Strategic Design Solutions for Rural Banking

  • Netbramha Studios
  • March 17, 2017

Today when we say bank in an Urban area we think of new disruptive technologies such as internet banking, digital wallets, distributed ledger technology, etc., These technologies are increasingly changing the way we go about our day-to-day lives, but it appears that efforts towards reaching the last mile (RURAL INDIA) is just not in the right direction.

In the pursuit of higher profitability and less risks, many banks are concentrating on catering only tier 1 and tier 2 cities and not concentrating on rural India where 70% of India’s population rests with limited or no access to technology. Unless banks can join the risk dots across their ecosystem, they will continue to spend at a very high rate with devastating results.

Rural Banking: Key Challenges and constraints

Have you ever wondered why most people in rural India do not have bank accounts. Even if they open bank accounts, they do not use it. WHY?


  1. Villagers do not trust the bank
  2. Transaction fees is prohibitively expensive
  3. Even if the bank provides local credit options, very low people apply for it because they do not want to risk losing their collateral
  4. Procedures for opening an account or seeking a loan are cumbersome and costly
  5. Rural banks do not provide flexible products and services to meet the income and expenditure patterns of small rural borrowers.

Two-thirds of companies doing business in India plan to rapidly accelerate the expansion of their business in rural markets. But Banks do not want to serve the rural poor. WHY?


  1. Serving the rural poor is a high-risk
  2. High-cost proposition for banks
  3. There is the uncertainty about the repayment capacity of poor rural borrowers
  4. Small loan sizes
  5. The heterogeneity of borrowers
  6. Widespread illiteracy

Efficient use of technology and low-cost banking channels will help banks in India turn their rural operations into profit. The recently launched Pradhan Mantri Jan Dhan Yojana has boasted the profitability of banks in rural India. There is no doubt that India’s rural markets have become a powerful economic engine. Banks must find new ways to promote their services, introduce flexible products and establish their credibility in rural markets.

So the big question is, How can we make Rural banking easier, more accessible, more simple and human?

Endless solutions could be offered, but we thought it would be worthwhile to sketch 4 solutions for the banks in rural India. Here we are presenting 4 disruptive solutions for the banking industry that will drive the financial boom in Rural India.

Solution 1: Aadhaar enabled biometric Banking:

Aadhaar card which is used as an unique identity for a resident of India can foray its utility to banking segment helping in accessing various banking facilities. Aadhaar enabled banking can be introduced where debit and credit cards can be replaced by biometrics of villagers.

ATM kiosks can have biometric devices where people can just walk in and use their fingerprints to access their bank accounts which is linked to their Aadhaar card. The ATMs can have local language interface which villagers can easily understand. Once the villager puts his fingerprint, his account will open, and he can make money transfers, withdraw money, check his balance, etc. This will help illiterate people also to operate bank accounts comfortably. Of course this is the easiest scenario, but almost every operation can be completed that way.

Such ATMs can also add extra features like payment of utility bills, tax payment, book railway tickets/ air tickets, mobile recharge, fund transfers, open a Fixed Deposit, loan account enquiries, etc. By adding the above features to the ATM, villagers can easily perform all their basic banking activities on their fingertips.

Solution 2: App based Rural Retail Banking:

Ask a villager how difficult it is for him to operate a smartphone. But what if someone he trusts operates the smartphone or tablet for him? What if in rural areas, Banks can provide retail shopkeepers with a common tablet or mobile phone banking application?

In this case, customers can just walk into the store, and with the help of their trusted retailer, perform any banking activities like fund transfer, balance enquiry, withdraw money, open a fixed deposit and perform interbanking transactions on the app. Loan account holders can also check their outstanding balance, request for IT certificates and also can make part payments through the App.

This concept is used by Storeking which is an e-commerce company serving rural India. StoreKing Kiosks are installed at various shops in rural areas of India and has a large variety of products, ranging from electronics, appliances to digital goods like mobile/DTH recharges. Customers walk into the store and with the help of the retailer, browse and shop on the StoreKing kiosk. Banking industry can adapt the same concept which will help them reach 850 million rural population, digitizing rural India.

Solution 3: Fingerprint based payments

The rising popularity of biometric based applications among users of digital products, which convinces us that the fingerprint based interfaces are the future: fast, familiar and easy. Banks can provide all retail shopkeepers with a common mobile phone app that can be used for receiving Aadhaar enabled payments bypassing credit and debit cards, pin and password. Here a villager walks into a kirana store, makes purchases, and while making payment he can use his fingerprint instead of debit/credit card.

This fingerprint will be linked to his Aadhaar card which in return will be linked to his bank account, and hence money will be debited from his account. If you still think we are cracking a poor joke, you can check this below article 😉

Solution 4: Payment banking through SMS:

Consumers look for services in all the spaces. Banks can grab this opportunity by providing a payment banking system like Vodafone Mpesa where transactions are not only limited to smartphones or web portal, but also it can be made through SMS or dial in numbers like *400# or *99# without the use of internet.

Through such payment system in rural India, a villager can deposit money, send money to any mobile number, send money to any bank account, make prepaid recharge, postpaid bill payments, DTH recharge, utility payments, merchant payment, withdraw money, etc.

Near Horizon

By building the thriving ecosystems, banks and rural people both can win. If Banking industry takes the above initiatives, it can help the Indian government deal with recent conditions like demonetisation while bringing in more financial transaction transparency and pushing India towards digital economy.

Want to know more? Talk to us!

If you want to know more about the above banking solutions we have provided, it’s design, technology and possibilities of implementation, don’t hesitate to contact us.

Of course the above solutions can be used not only in banking, but also insurance, online commerce, travel, healthcare and many other industries. Let’s explore the BHARAT in INDIA.

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