A company focussed on developing sustainable products for rural India decides to develop an ATM to meet this segment’s banking demands. It is now on the verge of transforming banking services through its unique ATM. The ATM is powered by solar energy and consumes just 4 per cent of the total energy that is required by a conventional ATM to function. It can operate in the temperature range of 0°C to 50°C, which will help in reducing CO2 emissions by at least 18,500 kg per year. This unique ATM has the capability to serve Indian villages-indicating an opportunity for over half a million ATMs across the country.
The delivery of financial services to all sections of society at an affordable cost has been an area of concern for governments around the world. Financial services include services such as credit, savings, and insurances. To date, banks have been considered the most preferred channel for providing financial services. However, the banking channel has its own limitations, especially in nations that have a large rural population and diverse geographical conditions. This results in a low concentration of banking systems in rural areas. Rural locations account for around 70 per cent of the total population of India, but have access to only 30% of the total bank branches of the country.
The low penetration of formal banking systems has also resulted in the proliferation of several informal financial enterprises such as local money lenders. These informal financial enterprises lack the necessary rigour in their processes (such as risk management skills, market research capabilities, etc) which could help safeguard the interests of both money lender and borrower. The lack of defined processes results in the creation of an inefficient financial system.
Challenges such as the high cost of setting up a new bank branch, low transaction volumes, and the inability of conventional ATMs to serve rural locations have hindered the proliferation of formal banking channels in rural India. These challenges compelled Indian banks to approach the Indian Institute of Technology, Madras (IIT-M) to help them address the problem of low banking penetration.
IIT Madras worked in collaboration with Vortex Engineering to develop a low-cost and reliable solution that would address the concerns of the rural population. This solution took the form of a unique ATM meant exclusively for rural locations. As Vortex began developing the new ATM, it arrived at the following list of requirements for it:
- It needed to cost less than conventional ATMs
- It needed to consume less energy
- It needed to be independent of the air conditioned environment that conventional ATMs require
- It needed to be able to dispense soiled notes, as the supply of fresh notes to rural areas is very limited
‘Bhoomi’ for Better Land Management
There issues were causing inconvenience to the farmers. Hence, the state government decided to implement a system for the better management of land records. The government named the project ‘Bhoomi’ (which translates to land in English). This was meant to address not only the major concerns in the land management system, but also a broader set of objectives. Some of the objectives that the state government set up for itself prior to developing the new land management system were:
- Facilitating easy maintenance and prompt updation of land records
- Making land records tamper proof
- Allowing farmer easy access to their records
- Collating information to construct a database regarding land revenue, crop pattern and land uses
- Utilising the data for formulating and planning development programmes
- Enabling the usage of the database by courts, banks, private organisations and companies.
Bhoomi was able to incorporate a number of services-level features which made the project very unique. The system’s user interface is in the local language. It can generate various types of reports on land ownership by size, type of soil, crops, owner’s sex, etc, which can be useful in planning poverty alleviation programmes, and in supplying agricultural inputs.
Records are generated using the Bhoomi software running in kiosk computers, and a back-end server holding the database. The records are signed by village accountants at the kiosks, and are then provided to the farmers. Village accountants are no longer entitled to manually issue copies of the records, as only computerised records are considered valid under the new system.
The banks that loan money to farmers on the basis of land records will now be able to electronically indicate to the revenue department that the land has been pledge to them. Three-after, once the farmer has repaid the loan, the bank can electronically release the land.
To address the farmers’ concerns over the large distances they have to travel to access these kiosks, about 750 telecentres (as of May 2007) have been established in the villages of Karnataka which can also distribute land records to the farmers.
A Fresh, Radical Approach
Vortex adopted the bottom-up methodology for developing the ATM. Instead of trying to strip down a conventional ATM to make it cost less, Vortex decided to completely redesign key elements of the machine. Here’s a look at some of the most innovative features that were developed for the ATM:
Redesigned Cash Dispensing Machine (CDM). In conventional machines, cash is stacked in horizontal cassettes behind the machine. Notes (paper currency) are picked from the cassette and moved upwards by approximately a meter to the dispensing outlet. This process uses various electric motors, constant force, and a conveyor belt to execute the cash dispensing command.
To replace this technology, Vortex’s team developed a technology called ‘Gravity Assisted Friction Pick (GARP)’. Under this approach, cash is stacked in the upper half of the ATM machine. Notes are picked up from the bottom of the stack and moved approximately 10 cm downwards for dispensing.
Ability to process soiled notes. Currently, most ATM machines require fresh and crisp notes to provide a better service experience. Vortex’s team developed a technology called ‘Sheet Separation’, which means it is no longer essential for ATMs to use only fresh notes for dispensing cash.
Low power usage. Because of the conventional CDM system, ATM machines require a lot of power to dispense cash. The system also requires air conditioning, as it consists of a processor and operating system that consume a lot of energy. Generally, a conventional ATM requires around 2,500 watts of power per day (i.e., about 7oo watts for the ATM and another 1,800 watts for the air conditioners).
Redesigning the CDM helped Vortex to reduce power usage by 80 per cent. This was due to the absence of motors and a conveyor belt, which are required in conventional ATM machines to propel notes to the dispensing system. Moreover, the new machine uses an Atom processor and Linux operating system, which help in reducing the power usage further. It has a single computer, as opposed to the two computers required in conventional ATMs. Its low power consumption allows it to be operated with solar energy instead of conventional power supply.
The ATM also allows biometric authentication of users’ identities.
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