MICROCAPITAL STORY: FINO and NCR to Install 30 Thousand Smartcard Micro-Deposit Machines in India Over 5 Years in an Effort to Reduce the Cost of Microfinance Services

Financial Information Network and Operations Ltd. (FINO), an Indian technology company that produces biometric smartcards, collaborated with the National Cash Register Corporation (NCR), the automated teller machine (ATM) manufacturing company, unveiled a new micro depository machine in Mumbai called the EasyPoint 70 Tijori. As part of the partnership, FINO has committed to release 1000 of the machines, and has reported to have already reached an accord to roll-out an additional 30 thousand machines over the next five-years. However, the company has not specified who will buy the machines. The machine is designed for semi-urban and rural areas, which are traditionally underserved by banks. It is estimated that 560 million people in India (about 51 per cent of the population) are financially underserved. The companies hope to reach 25 million unbanked people with the EasyPoint 70 Tijori by 2011.

The bank machine is based on smartcard technology. Smartcards are essentially an electronic passbook on which financial transactions are recorded. The cards store basic client information and biometric data, such as fingerprints, in order suit a client base that is largely illiterate. The machines are also equipped to recognize 14 languages. MicroCapital reported on the spread of smartcard technology in India in November 2007.

Beyond withdrawals, deposits and savings, the EasyPoint 70 Tijori can act as a direct channel for delivering a variety of other micro-financial services. The machine will enable the creation of credit profiles, which increase confidence levels of banks and MFIs in extending microcredit to low-income persons. Subsequently, the machine can also deliver microcredit. “After the customer’s loan is sanctioned by the bank, the amount is transferred into the accounts via the smart card that allows withdrawal of the cash as per the needs,” explained Pradeep Sen, NCR’s managing director for India. Furthermore, the machine will facilitate other financial services, including bill payments, insurance, remittances, and eGov services.

It is unclear who will purchase the 30 thousand machines. The Reserve Bank of India has called on banks to take steps to increase services to rural areas by exploring a variety of channels including satellite offices, mobile offices, and business correspondents. According to FINO’s CEO Manish Khera, the new self-service machines will be owned by banks and microfinance institutions (MFIs), though he did not specify which ones or provided information on project sales.

The unveiling of the Easy Point 70 Tijori occurred as NCR’s Vice President, Scott Sobel, released a White Paper in Mumbai called “Bringing financial services to the masses.” In the paper he acknowledged that a strong foundation for microfinance has been built in India on a Business Correspondence (BC) model, in which an agent personally delivers financial services within a wide geographical area. However, he argued that the ‘doorstep banking’ model has limitations of scale: “The size of the unbanked population is too large and spread across too vast a geography for it to be properly served by conventional channels alone. Self-service technology solutions are essential to address the scalability and sustainability challenges facing Financial Inclusion in India and other developing countries.” Mr. Sobel said that the new machines will “reduce cost to return capital and expand reach and business of the MFIs rural business.”

This statement was corroborated by Mr. Sen who said, “Each machine can be used by 500 people and a business agent can manage three machines, resulting in more people accessing financial services compared with an agent only model.”

FINO was founded in 2006 with the objective of building technologies that enable financial institutions to more efficiently and effectively serve bottom of pyramid customers. Financial institutions using FINO technologies include Axis Bank, Bank of Baroda, Corporation Bank, DGB, ICICI Bank, ING Vysya, OBC, PNB, and UBI. FINO is funded from the international sector by Intel Capital, Legatum Global Development, and The International Finance Corporation; from the private sector by ICICI Bank Limited , ICICI Lombard General Insurance Company Limited, and The Institute for Financial Management and Research (IFMR); and from the public sector by Corporation Bank, Indian Bank, LIC, and Union Bank of India. MicroCapital reported on FINO’s rapid growth in November 2008, on its adoption of Gemalto Smart Cards in June 2007, and on investments in FINO by the International Finance Corporation (USD 5 million) in May 2007 and the Legatum Group (USD 4.5 million) in April 2007.

NCR was founded in 1884 as the manufacturer of the world’s first mechanical cash registers. Today it is a global manufacturer of ATMs and other automated financial self-service products. In 2007, NCR reported revenues of USD 4.97 billion. NCR was acquired by communications company AT&T in 1991. NCR currently holds 70 percent of the ATM market share in India.

By Ryan Hogarth, Research Assistant

Additional Resources:

Business Standard: “FINO, NCR to roll out 30,000 micro deposit machines”

CyberMedia News: “Here Comes a Different Microcredit Deposit Solution”

Financial Express: “FINO to Launch Micro-Deposit Machine”

Financial Information Network and Operations Ltd. (FINO): Home

MicroCapital, November 2008: “FINO Reaches Two-million Unbanked Populations in India and Releases Micro-Loan Management Software”

MicroCapital, November 2007: “3 Million More Rural People to Benefit from Smartcard Technology That Enables Microfinance in India”

MoneyControl.com: “NCR and FINO Partner to Overcome Barriers of Financial Inclusion”

National Cash Register Corporation (NCR): Home

TradingMarkets.com: “ATM-like Device Developed to Tap Rural Markets”

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  1. […] Financial Information Network and Operations Ltd. (FINO), an Indian technology company that produces biometric smartcards, collaborated with the National Cash Register Corporation (NCR), the automated teller machine (ATM) manufacturing company, unveiled a new micro depository machine in Mumbai called the EasyPoint 70 Tijori. As part of the partnership, FINO has committed to release 1000 of the machines, and has reported to have already reached an accord to roll-out an additional 30 thousand machines over the next five-years. … [click here to read the rest if this article…] […]

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