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India: Internet and mobile technologies have spread out and are visible at various levels of the technology delivery chain. But, the challenge hereon, in the context of financial inclusion, would be to get the technology pieces together in a complete whole that is viable and sustainable. Stating this in his address at the Financial Inclusion Summit organised by Confederation of Indian Industry (CII) in New Delhi , Mr R Chandrashekhar, Secretary (Information Technology), Ministry of Communications & Information Technology, Government of India, said that inter-operability of technologies relevant to financial inclusion will largely determine the pace of financial inclusion in the country.

He added that reduction in cost of transactions is another key factor in evangelising financial inclusion. This will come about when the banking service providers, quite like the telecom service providers, are willing to enter into passive infrastructure sharing, and perhaps even by developing a common pool of business correspondents.

Mr Chandrashekhar also said that the banking and financial service providers could share a whole range of middleware. Mobile-linked no frills bank accounts can operate through such shared infrastructure, but only if the inter-operability issues are tackled, he said.

Placing particular emphasis on the viability factors, Mr Ajai Chowdhury, Chairman & CEO, HCL Infosystem Ltd, said in his address that standardisation of the processes and inter-operability will enhance the viability of the financial inclusion business model for all participating entities. He observed that financial inclusion should not only cover the population in the 6 lakh villages but also those living in the smaller cities.

Mr Chowdhury said that UIDs will greatly aid the push towards uniform standards.The National Payments Council will also help in this direction, he added, while observing that the long term success of financial inclusion would also depend on affordable technology devices being made available to all the stakeholders concerned. With greater volumes, the cost of these devices will come down, he noted.

Referring to a more broad-based approach toward financial inclusion, Mr Chowdhury said that government social programmes like NREGA, PDS and the like could indeed be linked to the banking system that relates to financial inclusion. Cooperative banks and post offices too could be engaged in promoting the process of financial inclusion, he said, adding that the entire eco-system for financial inclusion has to evolve.

Talking about connectivity, Mr Kuldeep Goyal, Chairman & Managing Director, Bharat Sanchar Nigam Ltd (BSNL), said that his company has taken strident steps to enhance the telecom connectivity in the rural hinterland through initiatives such as village public telephone, common service centres, optic fibre lines, etc. Over 2.5 lakh villages will be connected by optic fibre cables over the next three years, he said, while adding that affordable technologies will drive financial inclusion.

Mr Goyal said that WiMax base stations are providing villages with wireless connectivity.3G technologies will also penetrate villages in due course. Along with this, local language applications will greatly promote the pace of financial inclusion.

Mr Manish Khera, CEO, FINO, offered a contrarian view wherein he observed that technology is not the show-stopper. Instead, the participating entities need to develop viable business plans. The transaction architecture will follow the banks, he said, adding that two other important areas that get overlooked in the general discussions on role of technology are: (i) development of robust back-end technology that can support a large user-base; and (ii) risk management.

If customers want a particular service, technology will make it happen. So, the focus should be on knowing and developing viable solutions and services, he said.

Mr Vipul Sabharwal, Director, Sales, Nokia India Pvt Ltd, said that a robust ecosystem supported with strong training and development programmes will enable the technology side of financial inclusion to deliver the goods. He listed three key success factors in this regard: (i) affordability of services; (ii) accessibility for a wide user-base; and (iii) training and development programmes for creating a large manpower base for all activities linked to financial inclusion.

Mr Arun Duggal, Chairman, Shriram Capital Ltd, in his address referred to the success of his own company in the area of commercial transport finance in saying that financial inclusion as a business strategy is highly viable. Shriram Capital Ltd has grown from the size of Rs 400 crore five years ago to Rs 20,000 crore now. Addressing the need of the industry as a whole, he said that adoption of best-in-class processes and reduction of transaction costs are key to the success of financial inclusion across the country.

Alok Prasad, CEO, Microfinance Institutions Network (MFIN), said that new models are needed to ensure that banks don’t lose money by promoting financial inclusion. As of today, any savings bank account with less than Rs 5,000 as deposit is not viable for any bank. The challenge is in developing a model whereby the no-frills account with little or no deposits in them becoming viable for banks.

Listing the game changers in the realm of financial inclusion, he cited the UID project, mobile banking, smart cards, business correspondents, routing of government social schemes through banks, and micro-finance as factors that will take financial inclusion a long way in the country.

Source:http://www.cii.in/NewsRoom.aspx?enc=SO0wa+TYDvk3FXKFO1bn1Q==