Thumb-Print Banking Takes India

I wrote this story that came out on Wired News today about biometric ATMs. While I was researching it the idea came to me that while using your thumb instead of a PIN code could be quite problematic. I've heard stories about brigands in Bihar and Rajasthan who cut off women's arms to get their bangles and it isn't so much of a stretch of imagination that someone would cut off the thumb of a farmer to access his/her account. A person who commented on the story on Wired News also pointed out that if a farmer injures his thumb (a common enough thing when working with your hands all day) then he might get locked out of his account. What do you think?

Thumb-Print Banking Takes India

CHENNAI, India -- Banks and ATM machines are an unfamiliar sight in the rural countryside here, but the government hopes to change that with new technology that could ease the transition from cash to computers.

A pilot program will put 15 biometric ATMs at village kiosks in five districts across southern India. The machines are expected to serve about 100,000 workers who will use fingerprint scanners, rather than ATM cards and PINs, to obtain their funds.

Biometric ATMs are already in use in Colombia and a few locations in Japan, but haven't caught on in much of the rest of the world. As a result, biometrics companies are watching the experiment closely as a potential watershed for the industry.

Nagaraj Mylandla, managing director of Financial Software and Systems, which helped design security protocol for the new system, said there are 35,000 non-biometric ATMs in India today. In three years the number of machines is expected to triple to more than 100,000, leaving a window of opportunity for suppliers to make the new technology standard issue for all new machines.

The increase will mean that just about every rural village and outpost will have access to the world's financial backbone and, if the pilot program is successful, fingerprint identification could become standard, even for private bank transactions.

"Many banks here are keen on this idea of doing away with ATM cards," said Sunil Udupa, CEO of AGS Infotech, the company supplying the first batch of ATMs to the five districts in India. "Whether it is practically possible is a very different question, but the interest is huge."

Officials hope the plan will bring billions of rupees currently being held in private hands into the banking mainstream, and that it might even shelter the country's poor from the ravages of inflation, theft and widespread corruption.

For example, some believe e-banking will help eliminate several layers of middlemen who manage, and often siphon off, government-allocated funds earmarked for low-income workers.

Under the current system, money gets sent from the government coffers and passes through the desks of dozens of bureaucrats and private contractors. Each tends to take a cut along the way so the money that reaches workers is usually only a fraction of what was allocated. Electronic banking will eliminate the middlemen, and provide a real increase in rural wages.

"This is really meant to cut down on corruption," said Mylandla. "The whole structure is designed so that only the people at the end get the money. No one in between can steal it along the way."

The program is not without its critics, however.

For example, privacy issues may arise in switching from user-generated numeric codes to bio-data. According to Mylandla and Udupi, law-enforcement agencies have already expressed interest in having access to the data for fraud prevention and to track known criminals through fingerprint transactions. It is unknown what other agencies might be able to see the data.

Another concern is that in some of the more crime-ridden areas of the country, fingerprint IDs could give rise to a new sort of crime where bandits chop off digits in order to withdraw cash from ATMs. Without a PIN code, a robber would be able to enter an account using a severed thumb.

In the last several years there have been several incidents of bandits chopping off hands to retrieve gold bangles from women's wrists, and last year in Malaysia bandits cut off the thumb of a man driving a sports car in order to activate the biometric thumbprint ignition.

Those implementing the biometric machines in India scoff at the idea that this could become a problem.

"I have heard of instances where people get held up and gunpoint and told to enter their ATM pins with ordinary cards," said Gopal Shekar, director of corporate communications at FSS. "The danger of violence is the same with biometric cards. Besides, the most anyone can withdraw in a day is 10,000 rupees ($230). Who would kill someone for so little?"

Whether that proves true or not, bringing poor farmers into the banking fold won't be easy. The project will have to overcome communication barriers posed by the thousands of dialects in the country, not to mention illiteracy and unfamiliarity with computers.

The first prototype ATMs used PIN codes and written instructions, and failed miserably.

"The main problem is that most farmers are illiterate and only speak local dialects," said Udupa. "The farmers couldn't remember their PIN codes and didn't understand the on-screen instructions. So we developed a fingerprint interface with audio and visual instructions that they could understand."

Udupa thinks farmers are comfortable with fingerprint technology because they have already been introduced to other government projects that use biometrics. Bhoomi, a widely accepted land-record program in the state of Karnataka, uses fingerprints to verify owners of land records.