RFID Technology for Rural Banking

Using newly developed RFID enabled phones, banks in India can now work more efficiently when performing microfinance activities in rural areas.

Thanks to NXP, a semi-conductor company recently spun out of Philips, and A Little World, a technology development company, this next generation solution will let over 45,000 people in rural India access full featured banking services in their village.

NXP has designed a mobile that encloses an RFID card, which will work with A Little World’s micro banking platform, ZERO. Radio frequency identification, or RFID, is a technology that uses radio waves to automatically identify people or objects. There are several methods of identification, but the most common is to store a serial number that identifies a person or object onto a microchip that is attached to an antenna. The antenna enables the chip to transmit the identification information to a reader, the mobile in this case. The reader converts the radio waves reflected back from the RFID tag into digital information that can then be transmitted to computers for processing, in this case A little World's ZERO Platform.

The mobile acts as a branch of the bank by storing the entire database of customers in the village and neighbouring areas within the phone’s memory, protected by a high security chip built into the phone. The mobile encloses a smartcard, which biometrically stores the identity of the customer such as name, address, photograph, fingerprint templates and relevant details of the savings or loan accounts held by the issuing bank.

The pilot project brought customer service points equipped with new generation NFC (Near Field Communication) enabled mobile phones, contactless RFID smart cards and integrated biometrics. Seven banks were involved in the pilot in over 450 villages across four states in India - Uttarakhand, Mizoram, Meghalaya and Andhra Pradesh.

For participating banks, it is an important step that will eliminate the cost and effort to set up physical branches in rural areas, while providing full services for cash deposits, cash withdrawals, utility payments, money transfers, micro-insurance, and cashless payments.