A couple of entrepreneurs out of Kerala, India, are re-envisioning the way that banking is done. Anish Achuthan (26) and Rameena Rabeedin (28), have developed a branchless network consisting of low-cost ATMs, Smart Teller Machines, E-POS terminals, and a mobile banking gateway that lets you perform transactions using your cell phone. The end result of their efforts brings modern banking technologies to semi-urban and rural markets where traditional banks are unwilling or unable to set up ATMs.
CashNxt: Branchless Banking
Achuthan and Rabeedin did not have an easy route to success. Initially ridiculed by parents and schoolmates, the two struck out on their own to prove that they could achieve their goals. Unfortunately, the first banking venture from the duo, Mobeo Technologies, was not a success. With that project, the two had developed low-cost banking terminals dubbed "Personal Banking Machines" which used fingerprint readers and mobile PINs. The operation was shut down after a year due to unfavorable market conditions, regulations, and issues with hardware distribution.
Unfettered by the initial failure, the entrepreneurs chalked up Mobeo as a learning experience and moved on. Their new venture, CashNxt Technologies (web site is not fully functional), was launched in partnership with companies that already had similar low-cost banking devices for the poor.
Traditional banks don't set up ATMs in remote villages due to huge operational costs and poor connectivity. Cashnxt works around those obstacles by allowing service providers to use their network on a pay-per-use basis without any capital investment or additional infrastructure. Through a partnership with four banks out of Kannur, Cashnxt was able to deploy ten kiosks in parts of India.
Mobile Phone Transactions
As a customer, if you and a vendor are a member of the Cashnxt network, you can conduct transactions using your mobile phones. The merchant dials CashNxt's IVR number, enters their PIN and transaction amount, and then hears a high pitch sound on their mobile phone. The customer does the same - calls the IVR number, enters their PIN and hears a high pitch sound. The two phones are then brought together, held close enough for CashNxt to encrypt and decrypt the sounds. The transaction is then confirmed via SMS. (You can see how this works in this YouTube video.)
Using Cashnxt ATMs
Customers who want to make a transaction using an ATM encounter similar audio mechanisms as they do when mobile banking. The ATMs are fitted with audio systems that produce the high pitched sounds needed when transactions are made. Customers dial the IVR number, confirm their PIN and then hold their mobile phone up to the ATM. The transaction can then be completed and the customer can withdraw money. This system eliminates the need for debit and credit cards entirely.
Using high pitch sounds to authenticate transactions could lead to high-tech hacks. As the system is relatively new, having just launched in December, it's still unknown how foolproof it may be.
Cashnxt Technologies is a 25-person self-funded venture founded byAnish Achuthan and Rameena Rabeedin. You can reach them via email at achuthan.anish AT cashnxt.net. More info about the company can be found at goergo.in.