‘Tech-driven approach will help achieve financial inclusion’

Business Line, February 16, 2009

The Institute of Development and Research in Banking Technology (IDRBT) is planning to develop common standards for banks in achieving financial inclusion.

An important objective of the institute, set up by the Reserve Bank of India, was to leverage technology for speedy achievement of financial inclusion, Mr B. Sambamurthy, Director, IDRBT, told Business Line.

“One of the primary challenges in financial inclusion is to reach over 6 lakh villages in India. Setting up a branch in each of these villages would be impossible due to operational costs. A technology-driven approach will help solve the problem,” Mr Sambamurthy said.

Though almost all public sector banks are engaged in financial inclusion initiatives, most of the projects are pilots which need to be replicated on large scale. Technology is the best option.

“You just take a smart card, for instance. Unlike the plastic cards we are using now, a range of transactions can be done with a single smart card. As the end-customers could also be illiterates, biometric applications are required,” he said.

RE-INVENTING

The focus of IDRBT, started over a decade ago, has always been enhancing the customer comfort. “We have no difference between the public, private and foreign banks. A customer of any of these banks is important to us,” he said.

The institute, which is an apex banking technology centre in the country and only one of its kind in Asia, is working on “re-inventing” itself to the fast-changing technology needs of the banking industry.

“We are working on many things. As a research center, we always think ahead and be ahead of banks on the technology front,” Mr Sambamurthy, who took over as head of IDRBT a couple of months ago, said.

MINDSET

The ‘Indian mindset’ is, in a way, both receptive and resistant to technology change in banks. “In rural areas, we are finding a lot of interest, especially from women using smart cards. It is amazing to see how women carry it by tying it to their sarees,” he said.

However, there is also some slow-acceptance to switching over to electronic transactions in a broader context which is reflected in relatively lower participation of public sector banks in facilities such as National Electronic Fund Transfer (NEFT).

“At present, approximately 65 per cent of transactions are based on NEFT. This is because of customer preference. Because it is the customer who has to take a decision of using a technology platform,” he added.