Rural Banking Design: 4 cogent tips to deliver a delightful user experience

rural banking design

A disruptive rural banking design is the need of the hour.

But when we talk about disruptions in banks today, we think of the urban settings.

New technologies are transforming the banking systems and making our lives easier.

Technologies such as internet banking, digital wallets, distributed ledger, etc.

These technologies are changing the way we go about our day-to-day banking activities. But these are mostly limited to urban settings.

When it comes to the rural areas, reaching the last mile is still a vastly unexplored territory for the Indian banking system.

Due to higher profitability and lower risks, many banks are still concentrating on tier-1 and tier-2 cities.

Rural India- where 70% of the population lives often has limited or no access to technology at all.

At this time, creating a clean and practical rural banking design can help financial institutions fill this gap.

Why Are The Rural Indians Reluctant To Use The Banking System?

Rural Indians reluctant to use the banking system

There are several flaws in the current banking system- lack of a thought-out rural banking design is the biggest one.

Have you ever wondered why most people in rural India do not have bank accounts?

Even if they open bank accounts, people do not use them.

With the introduction of Pradhan Mantri Jan Dhan Yojana (PMJDY), 41.75 crore bank accounts have been opened to date.

But several of these accounts are either not operative or not utilized.


• Lack of trust: Rural Indians often do not trust the Government or the banks when it comes to their finance.

• Lack of understanding: Managing finances can be overwhelming, people tend to avoid getting into what they do not understand.

• High fees: The accompanied transaction fees are often high and not small token friendly

• Lack of customization: Banks often have central products/services. Often designed for the urban audience, these do not meet the income and expenditure patterns of rural borrowers

• Fear of risks: Even when banks offer local credit options, people avoid it for the risk of losing their collateral.

Why Are The Banks Not Keen To Explore Rural India?

The corporate space today has shifted its focus on rural India, with two-thirds of companies looking to rapidly expand their business beyond the tier-1 and tier-2 cities.

But there isn’t a clean rural banking design that financial companies can follow. Therefore, banks are lagging.


• Low profitability: Serving the rural audience gives very low returns to the banks.

• High capital: Network expansion to the last mile requires a lot of investment.

• High risk: While there is always a repayment uncertainty while giving out loans, this is especially high in rural India.

• Small ticket loans: The ticket size of loans is very low among the rural audience as compared to the urban one.

• Lack of education among the audience: The rural audience lacks knowledge and therefore banks have to spend in creating education initiatives for them.

There is no doubt that there is a lot of hidden potential in the rural market. As more and more companies start getting into rural India, it is slowly becoming a powerful economic engine.

Using Rural Banking Design To Revamp The System

There is no doubt that there is a lot of hidden potential in the rural market.

As more and more companies start getting into rural India, it is slowly becoming a powerful economic engine.

Therefore, banks must find new ways to promote their services and establish their footprints in the rural markets.

A powerful design mechanism to introduce flexible products and provide credibility to the banks is the need of the hour.

We can design several solutions that can make rural banking easier, more accessible, simpler, and most importantly – more human.

But there needs to be a cohesive rural banking design that can be implemented holistically.

Here are the 4 disruptive plans that can be included in the rural banking design to improve usr experience and drive the financial boom in rural India:

Rural Banking Design Tip 1: Aadhaar-Enabled Biometric Banking

Aadhar has become a unique identity for Indians that has replaced most identities across institutions.

As of 2020, 90% of the Indian population had an Aadhar card.

Therefore, Aadhar is slowly foraying its utility to the banking segment.

Aadhar-enabled banking can help ease the cumbersome process of accessing various banking facilities.

Aadhar-enabled biometrics can be utilized to replace debit and credit cards.

People can just walk in and use their fingerprints to access their bank accounts that can be linked to their Aadhar card.

This coupled with the introduction of local language interfaces can make things easy for people.

Picture this: a rural Indian with limited banking knowledge wants to use their account.

They would be able to just scan their finger and deposit money, transfer money, check their balance, start a fixed deposit, or apply for a loan.

Such a rural banking design can make it very easy for customers to avail themselves of banking services.

ATM kiosks with biometric facilities can also become a unique way to engage the rural population.

Such ATMs can also be utilized to pay utility bills, tax/challan payment, travel ticket booking, mobile recharge, etc.

These added features will empower people to easily perform all their basic banking activities at their fingertips.

Rural Banking Design Tip 2: App-Based Rural Retail Banking

Today smartphones have made their way into the rural market.

Most people or at least someone in their family knows how to use a smartphone.

Of course, there is a learning curve involved, but that’s true for the urban market as well.

With a click of a button, the urban audience can easily transfer funds, enquire about their balance, open a fixed deposit, and perform any other common banking activities.

The same be easily made a part of the rural banking design.

Sure, there will be some additional challenges involved here, but with the right education, banks can scale in rural India without having to several set up offline channels.

Rural Banking Design Tip 3: Fingerprint-Based Payments

The rising popularity of biometric-based apps indicates that users enjoy this interface.

Fingerprint-based security is fast, easy to use, and secure.

This is the perfect opportunity to integrate this into rural banking design.

Banks can create and distribute an app that can accept fingerprint-based payments by fetching information from Aadhar.

This will help them bypass the problems associated with debit/credit cards.

You may ask aren’t digital wallets doing the same thing through phone numbers?

Well, in a way yes. But Aadhar-based payments are more convenient and secure.

Here a customer walks into a grocery store, makes purchases, and while making the payment they can simply use their fingerprint instead of a card or digital wallet.

This fingerprint is linked to their Aadhaar card which in turn is linked to their bank account.

Therefore, the money is directly debited from their bank account.

Rural Banking Design Tip 4: Payment Banking Through SMS

Internet penetration is inching towards the 50% mark in India.

The sheer volume of that can be overwhelming- 54.65 crore people.

Still, internet connectivity is extremely poor in the country, especially in rural areas.

In this scenario, how can we ensure that people can still use banking services?

One option is to go the traditional way and to go to a physical bank.

But we want to make things easier for people through innovative rural banking design.

Banks can grab this opportunity by providing a payment banking system like Vodafone Mpesa.

Here, transactions are not just limited to the online world. It’s a system in which you can transact using SMS or dial-in numbers like *400# or *99# without using the internet.

Such a payment system will reduce the dependence on internet connectivity.

They can deposit money, send money to a mobile number/bank account, recharge their mobiles, make merchant payments-the opportunities are endless.

Final Thoughts

By introducing some of these design changes at the grassroots level can help both the banks and the rural audience.

If banks explore rural banking design from a business expansion point of view, they can collaborate with the GoI to make last-mile banking a reality.

By building this thriving ecosystem, they can increase their customer base, improve rural banking profitability and enable rural customers to turn a dormant financial system into an active economic center.

If you are a banking/financial company, wanting to reach the last mile through digital design and transformation, contact us for a free design consultation.