Bank inside a Phone

Yes you read it correctly, A Little World (ALW), a Mumbai-based company, which has come up with a unique idea: turning a regular mobile phone to play the role of a bank’s branch.

Faced with the challenge of creating affordable solutions to enable penetration of banking in rural areas, ALW came up with this solution. The equipment costs not more than Rs 30,000 (pounds 400 or $700) through which a bank’s branch becomes functional and offers facilities like depositing/withdrawing money, electronic money transfer, crediting of pension money and also having an online passbook.

Other peripherals that make up the branch are a printer-cum-fingerprint scanning machine, cash box to store upto Rs one lakh in cash and a high resolution camera. The mobile phone can store data of upto 50,000 customers including the entire identification profile comprising a picture and six fingerprint templates among other details.

A big opportunity was unlocked after RBI announced a new policy initiative to allow banks to do business using the ‘business correspondent’ model. Under this, a bank ties up with third parties like ALW’s clients Zero Mass to conduct business in far-off areas on behalf of the banks. All the mobile phones have latest security features and are connected to ALW (the technology and backend partner for Zero mass) servers using GPRS or EDGE technology. The ALW server is in turn connected to the core-banking server of the client bank due to which a transaction is made possible just like it happens in a conventional way.

The critical necessity to opening a branch though is the availability of mobile coverage at the villages and ALW has tie ups with all the major GSM mobile phone operators in the country. Zero Mass currently has tie ups with 24 banks to operate their banking operations in remote and unserviced areas across 18 Indian states.

Christened as ‘Zero Platform’ for branchless banking based on mobile, a branch is typically set up in the village grocery store or panchayat office. Peripherals like the printer and camera are connected to the mobile phone using Bluetooth technology and the entire system has been designed so that it can function even during power cuts, which the villages often experience. “The selected handset (either Nokia or Motorola) has features for encryption and decryption of data through which we can make use of a public medium like GPRS to send data,” says ALW’s Chief Technology Officer Anurag Gupta.

In a short span of a year, ALW has set up over 2,800 branches for Zero Mass across the country and has plans to increase the total number of branches to 5,000 by December this year. The accounts are opened free for a period of 10 years and Zero Mass currently boasts of over 12 lakh accounts with around 20,000 added everyday. “The mobile phone operated branch is a great idea. I fail to understand why others in the same space like us have not made use of existing technologies to come up with feasible solutions like this which offer exponential growth opportunity due to low capital expenditure,” says Gupta.

Zero Mass’s motto is to increase electronic transactions like payments and crediting of accounts , Gupta says. Keeping this in view, customers are encouraged to use the account for electronic money transfer, insurance premium payments, depositing of National Rural Employment Guarantee Scheme (NREGS) wages and pension funds in the account. As a pilot project, mobile recharge payments are also being done through Zero Mass-operated branches.

ALW gets a certain amount as technical fees for rendering its services while Zero Mass gets a percentage as commission for each deposit and withdrawal transaction made at the branch. Gupta, also a director at Zero Mass, says the way forward for the company is to make use of the platform for more profitable transactions offering bigger commissions such as mobile phone recharges and railway ticket booking.