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.