In an era where every day seems to bring a new article about banks doing silly things (liar loans are my current favourite), it’s refreshing to learn about a bank that’s actually doing something great.  Unfortunately for those of us in North America, this bank is in India.

Technology Review has an article in this month’s issue - Upwardly Mobile - describing how banking is being brought to rural India.  A lot of it was stuff I’d heard before; basically payments via cellphones (it’s been done in the Phillipines for a while).  What was fascinating was this:

These women live in a village that is seven kilometers from the nearest bank.  However, there’s a bank in that town that trusts a local woman (she’s the government’s representative for aid work) and has given her a special machine to extend banking to the village.  The way it works is like this:

  • She has a strong box where she stores money from people in the village
  • When people want to deposit or withdraw money they sign into a special machine via their fingerprint
  • The machine uses the cellphone network to send a message to the bank’s central computer
  • The cash is issued from the strongbox and the user gets a receipt

The system isn’t perfect (what happens if everyone wants to withdraw at once?), but it solves the greatest need of the villagers: the ability to store sums of money for short periods of time.  I thought it a very elegant solution; read the article to get an understanding of the impact this could have if it is scaled up across the entire country.