approximately 40 per cent of Indians lack access to formal financial services. the biggest barrier is cost of penetration. last week, i met with Shan Shank Chowdhury, VP at A.Little.World, a mobile software business in Mumbai who has developped a microbanking platform called “ZERO”.

the platform relies on Custom Service Providers (CST) in remote villages to deliver financial services. a CST is a local entrepreneur who uses a cell phone, combined with a RFID reader and a fingerprint. local bank customers show their bank card, which includes biometrical datas (picture and fingerprint). the CST verifies the identity of the customer, and performs the transaction via mobile phone.

a typical case in rural India: a woman buy and sells vegetables during the day at the town market. when she comes home in the evening, her man takes the money for drinking. ZERO lets her deposit the money right when she leaves the market, and pick it up again the next day.

the complexity of the system is humongous: 14 states in India, 16 banks, 200 villages (1000 planned for June 08)… the only negative point i see so far is that only large banks are involved, not small local ones.

ZERO will also be active in the national remittance markets, by dramatically shortening the time it takes for money to reach the beneficiary (currently 7 to 10 days) and lower the cost of the transaction to 1/10th of the current cost. there are currently 2 pilots in Dehli and Bihar.