AI & ML making rural India financially visible through financial inclusion

The issue of financial inclusion is a development policy priority in many countries. However, there is still progress to be made on the financial inclusion front. Customers are increasingly being encouraged to use online, and mobile banking.

FIA Technology Services Private Ltd.(FIA Global), a digital payment & distribution systems is a leading fintech company for last mile financial inclusion in Indian and Nepal.

In an interview, S Siva, Chief Data Scientist, FIA, tells how technology provides safe banking/ financial services to rural population. Excerpts:

DQ: In light of the context of digital literacy in rural areas, what are your observations about banking rural citizens?

Siva: The explosion of the Internet, affordable data, and access to mobile devices, has made the availability, and reach of information and services much easier to hitherto underserved areas, and mofussil towns of India.

By about 2023, one in two Indians will have a smartphone and more than 700 million will have access to 4G connectivity. While these are fantastic numbers from a telecommunications perspective, there are a large number of Indians who are still unbanked or underbanked.

With more than 30% of the population still needing access to assisted banking services, businesses like ours are working hard to bridge the gap through digital innovations by leveraging technology to provide access to those living in rural India.

Banks sakhis and bank mitras are fantastic anchors who are able to create the awareness of the ease of access and use of digital tools and the advantages of the multiple banking services that are now available.

DQ: How safe is your technology in providing safe banking/ financial services to rural population?

Siva: The very purpose of FIA Global is financial inclusion. Our vision as an organization is to “transform a billion lives by harnessing the power of artificial intelligence, networks and people to bring about a digital revolution”.

It is this vision that has led us to innovate with our tech-powered products that help the underbanked and unbanked avail of financial services. Since our solutions are an aggregate of our banking partners’ products, we take care to redesign and deliver financial products for scale.

We have been vigilant in ensuring that not only is the final UI of the product made to serve low literacy levels, but has inbuilt failsafe mechanisms that would protect our customers from potential frauds and other inherent challenges. 

So, although transactions happen on our partner banking systems, we closely monitor them for potential frauds and parallel banking systems. Our training to our BCs and our continuous review process takes into account the protocols set by the banks and regulators.

Our audit processes are foolproof and enabled by Artificial Intelligence / Machine Learning Technologies. For example, our Audit systems are enabled by Face Recognition systems of our agents to minimize fraud / impersonation of agents.

DQ: How are AI & ML techniques used in making rural India financially visible through financial inclusion?

Siva: 66% of Indian population still reside in rural India. The primary occupation of the rural masses is agriculture and millions are either farming or are farm labourers.

The banking sector has made headway in their outreach, but given the breadth and depth of the country, formal Banking systems / branches are still primarily situated in urban towns.

One of the reasons of course is that urban centres are more profitable for banks and the exact opposite is true when it comes to rural centres, given that the cost of setting up a bank is high and the RoI for a bank with a rural branch is almost nil.

To solve the challenge of financial inclusion, our products such as FIA Pehchaan use AI/ML techniques to create customer profiles which help banks understand their creditworthiness and build customised solutions to serve this segment of the population.

Our FIA Dhan for instance suggestsmutual fund products based on the risk level and capacity of the customers who till now, did not have access to these kinds of digital financial solutions.

And, our financial partners too have seen the advantage of reaching out to the underbanked and underserved sections and seen the slow but steady adoption of these tools that have helped increase customer acquisition and use of several financial products.

DQ: What difference has AI & ML brought in the banking operations serving customers in far off rural markets?

Siva: We leverage technology to do two things: to extend and provide financial services to a section of the population that is still not used to the idea of ‘banking’.

While the first use case is straightforward, the flipside of any digital solution in the financial space is the misuse of data, and data leakage that could lead to frauds and cheating.

Our products have AI & ML directly implemented on our transactional database which can quickly identify any fraudulent transactions.  For instance, product FIA Kavach or FIA Jaanch uses face recognition technology to minimise agent fraud by identifying bank registered agents.

Our products have evolved to also offer personalised banking solutions by profiling customers and offering recommendations based on our AI/ML Models. Our products are used by banks and micro-finance companies to create customised credit models that help them in offering loans to customers.

So yes, FIA has used technology innovatively to design and deliver financial services that has extended the delivery of these services and helped in financial inclusion of large swathes of the population.

DQ: Since remote areas lack facilities like ATMs and bank branches, how does FIA help those customers in cash transactions?

Siva: As mentioned earlier, banks do not find it profitable to set up branches or ATMs due to the high set up costs. The other aspect is that a large mass of the population across the rural hinterland is not aware of how to use these products due to lack of literacy leading to lack of awareness.

For generations, this sector has by and large worked with an informal lending system that includes money lenders, or chit fund networks to access credit and conduct other financial transactions.

While these are fraught with risk and also attract very high rates of interest, currently, it’s the system they know and operate with.

FIA has been trying to plug this gap with the help of Banking Correspondents, and adding Bank Sakhis and Bank Mitras to our workforce, who are proving to be a value multiplier, and have helped us reach those that we couldn’t earlier.  

DQ: Tell us about your product which is most used by your partners to serve customers in their markets 

Siva: We have found that once the initial resistance on what banks can do and offer is crossed, and there is better awareness and understanding of the product, the most exciting thing for the rural customer is to open a bank account and then making deposits or withdrawing money, basically cash in and cash out transactions.

Last year, especially during the lockdown due to Covid, we found an exponential increase in the number of daily cash in/cash out transactions. And, there was an uptick in the sale of insurance products, especially medical insurance which offered Covid Coverage as well.

DQ: What are your plans of newer tech-led innovations and expansion?

Siva: Our product FINVESTA is a comprehensive technology-driven banking platform for everyone, that has been under development. We want to ensure that it has everything necessary for the banking correspondent, the financial partner and the customer to make it a one-stop solution for all things banking.

From opening bank accounts, to advisory services, to making access to credit via loan applications and approvals easier, offering customized credit solutions for micro borrowers and fraud preventive mechanisms such as FIA Jaanch, FIA Screen, FIA Kavach and FIA Tez, our digital chatbot available in multiple Indian languages, are some of the solution offerings that are already available and some soon to be launched.

FINVESTA will help increase our digital footprint and expand our scope and reach of services, giving our customers doorstep access, an Omni channel experience and seamless fulfilment.