Source: http://online.wsj.com/article_email/SB10001424052748703700904575391460677186520-lMyQjAxMTAwMDIwNjEyNDYyWj.html
A new automated teller machine aims to expand personal banking in rural India, where high temperatures, power outages and identity theft make for particularly challenging terrain.
Vortex Engineering is giving rural Indians the gift of banking. The southern India-based company has designed the "Gramateller" automated teller machine, which can run on solar power and dispense heavily used bills. WSJ's Linda Blake reports.
Vortex Engineering Ltd., an Asian Innovation Awards finalist, designed its Gramateller ATM with a backup battery system, solar power panels, a 50-degree-centigrade operating range and a fingerprint identification system—all factors that make it a viable ATM in developing areas, said Vortex founder Lakshminarayan Kannan.
Mr. Kannan, 42 years old, has spent the last two decades working with companies and NGOs on rural-development technologies, such as a special suspension system to transport fragile medical equipment for mobile health care in Karnataka. He founded Vortex in 2001 and set the company to work on various projects, including one designed to more efficiently convert cotton into yarn.
In 2004, he was approached by a group of researchers from the Indian Institutes of Technology who were looking for ways to improve financial access in rural India. The team's aim, Mr. Kannan said, directly overlapped with his own.
"Whatever we were to produce had to be a person-independent, technology-driven channel," he said. "To be dependent on infrastructure would be too expensive."
An ATM fit the bill. Fewer than 25% of India's 45,000 ATMs are located in rural and semi-urban areas, where 70% of the country's 1.1 billion people reside, according to Vortex research. As many as 65% of Indians don't have bank accounts, severely hindering their chances of saving, according to the Confederation of Indian Industry, an association of Indian business leaders.
A team of Vortex engineers worked with the IIT researchers to design an ATM that not only would operate in rural India, but also would inspire trust in the machines among local villagers who may have never even seen a computer before. This meant including a biometric method of identification—instead of entering a PIN, the user presses his or her thumb on a glass fingerprint reader—as well as the ability to immediately switch to a four-hour backup battery during voltage fluctuations and power failures.
Even assuring villagers the money is authentic was a concern. Vortex, based in Chennai, designed its machine to process soiled notes that "feel real" to rural dwellers who aren't accustomed to—and often are suspicious of—the clean, crisp bills that come out of other ATMs.
The ATMs use customer fingerprints as an authentication measure. Vortex says it hopes to put the low-cost machines in every village in India.
"New currency is loaded, and in rural areas, used, old currency is also loaded," Mr. Kannan said. "Often bills have small nicks, cuts and holes, which our ATM is tolerant to."
An unexpected benefit of the ATMs is that they encourage customers to save more money, something that didn't become clear until pilot tests near Chennai.
"If people have in their close vicinity a source of money whenever they need, and they know it's assured, then they actually tend to take less money than they are entitled to, and they save the rest," Mr. Kannan said.
Vortex has invested $6 million in its Gramateller ATM since 2004, producing nearly 200 machines to date. Mr. Kannan said 25 to 30 banks in rural areas currently operate between one and five ATMs each. Among them is State Bank of India, the largest state-owned financial services company in India.
The bank is deploying 1,000 ATMs in rural areas, 545 of which will be supplied by Vortex Engineering, said Amiya Deka, deputy general manager of SBI's ATM division.
He cited the Gramateller's low cost, low power consumption, wide temperature range of operation, solar power generation, biometric authentication and "simple design" as factors in its selection.
Vortex's end goal is to have one ATM in each village in India. That's 650,000 ATMs, Mr. Kannan said, and even that won't be enough to put India on par with other countries.
"The U.S. and Europe have one ATM per 1,000 people. By the same yardstick, India needs one million ATMs," he said.
But for now, Vortex has set its sights on the sector of India where it believes financial access can have the most impact.
"Since we are a start-up and we have limited resources, we want to focus on rural India," Mr. Kannan said. "We thought: Let us be creative. Let us be pioneers."
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