Monday, October 15, 2007

Biometric ATM's in India from NCR

Financial inclusion through biometric ATMs

D. Murali/P. Jaishankar

One in every nine persons on earth is a rural Indian, nearly 70 per cent of Indian villagers do not have a bank account, and tapping them would require multiple banking channels, says Mr P. P. Manjunath Rao, Country Manager Sales, Financial Solutions Division, NCR Corporation.

“Low-cost ATMs (automated teller machines), smart cards and mobile payments are some of the solutions,” he adds in a recent e-mail interaction with Business Line. “The recent directive from the Reserve Bank of India (RBI) on financial inclusion (‘banking for the common man’) is a key driver for the growth of such solutions in India.”

The US-based NCR Corporation ( traces its origins to 1884, when John H. Patterson founded the National Cash Register Company, maker of the first mechanical cash registers. “While our technology may have evolved from the world’s first cash registers to the retail systems, ATMs and IT (information technology) services of today, NCR’s central mission – to use innovative technology imaginatively to solve our customers’ business problems – has not changed for over 120 years,” proclaims the company’s web site.

A few weeks ago, the Indian subsidiary of NCR expanded its manufacturing capacity at the Puducherry plant, from approximately 250-300 ATMs per day to 800-900 machines. “We started manufacturing ATMs in India five years ago and till date have supplied to all the major banks in the country. The largest public sector bank, State Bank of India, has taken around 3,000 machines from us, followed by Canara Bank (1,000 machines),” Mr C. Sivaramane, General Manager in India, had informed the media then.

The ATM industry in India is among the fastest growing in Asia Pacific region, says Mr Rao. “A significant growth comes from the latent potential within the Indian market, which has only 28 ATMs per million people.”

Excerpts from the interview.

What is your share of the ATM market in the country? How big is your India operation?

We enjoy about 60 per cent market share in India and our customers include all major private, public and cooperative banks of India. With service and support centres in over 90 locations, covering about 500 cities and towns in the country, NCR India operates with a team of over 2,000 professionals. The customer care centre of NCR manages more than 7,000 ATMs for both private and public sector banks and handles over 85,000 calls a month.

You made a mention of Indian ATM density. How is the density elsewhere?

In countries such as the US and Canada, there are nearly 1,300 ATMs per million people. In Mexico, it is about 200 ATMs per million, as against 28 in India. The highest density of ATMs is seen in South Korea, where it is about 1,600 ATMs per million. At 55 ATMs per million, China’s tally is almost double that of India. Despite rapid growth, India has a long way to go compared to other markets. For example, China has about 80,000 ATMs, and the US, more than 4,00,000 ATMs; in India, the count is about 30,000 ATMs.

On your current initiatives.

NCR is deploying the multifunctional ATMs for a large number of banks in India. Both state and privately owned-banks are investing in our machines with the latest technologies. We have had successful piloting of biometric ATMs for Canara Bank.

Are banks increasingly receptive to the idea of ATMs?

Yes. Banks in India are recognising the importance of technology to retain their competitiveness and customer loyalty in the rapidly changing business environment. Migrating routine transactions to the ATM channel enables banks to free resources while focusing on revenue generation and improving customer satisfaction. Most importantly, the need is to establish and maintain consumer trust in self-service, using a portfolio of fraud prevention measures and a holistic approach to security.

Why biometric in banking?

Banks in India are looking at deploying biometric ATMs targeted to reach the unbanked population in rural India. Using thumbprint and voice guidance in ATMs reduces literacy requirements to a considerable extent. Thus, establishing the identity of a rural depositor through biometrics makes it possible for illiterate or barely literate people to become part of the banking user community.

A simplified menu on ATMs coupled with possible audio guidance in local language enables easy use for rural masses. So far, bank ATMs are dependent on PIN (personal identification number) verification. The fingerprint authentication method is non-PIN based, and this requires enhancements to the standard switch environment. Though identification can be via face, voice, retina or iris, fingerprinting has the advantage of being a familiar concept worldwide.

Some Indian banks have started implementing biometric applications in retail branch applications for officer authentication. Elsewhere in the world, efforts are on enabling payments through kiosks based on fingerprints (non-card based). ATM enhancements with biometric support envisaged by vendors eliminate the need for PIN entry, and authenticate customer transactions by thumb-impressions.

Where else does biometrics find application?

In recent years the importance of biometrics has grown tremendously with an increasing demand of security in accordance of unique identification of individuals, in applications other than policing, the traditional area of use.

Apart from banking, biometrics finds use in the retail payments arena. Developments in biometric technology have made their presence felt in the pervasiveness of self-service devices such as point of service (POS) machines. Some of the new generation POS terminals are biometric enabled with smart card readers, allowing thumbprint-based authentication.

Can ATMs work in the wireless mode?

Yes, and this is what we are working on through our alliance with Symstream Technology Group Ltd, a worldwide leader in wireless-technology. By deploying Symstream II™ - wireless modem for GSM (global system for mobile communications) connectivity, banks in India will now be able to deploy ATMs to the most remote sites in India, thereby enabling them to offer banking services to the unbanked rural population.

How does it work? And what can be the benefits?

The solution uses voice channel, unlike traditional GPRS (general packet radio service) connectivity using data, making it more reliable and fast. Banks will be able to increase their ATM penetration with reduced overhead costs, faster deployments, better security, improved efficiency and functionality compared to other legacy technology being used.

Can you explain how biometrics works in banking?

Customers opting for biometric authentication can visit a nearby kiosk or ATMs or bank, where his fingerprint data would be scanned into a special PC (personal computer) with a fingerprint scanner, and the scanned fingerprint is then stored in an encrypted form in a central server.

When a customer inserts (or swipes) his card in a biometric-enabled ATM, he is prompted to set his finger in the fingerprint scanner. The transaction along with customer’s biometric information is passed on to the switch. The switch verifies the fingerprint with the server, and if successful, requests the banking application to authorise the transaction. Based on the result, the switch instructs the ATM to complete the transaction.

In sum, the benefits of biometric ATMs?

Several, as follows: Strong authentication; usability instead of a PIN; avoidance of hidden costs of ATM card management such as card personalisation, delivery, management, re-issuance, PIN generation, help-desk, and re-issuance; suitability for Indian rural masses; accuracy; and low operational cost, which ultimately goes to reduce TCO (total cost of ownership).