How Technology Can Help With Financial Inclusion Of Rural India

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Signzy

9 min readApr 5, 2021

How Technology Can Help With Financial Inclusion Of Rural India

Indian economy comprises almost 60% of the rural population which means the majority community. Technological innovations in the banking sector directly affect the rural population in India. The understanding and utilization of digital banking services is a key factor to the success of a digital economy. India

As per the IMF data for 2015, there were over 1.2 lakh bank branches in India. RBI data as of June 2016 similarly displays over 1.3 lakh bank branches in India. The financial inclusion drive in India has contributed to the grand success of opening bank accounts. In Dec 2017, a total of 30.71 crore accounts were opened under Pradhan Mantri Jan DhanYojana (PMJDY) has been seen. This includes 18.05 crore accounts opened in rural/semi-urban areas.

Backdrop For Boosting Digital Economy In Rural India

India has more than 75% of the country’s population residing in rural areas. Therefore India is planning to achieve

The number of connected rural customers is anticipated to extend from 120 million in 2015 to 400 million in 2021.
Over ninety-three individuals in rural Asian nations haven’t done any digital transactions. So many schemes of the government have been introduced.

Major Challenges In Banking For The Rural Population

Access to financial services is crucial for development in the rural sector. Extending financial services to low-income households is a priority. Some of the factors affecting access to financial services are as follows:

Place of living: Most commercial banks function only in urban commercial zones. The main reason is because these banks set up their branches in profitable areas. Hence, people living in rural areas find it difficult to access financial services.
Missing infrastructure in rural and remote areas: Distance or access to a formal banking outlet is a major roadblock. This applies to both consumers and financial institutions. On one hand, financial institutions face issues like internet, electricity, and other facilities. On the other hand, they also find standalone bank branches as a non-viable option. This is due to high costs and other factors. Consumers, as a result, do not have access to proper bank branches and financial services at their nearest location.
Rising unemployment and low wages: Financial prominence plays a key role in financial services. In India, not many people consider using financial services due to low levels of income and unemployment.
Service charges: High bank charges discourage people from using financial products. It also creates a lack of trust among people using banking and financial services.

While 80% of the Indian population may have bank accounts, almost 45% of such accounts still remain inactive. This is due to a combination of the above factors.

Benefits Of Digitalization

Banking has started to take a more digitized approach in modern times. Banks are focusing on creating a more efficient service for people. They are producing advanced methods for a more user-friendly front-end service.
Through this mode of banking, paying bills online is done much faster and better. This is because all our information is monitored through our banking applications.
Digital banking also enables us to verify our account history and transactions anywhere.

Technology To The Rescue — Banking-As-A-Service

Information technology has had an enormous effect on the banking sector. Ex: The development of more flexible payment methods and more-user friendly banking services. Internet banking involves consumers using the internet to access their bank account. It is used to undertake banking transactions.

At the basic level, Internet banking can mean the setting up of a web page by a bank to give information about its products and services.
At an advanced level, it involves the provision of various facilities. These are accessing accounts, transferring funds, and buying financial products or services online.

Given below are some instances of how technology can help improve financial services.

Artificial Intelligence for BANKING-As-A-Service [BaaS] to Rural Markets

The unbanked population could mostly converse in the local language. As such, agent banking has been flourishing. But what if an AI-based app could help you provide answers to all your banking queries via voice?

This is one of the quick examples of voice-assisted payments that could use Artificial Intelligence. It also helps remote workers to locate the nearest ATM or cash counter to collect money in case of emergencies.

Wallet.AI is an AI-based smart wallet that monitors users behaviors and spending habits. It then alerts and educates individuals on how to increase savings by making spending wisely.

AI can also be used to transform physical banking operations into a digital one. Signzy is an Indian fintech company that simplifies KYC & onboarding processes. It works with banks, NBFCs, other financial institutions. Signzy uses AI-based solutions like Face Match, Document OCR, and Liveness Check to deliver highly robust accurate products. We are currently serving more than 90+ financial institutions including 4 major banks in India.

Blockchain For BANKING-As-A-Service [BaaS]

Blockchain has unique characteristics. It enables financial institutions and fintech firms to modify their products and services. This leads to the adoption of services by the unbanked and underbanked.

In India, one of the leading banks, State Bank of India has announced a new initiative Bankchain. This would allow data exchange across banks. It also acts as a preemptive measure for reducing fraud and duplication.

Cloud Computing and Cloud Robotics As A Means For BANKING-As-A-Service [BaaS]

With data stored and accessed via Cloud, it offers benefits to banks in terms of cost and access. Most of the digital banking services across the world are using the power of cloud computing and providing banking to rural people.

Some of the leading banks in India like ICICI Bank, HDFC Bank have started using cloud technology. They are boosting the financial health of the digital economy in rural India.

The integration of Cloud computing with Robotics is an innovation in recent times. It is serving the rural population with time-saving, higher-quality offerings. Cloud Robotics Banking could allow the natural flow of data. Backed up with e-KYC, this makes account opening smooth and hassle-free.

In India, ICICI Bank has launched Smart Vault. It is an excellent, first-of-its-kind locker in India that is designed to bring human intervention to a minimum. SmartVault is a progressive breakthrough in banking technology in India. Users can access their locker at any time of the day or night and even on bank holidays.

Biometrics Enabling BANKING-As-A-Service [BaaS]

Biometric technology like fingerprint and iris scanners are making banking services accessible to many first-time users. The Indian Aadhaar based biometric authentication is enabling users to avail of loans instantly.

Fingpay, a product-based startup from Indore, is using the Aadhaar ID and biometric authentication to allow merchants to process digital payments from individuals who do not have a credit card or digital wallet.

Signzy uses Aadhar based biometric authentication to easily authenticate the identity verification process. This makes customer onboarding faster and more efficient.

How Does Signzy Contribute to Transforming Rural Banking Services?

Using the power of AI, Signzy has made a significant impact on the rural economy. Our products help customers in rural and remote areas open an account in any bank without having to visit the physical location. This reduces the cost and time required for travel to urban areas to complete the account opening process. It saves paper costs, manpower costs and makes the banking experience for rural customers hassle-free.

Customers in rural areas can upload their bank documents for verification with our KYC technology. This can be easily done from the comfort of their homes. It saves the need to submit cumbersome paperwork as well as saves the time required for the KYC verification process. The estimated time for KYC verification is roughly a few hours as opposed to a matter of days.

One example of this is Kaledofin which is focused on rural customers for mutual fund investments. They have been able to grow over 16 times using our digital KYC process. The other example is SBI’s rural branches. Using our branch automation technology they have been able to reduce account opening turnaround time from 3 days to 1 day at these branches.

Video KYC — The New Game Changer For Rural Banking

The Reserve Bank of India issued an amendment to master directions on KYC on January 9, 2020. RBI has now allowed banks and other lending institutions regulated by it to adopt a Video-based Customer Identification Process (V-CIP). This is a consent-based alternate method of identity verification for Customer Onboarding.

Signzy Video KYC has also been used to onboard over 150,000 customers every month by one of the top SEBI regulated institutions. This has been the focus of media attention in the past few months as well.

VideoKYC has gained significant importance in modern times due to the Covid-19 pandemic. Across industries, the impact of the pandemic and subsequent lockdowns has been significant.

The Indian economy is expected to contract by 5 percent this year. Early movers in the Indian financial space have been able to leverage the product quickly. This now reflects in the growth of their respective businesses. We have seen a monthly growth rate of over 300 percent in Video KYC-enabled activity since May.

Benefits of VideoKYC

Contactless Onboarding: No need for customers to travel miles to their nearest branch as VideoKYC can be done from the comfort of your home. The process can enable new account opening in as low as 2–3 minutes.

Branchless Banking: Banks have difficulty setting up branches in many remote areas. VideoKYC is another step towards digitizing the brick-and-mortar branch premises.

Compatible WIth Most Devices: Signzy’s VideoKYC product supports the latest browsers. This applies to both desktops and mobile devices. Our product works with 92.8% of all desktop browsers and 94.71% of all mobile browsers.

Supports Low-Speed Internet: VideoKYC has minimal requirements for internet speeds. It ensures connectivity in remote areas with minimal mobile network coverage.

Conclusion

Banks have a big role to play in the nearest future along with traditional banking in rural areas. Technology up-gradation has faced its fair share of challenges. However, the level of consumer awareness is significantly higher as compared to previous years. Nowadays people understand as well as feel the need for internet banking, mobile banking, and ATM services

Digital banking services can now reach even the remotest areas of India. This is largely in part due to government legislation and general support. With Signzy’s proprietary onboarding technology, customers in rural sectors can utilize technology. This can boost the Indian rural economy as well as the daily lives of people.

About Signzy

Signzy is an AI-powered RPA platform for financial services. No matter how complex your workflow or operational complexity, Signzy is able to completely automate your back-operations decision-making process into a real-time API. This is possible due to a combination of Nebula — Our no-code AI model builder and our Fintech API Marketplace of over 200+ APIs. Today we work with over 90+ FIs globally including the 4 largest banks in India and a Top 3 acquiring Bank in the US. Globally we have a strong partnership with MasterCard and offices in New York and Dubai to serve our customers in the 2 geographies. Our Product team of 120+ people is building a global AI product out of Bangalore.

Visit www.signzy.com for more information about us.

You can reach out to our team at reachout@signzy.com

Written By:

Mahesh Mohan

A Creative Writer intent on learning and sharing knowledge.