Leveraging technology to enable inclusive banking

Future Factory Labs Centre for Behavioural Research

India has the second largest unbanked population in the world. A financially inclusive society is critical to building a healthy society, but many as 191 million Indians over 15 years of age in India, do not hold a bank account. The government had formulated a policy to bring in “un-banked” communities into the formal banking world, offering sustainable financing to vulnerable communities, and this opened new opportunities for the corporate sector. Future Factory was engaged to understand cultural codes and how user behaviour and attitudes would influence possible solutions around technology enabled banking solutions.

The research and strategy team at Future Factory, set off on an ethnographic mission, spending months living with potential users, watching them transact for goods and services, exploring their beliefs and motivations around technology and money. Then followed a series of workshops and strategy sessions, that helped explain behaviour and outline directions for solutioning.

Three distinct directions emerged around big socio-cultural themes that influenced the final solutions:

Industry Industrial
  • Research
  • Strategy
  • Design
Disconnect between banks and their customers:

There is a strong disconnect between banks and rural customers, which is a major reason for many communities staying out of the formal financial system. Three major reasons contribute to this disconnect. The first reason is the large geographical distance between the bank location and the users’ residence. Despite several attempts to build reach, there are only 7.8 bank branches for every 100,000 rural adults, and in some villages the nearest bank could be as far as 5 kms away. The second major reason is ‘Communication’.. India has 22 official languages with the local dialect changing every 20 Km. Bank formalities are usually processed in the state official language or national language, often alien to the dialect of rural folk. The problem is further compounded by a high level of illiteracy in rural India, making it difficult to read and fill forms. This build mounting work for bank officials, and social embarrassment for potential users. Lastly, reliance on complex formal systems, seems daunting for people who are comfortable working with informal relationships. And this makes the banking system overwhelming and formidable to these communities.

Credit systems and relationships:

Rural India lives around trust and relationships and this is as true for banking and money matters. The culture of borrowing money from relative or friends works well because it is primarily based on trust and relationships. But also because given the low income nature of the user group, there is a strong possibility of non-repayment. In such cases, rural folk believe the situation can be best managed by leveraging their personal relationship with the money lenders, as compared to a formal repayment system with banks which in contrast might hold a higher possibility of annexing assets. More than ever, the shame and loss of face under the extenuating circumstances of asset repossession by banks is a source of high anxiety.

Technology and Trust:

Penetration of mobile technology in India is more than 90%, almost double that of refrigerator penetration in Indian homes. So much so that India represents one of the largest markets for mobile products in the world. With such high adoption of mobiles, rural users have a high degree of familiarity with technology. However, it is the unfamiliarity of working with non-cash transactions that forces the low penetration of banking in rural communities. A good way to overcome this is to use a member of the local community as a bridge to creating the connect. Given that trust is such a high factor, this often enables the adoption of technology in banking for local communities. Some successes are evident in local self-help groups that offer financing, and in the “Bank Correspondent” system operated by public sector banks.


The insights from the research immersions formed a framework for explaining the motivations that drive behaviour in potential banking communities. The final solution was carved around providing a secure environment for financial transactions leveraging “trust” and “familiarity” for local rural communities. The final solution was a platform envisaged as a technology product + service. The business model for the solution was drawn around a technology-based product, supported by a pay per use revenue model.

The platform was envisaged by the inclusion of several stakeholders, and around a series of value exchanges drawn between them. This was specifically important because the success of the system relied heavily on the adoption of the platform by several important stakeholders in the value chain.


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