so much of linguistic and cultural diversity resulting in vastly different profile of the clients in different geographical regions.

Before the market is cluttered by the companies getting involved in a cutthroat competition, the right time is now for the microfinance institutions to adopt this as the principal tool of their business. The need of the hour is to align with mobile app development companies, get the right apps for their products and get to their customers before others start doing it. It is important to seek partners who can help them shift their operations seamlessly to the mobile devices through robust mobile apps.

The services offered by Anant Computing can prove to be the game changer for this industry. Anant Computing Platform has been developed by the company that facilitates creation of mobile apps that can work on both feature phones as well as smart phones, and the apps can run smoothly even offline. It is possible to develop rich apps with size less than 1/10th of usual mobile applications, and are designed to run perfectly on low memory phones. The platform also allows personalized on-screen keyboards in various Indian languages and the user gets to choose the language they prefer from the same app.