Integrating Iris Scanning Biometrics With An Eye On Banking Inclusion

New digital authentication tools are allowing India’s rural consumers to open bank accounts in the blink of an eye.

As India moves to a cashless society, new digital banking tools — such as iris scanning technology — are being adopted by the nation’s banks to help verify customers’ identities. The availability of these digital tools is expected to expand significantly in India, following the Indian government’s decision to remove 500- and 1,000-rupee notes from circulation last year. In early March, the Indian government asked the nation’s banks to offer all of their customers mobile banking by March 31 in an effort to make digital payments more widely available.

India’s push toward becoming a cashless society is also allowing new customers to become part of the nation’s digital banking network. This includes customers who live in more rural parts of the country, such as farmers and other agricultural workers.

To elaborate on how new digital tools are helping rural customers get access to more modern banking solutions, PYMNTS recently spoke with Narendranath Mishra, head of agricultural and inclusive banking at DCB Bank in Mumbai, about how biometric solutions like DCB Bank’s iris scanning system is offering consumers in rural parts of the country easier access to digital banking tools.

Bringing Digital Banking to India’s Rural Communities

Mishra said offering India’s rural customers the option to use an iris scan can relieve them of the burden of physical paperwork and expedite the process for authenticating the customer’s identity.

He pointed out that in the past, the know-your-customer (KYC) process took several days and relied on physical documents, such as photocopies of relevant ID documents and address forms. If a customer from a rural area is not able to easily access a photocopier or a copy is difficult to read, it can further delay the customer’s authentication.

“It was a cumbersome process for the banker and also for the consumer,” Mishra said.

In an effort to make the authentication process less cumbersome for rural consumers, DCB Bank launched a pilot program to test its iris scan authentication tool earlier this year. The program ran over the course of three weeks in 10 of DCB Bank’s branches in rural and semi-rural areas.

During that time, DCB Bank reported it saw 200 accounts updated with the iris scan technology, including 100 new accounts. The 100 new accounts were pre-opened, which means once the iris scan took place (after roughly 10 seconds), the bank could pull the customer’s Aadhaar details (India’s national identification number) from a central government database and connect that information to a specific bank account within a day.

Customers were able to open accounts by allowing the bank to scan their irises using a DCB Bank “phablet” device. Once the bank confirmed that the person whose eyes had been scanned matched the details in the Aadhaar database, the Indian KYC process was completed.

The system also enables customers to use the iris scans to update their Aadhaar numbers with the bank. Mishra points out that this is an important step for the customer as the Indian government moves to channel subsidies directly into citizens’ bank accounts.

Mishra said that he and his team were able to go directly to where customers in the rural parts of India worked to complete their iris scans and verify their identities using the phablet devices. Being able to directly reach their customers allowed the bank to complete the KYC process without disrupting their customers’ work schedules.

Since introducing the iris scan technology, Mishra said the KYC process has been progressing at a faster rate, which is convenient for customers in rural locations.

“There’s a ‘wow’ factor,” he said. “The customer is very happy because something that once took eight to 10 days to complete, today can be completed instantly.”

Following the pilot program, DCB Bank said it plans to further expand the availability of its iris scan technology to all of its nearly 250 branches over the next six months.

An Eye on Demonetization

Mishra said the need for the authentication tools like DCB Bank’s iris scan technology will expand as India continues its push to become a cashless society. While the move has been a controversial decision by the government, he said the transition ultimately encourages customers from rural areas to adopt to modern banking practices.

Since the demonetization decision took effect, Mishra said the number of accounts opened at the bank have “substantially increased,” and that the move has motivated various businesses, consumers and merchants to open digital bank accounts so that they can more easily participate in India’s growing digital marketplace.

“The demonetization decision has helped us to bring more people into India’s banking system,” he said. “For us, this is a very good opportunity to play our role in digitizing our economy.”

Expanding India’s Digital Banking Reach

Part of helping to digitize India’s economy is getting more customers to link their bank accounts with their Aadhaar details. According to Mishra, DCB Bank has approximately 600,000 members, many of whom still have not linked their Aadhaar numbers with their bank accounts.

Helping customers link their Aadhaar information with their bank accounts will help give them easier access to their funds, Mishra said. In addition to its iris scanning technology, DCB Bank also operates about 70 ATMs in India that allow customers to access their money using a combination of fingerprint authentication and their Aadhaar number for verification instead of an ATM card.

Over the next few months, Mishra said he plans to have his staff help more customers link their Aadhaar data with their bank accounts in an effort to get more customers to participate in the country’s digital banking structure.

While Mishra does not believe that India will ever go completely cashless, he said banks should take the lead in educating India’s citizens about the benefits of embracing modern banking technologies.

“One of the things we’re exploring is ways we can help customers carry less cash,” he said. “Carrying less cash is more convenient for customers, less cumbersome and less expensive for all.”

Reaching a New Generation of Banking Customers

Reaching younger customers will be a key component of India’s effort to educate citizens on the benefits of digital banking tools, he said. So far, Mishra said the move to get Indian customers to change their banking habits is going successfully, especially among younger customers.

“The older person has been doing banking tasks a certain way for a longer time, while the younger person is more tech-savvy,” he said.

While older customers may not be as ready to try and then embrace new banking methods like their younger counterparts, Mishra said he sees an opportunity for younger generations to help inform older customers about the benefits of digital banking tools. DCB Bank hopes that getting younger customers interested in newer digital banking technologies will encourage them to share their interest with their parents and, as a result, help older customers accept more modern banking habits.

With financial institutions increasingly offering biometric tools intended to provide customers with a more convenient banking experience, along with the push by the government to become a cashless society, India’s digital banking industry may be poised for significant expansion. And, of course, any way one looks at it, India’s ambitious effort to demonetize will be a journey worth keeping an eye on.

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