Villagers in India have to travel miles for basic amenities such as food and medical facilities. In these circumstances, access to banking services may seem like a dream. But not anymore. Thanks to an ATM built for rural India by the Chennai-based Vortex Engineering.
Vortex’s Gramateller ATM was conceived for rural India, but given its rich features, it can possibly find ready markets even outside and give multinational ATM vendors a run for their money.
The idea of an ATM for rural India took root in the early part of the decade when Vortex’s founder, R Kannan, an alumnus of IIT Chennai, along with professor Ashok Jhunjhunwala, Bhaskar Ramamurthi and other faculty, were working on ways to leverage technology for rural benefit.
Around the same time, a few banks approached IIT for help with rural banking. The team experimented with installing ATMs in a rural area near Madurai in Tamil Nadu, and the results were encouraging — people were able to use the ATM without assistance but the hitch was the high cost.
“Acceptance was good but the ATM was too expensive for places with low footfalls such as rural and semi-urban areas,” says Mr Kannan. Conventional ATM costs were around Rs 5 lakh, and including the air-conditioning and the room to house the ATM, the installation costs would spiral to Rs 8-10 lakh. Another big hurdle was long power cuts, because of which the ATM would be unusable for hours.
In working out on how to overcome these hurdles, Mr Kannan and IIT’s faculty eventually came up with Gramateller after four years of innovation in the design, electronics and mechanics.
“It was a tough investment. It took a long time to perfect,” recalls Vineet Rai of Aavishkaar, a venture capital (VC) focussed on social and rural investments, which pumped in Rs 10 lakh along with another VC firm, Venture East, when Gramateller was still in concept stage.
Gramateller’s cash dispensing machine (CDM), which is the heart of the ATM, accounts for a large part of the innovation, which makes it less power-hungry and cheaper — a basic Gramateller model costs Rs 1.75 lakh, one-fourth the cost of a conventional ATM.
In conventional ATMs, the cassette, where currency notes are stored, is vertical and requires a spring or piston to push the notes when they have to be dispensed. In Gramateller, this cassette is horizontal and the notes are dispensed using a gravity-assisted mechanism, saving power.
Conventional ATMs consume about 1,800 units of electricity a month, but Gramateller requires 72 units, says Vijay V Babu, CEO, Vortex. Less power means less heating and therefore no need for air-conditioning. “Frugal engineering definitely helped,” he adds.
The ATM runs on Linux, which is an open source software, unlike conventional ATMs that run on Windows for which licence has to be purchased. It also has a built-in UPS, which ensures the ATM doesn’t go down when there are power cuts, and the option to run on solar energy.
Other unique features include fingerprint-based biometric authentication and the ability to dispense soiled notes. Vortex started with seed funding from Venture East and Aavishkaar in 2006. Ray Stata, founder of semi-conductor firm Analog Devices and Switzerland-based Bamboo Finance invested in 2008 and 2009, taking the total VC investment to Rs 30 crore.
Vortex launched Gramateller commercially in 2008, and after a pilot with State Bank of India in the same year, the company has now clinched an order for 545 ATMs from the bank. Orders have also started coming in from private banks. The manufacturing of the ATMs has been outsourced to a contract manufacturer.
With about 80% of India’s population in rural areas and less than 10,000 ATMs, there is a huge latent demand, feels Babu. “India has an installed base of around 45,000 ATMs — the ideal ratio is 1 ATM for every 1000 people.
So, to even get to 1 ATM for every 10,000 people, India would need over 1 lakh ATMs more,” he says. Enquiries have also started coming from African countries and Indonesia, Malaysia, Afghanistan and Pakistan.
“From here, I only see the value of Aavishkaar’s investment enhancing. Not only because profits will start coming in from sales, but because the business has huge potential to scale up,” says Rai. For Rai, whose fund invests in social ventures, it is another vindication that good intentions can multiply.