Why are citizens unbanked ??
• Geographical inaccessibility to extend banking services,
• Inability to understand and carry out the banking processes due to illiteracy,
• Meagre surplus due to a hand to mouth existence and hence no motivation to access a banking product.
• Further such citizens are a low value proposition for the traditional brick and mortar banks, given the high volumes and low value of transactions expected from such customers. The attitude of bank staff towards them may also not be conducive enough to motivate them to access a banking channel

Enter!!! A business correspondent (BC)

Complete Solutions
An agency who will have not only the:
• Requisite technology to reach the base of the pyramid citizen, but also,
• Offer a full range of customized banking products and services to such citizens,
• Alongwith the operational web to reach the unbanked citizen .

Here the core concept is that the bank goes to the customer, instead of the customer coming to the bank, thereby inducing some basic banking habits among the base of the pyramid citizen.
Make banking easy and attractive for the unbanked citizen
My experience says that traditionally available banking products and services are not at all attractive to the base of the pyramid citizen. The following table brings out some of this blaring difference, and how we at FINO have actually bridged the gap:

Having a look at the above I would again re-iterate that the banking needs of the base of the pyramid are almost same as us but the means are drastically different.

Paving the way ahead – Look at the Fino way!!
Currently India has a plethora of MFI’s and BC’s engaged in micro-banking activities and all of them are doing a good job. However none of them have achieved a scale comparable to Fino, and neither have the wide array of products and services to offer.
Fino has been a specialist both technology, operations and products too, and a combination of all these is truly essential to get a critical mass of the unbanked and under banked and sustain them.

BC – Bank Partnership
• Banks need to understand that the BC being a specialized agency with feet on the ground, technology and cash management capability, they are well placed to bring the base of the pyramid citizen under the financial inclusion umbrella
• Though the regulator has been from time to time pushing the concept of financial inclusion the onus is on the banks on how aggressive they would be in their strategy to execute the same, and with precision
• Banks need to understand that a BC combines the technological expertise of offline + online banking
• Further for a sustainable model, banks need to compensate the BC adequately (and why not?? considering that if they go all alone to achieve financial inclusion they would have to incur a cost which is almost X times), and allow certain reasonable charges also to be taken from the end customer. Once the model achieves a momentum and scale, it would be a profitable venture both for the BC’s and banks

BC-Investor Partnership
• Banks themselves can serve as investors to a BC
• The private sector and government too needs to come ahead and support the Business Correspondents in their initiatives
• Once the market is tapped and the model of financial inclusion becomes scalable, all the stakeholders would benefit in the form of new revenue channels

I believe Fino has already come a long way ahead in financial inclusion since its inception and is leading the way ahead by being an example to follow.

“Financial Inclusion” – The Modern Way
I would like to replace ‘financial inclusion’ with the term ‘micro-banking’ which means accessibility of all banking products and services by a citizen of India, irrespective of his location and status, and irrespective of the bank. As I said the base of the pyramid citizen is just another person like you and me having a banking need.
I sign off with these thoughts and my microblog!!! Happy Reading!!

This post is the winner of the Blogger of the month contest for the month of July. The author of this post is Nediba Reuben

The Indian context
Before a strategy for delivery of ICT enabled rural financial services is articulated it is important to be aware of the context in which these services are planned to be delivered. Some the key aspects of the Indian landscape are as follows:

a. India has a population of over 1.1 billion people with approximately 70% living in rural areas and the rest living in densely populated urban centers.

b. There are 600,000 villages spread out within over 6,000 blocks and 600 districts. The average population per village is about 2,000 people giving about 200,000 individuals per block and 2 million people per district.

c. The average size of each household is 5 individuals. This implies that there are approximately 200 million households in the whole country.

d. More than 70% of the total working population is engaged in agricultural activities of which about 80% are small and marginal farmers. More than 90% of the working population falls in the unorganised sector earning very low wages and not covered by any social security net .

e. The country is divided into 29 states. There is an enormous amount of variation in the development and growth status between these states. While states like Punjab, Gujarat and Maharashtra demonstrate per capita Gross State Domestic Product of Rs.15000 (USD 300) and above, Bihar, Uttar Pradesh and Orissa have less than Rs.5000 (USD 100). Similar variations can be observed for health and education indicators as well.

f. India accounts for a large portion of the world’s disease and malnutrition burden. Over one-third of the world’s chronically poor live in India. India accounts for 23% of world child death, 20% of maternal death, 30% of tuberculosis cases and 40% of undernourished children. It also has one of the highest rates of low birth weight (LBW) incidence with 67.2%8 due to growth retardation in the womb.

g. Around 34% of the country’s population is illiterate. Although efforts are being made to improve literacy rates, there are major gaps in the areas of universal enrolment and retention of students in schools.

h. About 25% of the total rural population does not have access to safe drinking water, 55% of them do not have electricity in their homes and 40 % of the villages in rural India are not connected by metal roads.

Based on the above in your face statistics, In my opinion the available sources for financial products for the poor clusters in rural areas today are:
- Credit Societies
- Co-operative Banks
- Nationalized Banks
- Private Banks
- Informal loans

And some of the major challenges which intermediaries (Local Financial Institutions) face today in India are:

The supply dilemma:
The exclusion of large numbers of the rural population from the formal banking sector may be for several reasons from the supply side:
(a) Persons are un-bankable in the evaluation/perception of bankers
(b) The loan amount is too small to invite attention of the bankers
(c) The person is bankable on a credit appraisal approach but supporting the accounts and expanding branch network is not feasible and viable
(d) High transaction costs particularly in dealing with a large number of small accounts
(e) Lack of collateral security
(f) Inability to evaluate and monitor cash flow cycles and repayment capacities due to information asymmetry, lack of data base and absence of credit history of people with small means
(g) Human resources related constraints both in terms of inadequacy of manpower and lack of proper orientation/expertise
(h) Adverse security situation prevailing in some parts of slums and other such localities

The demand dilemma:
There are several reasons for the rural poor remaining excluded from the formal banking sector:
(a) High transaction costs at the client level due to expenses such as travel costs, wage losses, incidental expenses
(b) Lack of awareness and lack of social capital
(c) Non-availability of ideal products
(d) Hassles related to documentation and procedures in the formal system
(e) Easy availability of timely and doorstep services from money lenders/informal sources and
(f) Prior experience of rejection by/indifference of the formal banking system.
Hope this info was useful. Will continue with the ICT in rural financial services with some more in-depth insights keep watching this space. Cya !!

Let me begin by quoting a anonymous person but a relevant quote as far as ICT in India in concerned: “Liberalization without regulation is like kids playing football before you have the referee and the playing lines.” – anonymous

ICTs are transforming the way life goes about. They have a huge potential to transform the paradigms of governance. ICTs entail connectivity and networking thereby making the delivery of services offered by governments better. While talking of governments, local self-governments deserve maximum attention as they are at the cutting edge and immensely affect the daily lives of citizens.

Financial Information Network & Operations (FINO) being a sectoral resource in India is playing a major role in the ICT based rural financial delivery for which we were even awarded by the financial times recently.
FINO conducted a primary research on ”Understanding the ways in which rural and urban low-income households access and use financial services from formal and informal providers, including microfinance providers”. Our work involves

Investigating ways in which the use of technological solutions to enable various aspects of financial service delivery can result in cost-effective and scalable operations for providers and cheaper, better quality finance for the poor. To this end, we are working on understanding the Financial, Social and Usability factors involved for effectively deploying technologies to improve financial service delivery to the micro poor clients.

Background
In my opinion one of the most important issue that we face today as a country is the extreme poverty within which almost a quarter of our population lives and the very vulnerable status of almost an equal number, giving over 700 million people who are forced to live well below the level at which they could become active participants in the larger economy.
Concern: Though high GDP growth rates would definitely help reduce this number, the main concern is that causality could actually be working in the reverse direction and that it could prevent the economy from realizing its full potential
1. Mainly on account of existence of large poverty levels
2. Associated deficiencies in the health and educational sectors can lead to retarded growth rates

Belief: The poor already have a keen sense of the manner in which many of the challenges that they face may be best addressed. Therefore instead of trying to push poorly designed subsidised services at the poor they can be given the means to better realize their aspirations on their own terms. Through an improved access to high quality financial services the poor should be able to find their own way out of the “poverty trap” Through the means of such improved access.

What is Improved access: It is defined as the ability of economic participants (individuals and enterprises) to obtain a broad range of financial services (including savings, investments, money transfer across geographies, loans, insurance services and hedging instruments against price fluctuations) suited to their specific requirements to manage price, yield and other risks that affect the income of the household, as also expenditure, with ease and at reasonable prices.

Access to finance: It leads to improvement in individual productivity because it permits:
1. Higher levels of consumption for basic items
2. Investment in education and
3. Skill building : specialization in a few activities instead of over diversification
4. Improvement in risk taking ability.
5. Positive effects on the local economy through a general increase in wage labour opportunities and better utilization of surplus labour

Demand V/s Supply
However, I also feel that the scenario of supply of formal financial services within India is $200 to $300 million against an estimated demand for credit ranging from $3 to $9 billion annually the formal sector is barely able to provide; less than 20% of rural populations have a bank account (contrasted with a figure of over 100% for urban populations); against a total of over 600,000 villages there are barely 30,000 bank branches and while products such as health insurance are completely inaccessible to the poor even the most basic life and accident insurance products remain out of reach. It is entirely possible that the 700 million people that were referred to earlier have never been to bank, have never bought any insurance product and have been completely dependent on uncertain and very limited supply of credit, savings and money-management services made available by the informal sector at exploitative and usurious rates.

I also strongly feel that the Banks should be on alert and planning for the inevitability of multiple, non-bank entrants for a number of reasons.

1. Erosion of branch-based transactions can significantly reduce the natural advantage retail banks have had for decades to blunt the invasion of new bank entrants.

2. Today, several non-bank companies have stronger sales cultures, higher customer service approval ratings, and more formidable brand equity than many private or public sector banks.

3. Each type of non-bank competitor offers customers an individual value proposition that may include, for example, bundled insurance and deposit or savings products, one-stop shopping with a single financial institution, convenient store locations, or innovative products such as mobile payments.

4. Finally, some non-banks such as online retailers or search firms may bring approaches and a set of economics that envelope and overwhelm the traditional economics of the “old retail banking payment systems” making banks little more than commodity vendors of a low-cost banking service within these emerging customer paradigms.

Bank should go the other way around!!

1. Enabling the Retailers/Agents with appropriate technology would enable the banks to go where the customer is present instead of the other way round.
2. Extending traditional mode of banking by targeted branch expansion in identified districts
3. The Business Facilitator/Business Correspondent (BF/BC) models riding on appropriate technology can deliver this outreach and should form the core of the strategy for extending financial inclusion.

Banks should now reach to the Remote Locations
1. Expansion of telecommunication network in the hinterlands of the country have provided the perfect launch pad for extending banking outposts to remote locations without having to open bank branches in the area.
2. The world over, banks are increasingly using outsourcing, as a means of both reducing cost and accessing specialist expertise, not available internally and achieving strategic aims.

In my view the BC/BF led retailer-distributor model, where the customer walks-in to a store and procures the banking services after making an informed choice from the available products, is the new paradigm to stay forever. This will make the chain viable as well as provide it non-linear scalability.

Electronic Banking Environment
The environment for electronic banking is influenced by:
1. Evolution of the financial and retail sectors
2. Levels of financial literacy
3. Supportiveness of the regulatory and policy environment.

Financial and Retail market’s evolution
Electronic banking initiatives are more likely to succeed in evolved financial and retail markets..There are a number of reasons for this. Since scale is required to cover costs, the business case for electronic banking in developing countries becomes stronger with the significant fall in the price of ATMs and POS devices and improving communications infrastructure. With scale come a number of advantages:

• When there are a large number of card (or other solution) users in a population the problem of financial illiteracy is significantly reduced since, for example, children teach their parents how to use the card.
• Initial concerns relating to trust are likely to be overcome.
• The case for merchants to hold POS devices improves as the volume of cards in circulation grows.

Clearly the scale of operation increases the case for interoperability and as financial and retailer infrastructure develops, markets become more attractive.
Financial literacy for the users
Marketing electronic banking for the poor involves more financial education compared to other products and services. To benefit from the solution, users need to understand:
• How to use the cards. It is important to ensure that customers are familiar with the multiple ways in which a card may be used than to simply increase the number of card holders.
• Where to use the cards. Clear branding that is easily communicated to both literate and non-literate clients is a prerequisite to informing customers where the cards can be used.
• What to do when things go wrong. When service delivery fails, clear instructions need to be given on how the expected service can be obtained, for example, through the provision of a call centre number or a location guide to ATMs in a particular area.

Financial institutions have developed a number of innovations to assist their customers to access services. Providing training and support materials to merchants offering POS devices can help them to assist customers.

Commercial Banks: What they doing?
• Commercial banks see an opportunity for volumes business in microfinance and look to tap into the savings and credit appetite / potential of rural India
• They are fast building the infrastructure they need to reach out to the remote pockets
• Commercial Banks are now building partnership models with the MFI organizations

MFI: What they are doing?
Micro-finance companies need to automate their work through use of ICT where possible in order to increase efficiencies and bring down transaction costs and hence compete with the big banks.

Where are Microfinance organizations lacking?

They do not seem to be attacking the problem of transaction costs and are instead achieving improvements in efficiency of operations, accuracy of transaction record maintenance or transferring the costs to some other entities in the system. Even when we take the non-strategic perspective, the pilot projects that are put in have not sufficiently addressed the issue of deploying the right solutions: these act as a dampener for large scale rollouts in MFIs and prevent the achievement of the intended benefits.

I will like to conclude by saying that looking at the geographic distribution and the more than 55% - 65% of the population being unbanked in India, contact based biometric enabled smart cards with higher programming capabilities working on an offline mode/Authentication Devices/POS being operated in a fully secured environment under a bank partnership model or with transactional enablement’s in place in the field seems to the way forward.

Happy reading the FINO Koshish blog. Cya

Mobile Operators, FMCG sales & marketing companies etc have already taken the route long back for spreading their roots in the far fetched 600,000 villages of the India through
• mom-n-pop stores
• Dairy owners
• Agriculture input sellers via prepaid and revenue share model.

Thus, dividing the risks and returns between the stakeholders of the distribution channel and also spreading the burden of investment required for circulating inventory.

Banks need to redefine themselves
Now, banks need to re-define the paradigm and spread their roots deep to sustain their foot for long in a country with majority of population living in rural & semi-urban areas.

Past Scenario
In past, regulatory restrictions and control in banking industry kept competition at bay. Customers were satisfied with one branch and restrictive timings. Easy comparison of products & services was not possible hence customers were not able to make informed decisions.

Current Scenario
In present times, the needs and expectations of customers are changing as quickly as the competitive landscape. Customers are demanding seamless, multi-channel sales and service experiences. With the regulator opening new doors to non-traditional players, NBFC and service-providers are looking for opportunities to invade this space or to redefine it through disruptive innovation. The result is forcing banks to examine a more balanced, integrated approach to the customer experience and move beyond simply meeting their profit and growth goals to delivering complete solutions.

Bankers have long envied retailers for their ability to develop and navigate channels and their responsiveness to customer needs. In my view many financial institutions have embraced similar strategies, they often fail to deliver strong results – particularly in terms of cross-sell rates and customer retention. For most banks, the branch presently dominates their distribution approach, while other methods of interaction such as direct channels and alternative face-to-face (F2F)
outlets are less important and not well integrated.

Shift in Customer Expectation

With shift in customer expectation, need-of-the-hour is to rapidly transform the retail distribution landscape for banking services from a branch-dominated paradigm to one of integration and balance among multiple channels. Branches will still play a vital part in this new equilibrium, but they will be very different. As business via other channels evolve, banks will increasingly behave like traditional retailers, focusing more on sales and complex service opportunities. Also, technological advances will improve the ability of various channels to fulfill their potential as a source of banking sales and service with higher convenience at lower costs. Alternative Face-to-Face (Business Correspondent/Facilitator-(BC/BF)) channels will also emerge as strong, viable distribution options in this new landscape because people will still value personal interactions. An integrated customer focus will become critical across all these channels as demographic shifts usher in a new — and highly discriminating — breed of customer.

Banks will face some tough strategic decisions in adapting to this new environment.

Need of the hour for banks: Revitalize their bank branches

1. At a minimum, banks need to determine how and when to revitalize their branch, the existing primary channel for most, How to draw customers in and to address their changing expectations.

2. Consider how to develop and expand non-branch channels to be competitive in attracting, serving and retaining customers.

3. Look for cost-effective ways to make their channels more integrated and customer-focused.
Highly Competitive Scenario: With the competitive door continually ajar, existing banks are constantly under threat.

Several other industries have chosen to enter banking services including, but not limited to, retail brokerage firms; life insurance companies; property and casualty insurance companies; health care insurance companies; and retailers and e-commerce companies forming their own BCs/BFs.

Given the deep understanding of the customers from bottom of pyramid, We at FINO understand the existing bottlenecks in proliferation of micro insurance and the practical ways to overcome them.
We launched FINO SURE – Insurance services for the low income group, with following inherent leverages:
• Leverage of group
• Leverage of Institutions and systems
• Leverage of transactional infrastructure
• Leverage of technology – instant & paperless process
Having an affinity group of large base of low income group customers keeping in mind the following key points

Some key points
1. The facility of Insurance – both Life (pure term life) and General (Group personal accident),
2. provision of instant and paperless enrollment,
3. along with meeting the underwriting requirements.
FINO has selected one life and another General Insurance company for providing the customized product to their group of customers – on voluntary basis.

Looking at the practical requirements of the customers, We offered Life term plan (i.e. pure risk cover) of Rs. one lakh sum assured and Group Personal Accident (GPA) of Rs. 50 thousands and 1 lakh of cover. Thus, at one end the sum assured is as per the defined microinsurance limit (Rs. 50,000), but at the same time looking at the current basic financial needs of low income customer in hour of needs, it has also provided a cover of Rs. 1 lakh as selling large quantities of insurance that costs very little and provides little benefit has limited value, no matter how widely it is sold.

Another very important aspect of FINO SURE is the fact that the 10,000 strong agents (called “bandhu”) are very well trained in Insurance , who in turn reaches to all their customers in rural and under banked areas and sensitize them on the need of Insurance, thus elevating the level of financial literacy for the much needy section of the society.
Our product has penetrated to 14 districts like Bijapur, Gulbarga, Kolhapur, Rewa, etc. and has covered successfully 5000+ lives in the first phase, which is targeted to escalate to more then 100 districts in the next phase of launch.

I will be happy to answer any queries the readers have on this post. Haapy reading FINO Koshish Blog.

4. Increasing efficiency of operations.

Electronic banking can significantly increase the efficiency of transaction processing.

5. Controlling development costs.

Any technology-based project is at risk of significant cost overruns and electronic banking is no exception.

• Cost dynamics are changing with the introduction of low-cost ATMs.
• Nature of the relationship that a financial institution has with the developer of an e-banking solution.eg Teba Bank in South Africa developed its systems through a joint venture agreement with its solution providers, and this seems to have resulted in a feature- rich product managed with careful cost control

6. Distribution. Crafting

A distribution strategy is at the heart of the any electronic banking solution. A number of factors influence the distribution strategies.
• Technology costs, communications costs are falling. The latest generation of POS devices can be battery operated and operate on GSM (Global System for Mobile communication) networks. This allows POS devices to reach much more remote areas.
• More and more major banks are upgrading their acquiring infrastructure (ATMs and POS devices).
• It is increasingly possible to sell a range of products from a single POS device. This changes the economics of the merchant hosting the device and may increase the profitability for the bank providing the device.
A host of questions needs to be answered before an appropriate distribution strategy can be designed.
• What type of infrastructure can be put in place?
• Where the infrastructure should be placed?
• How should infrastructure development be phased?
• Should distribution be fully or partially outsourced, can the infrastructure be franchised?
• Should the solution be online or offline?
• Is there a sufficient business case for each partner in the distribution infrastructure?
Unfortunately there is no one correct answer to these questions as the answers depend on many inter-related factors including the competitive environment, the availability of technical resources, the availability of capital and the strength of the different business cases.

7. Partnerships.

Except perhaps for the larger banks or in the case of solutions with tightly defined functionality, e-banking solutions require a partnership approach to achieve scale (see Table 4).
Partners in an e-banking solution include,
1. Application service providers
2. Banks
3. Communications providers
4. Merchants
5. Government departments
6. Post offices and/or post banks
7. Microfinance institutions
8. Petrol stations
9. Transaction processors etc.

A critical partnership is that between the IT system developer and the host bank. A vendor relationship with the developer is transient, and the vendor and the host financial institution can have very different objectives.

8. Developing multiple business cases. Each partner in an electronic banking solution has to have a firm business case in favour of the solution. While providing a service that the end user values, the financial institution must satisfy the requirements of a range of different partners each requiring slightly different benefits from the electronic banking solution.

Happy Reading the Koshish Blog

Financial Information Network and Operations (FINO) is an organization committed to the cause of Financial Inclusion. It has already a customer base of 15 millions, which is targeted to grow to 25 millions by 2011. The customer base of FINO is primarily from bottom of pyramid and under banked segment, which it provides financial services on behalf of various financial institutions.

We at FINO riding on the philosophy of Financial Inclusion, are taking this service of Insurance to the bottom of pyramid people, These people at the bottom of the pyramid have high vulnerability. The reasons of this vulnerability being untimely death, critical accident of their earning member, illness etc
Since all of above perpetuate poverty. It is vital that access to insurance becomes an important strategy for reducing poverty among this highly vulnerable section.

The good news is that India is amongst few of the developing countries, which has clearly stated regulation and definition for “microinsurance” (i.e., insurance services geared to low-income people).It includes

1. A clear guideline for microinsurance which was formulated in the year 2005, where sum assured from Rs. 5,000 to Rs. 50,000 is considered under the microinsurance ambit, apart from other guidelines.

2. Insurance Regulatory Development Authority (IRDA) has came out with compulsory mandate for all Life and General insurance companies to cover the rural and the social sectors (which varies according to the number of years of operation of that company).

But the challenges are enormous for microinsurance. And the reasons are outlined below.
a) Many microinsurance schemes are quite small in coverage, leaving the vast majority of poor people without adequate protection.

b) Microinsurance in India is for the most part driven by compulsory credit life insurance and the growth of the microinsurance industry is therefore largely driven by the growth of microfinance.

c ) Poor risk mitigation: Only 10% of microinsurance policies are estimated to be sold on a voluntary basis – of these, up to 90% is endowment products rather than pure risk products, which is the real need of the poor for risk mitigation.

d ) Lack of awareness about microinsurance

e) The development of the microinsurance market has thus far also been inhibited by a lack of formal financial services infrastructure in rural areas, which undermines cost-effective microinsurance distribution, as well as a lack of actuarial data.

All in all only about 2% of the low-income market is estimated to be reached by microinsurance*, despite rural and social sector obligations on insurers and the creation of microinsurance agents within regulation.

The uptake of microinsurance has seen some increase but is mainly linked to the growth of the microfinance sector rather than micro-insurance per se

In my next post will talk about what we are planning to do at FINO to tackle this issue. Keep watching!!

In my view from an institutional perspective, the electronic banking solution should increase profitability. This means careful consideration of
1. Functionality
2. Building volume through segmentation
3. Fees and charges
4. Efficiency
5. Controlling
6. Development costs
7. Distribution channels
8. Partnerships and
9. Developing multiple business cases.

1. Functionality

“One debate is then whether to provide a low-cost, lower-featured product to prevent cannibalization of services targeted to the high-value market, or whether to provide a feature-rich product whose profits are driven by lower fees but relatively higher transaction volumes.”

There is a continuing debate over the level of functionality that should be provided by electronic banking solutions. Established commercial banks have an incentive to maintain the status quo. it is the newer banks with a lower investment in physical infrastructure who stand to benefit more from falling development costs for back office systems and the rapidly reducing cost of communications, of ATMs and of POS devices. One of the key features is that it will be accessed through a card which can be used on any of the ATMs of any of the participating banks, using the same pricing, i.e., no additional switching costs. The assumption of the big banks is that one cannot profitably provide a cheap product with high functionality to the low-income market.

2. Segmentation

Segmentation within an e-banking initiative is a key to profitability. Segmentation implies using the e-banking platform to sell differentiated services to different groups of customers. Segmentation allows financial institutions to match customers with optimal products and delivery channels. Have a look at the table below.

Some of the most obvious segments include:
• Own customers. An existing customer base is the most obvious market segment for electronic banking. Clearly, extending electronic services to existing customers risks cannibalizing existing products and services. Against this, is the expected benefit to be gained from decongesting banking halls and processing transactions at lower cost.
• Distributors. Business-to-business use of electronic banking allows the transfer of value between distributors and their customers, without the physical transfer of cash. This considerably reduces the risk to distributors.
• Loyalty cards. Fuel companies are the most obvious customers for loyalty cards. The fuel card is usually either co-branded with the financial institution, or simply branded by the fuel company. The fuel company is normally the issuer of the card to the public. The e-banking platform is also used to transfer funds between the fuel company and its distributors as each fuel delivery is made.
• Government. Governments make a number of transfer payments, e.g. pension and benefit payments. In South Africa and many other countries including India, pensions are already being paid to more than 5 million clients through smart cards.
• Corporate salary payments. Given falling ATM prices, employers in Africa are being targeted for a new service – on-site payroll processing through ATM machines.
• Community phones. Community phones take mobile phone technology into communities, usually under the brand of the mobile telephone company. For example, mobile franchisee kiosk operators can deposit funds in their ABC Bank-Card accounts in Post Offices, ABC bank branches and major supermarket chains and can top up their airtime at any time.
• Microfinance/Credit Union Cards. Microfinance programmes or credit unions can operate an advanced electronic solution through partnership with a financial institution, or through a collective approach which is being actively pursued in India by Banks.

3. Fees and charges.

Modeling the success of an e-banking product depends on accurately predicting the behaviour of customers towards the product. Assumptions must be made by each segment for ATM usage, POS transactions, the percentage of transactions that are on our network, that are off our network, etc. The challenge is that many variables are difficult to predict before the solution is in operation, at which time considerable sunk costs have been invested.