Micro Loan Kiosks for Banks & Microfinance Establishments

Microfinance establishments can leverage the benefits of micro loan kiosks to offer small, short-tenure loans to the blue-colored employees, underbanked and underserved populations. In short, these small-term loans can serve individuals who have limited access or exposure to the mainstream banking services. Micro loan disbursement kiosks are gaining popularity at a fast pace, especially in the middle-east and Africa region owing to their improved user experience and ease of loan disbursal. The easy-to-use interface coupled with step-by-step instructions in multiple languages make the loan application process smooth and highly convenient for blue-colored workers.

The micro loan self-service kiosk automates and streamlines the loan application, approval and disbursement. As a result, the customers need not visit the physical branches or perform an app-based loan application and verification process.

This blog will delve into how these kiosk terminals benefit banks and other microfinance establishments, with special emphasis on the role of video conferencing.

Components of a Micro loan kiosk

The micro loan kiosk comes with top-notch hardware and software components to handle seamless disbursement of loan amount. Below are the various hardware and software components.

Hardware components

• Intuitive touchscreen - The users can easily follow the instructions displayed on the kiosk screen, and input their credentials as part of the loan application process.
• High resolution camera - The high-resolution camera is necessary for customer identification and verification.
• Document scanner - Performs high-resolution scanning of vital documents which speeds up the document verification process and ensures document accuracy.
• Card reader - Reads banking card information and facilitates digital disbursement
• Cash dispenser - Performs disbursal of cash, the users can collect the cash right on the spot.
• Receipt printer - Prints the confirmation receipt regarding loan agreement and disbursal.
• KYC devices - The kiosk terminal is loaded with dedicated hardware components to streamline the KYC process like Civil ID reader, passport scanner, facial recognition or fingerprint scanning facility.
• Digital signature pad - To input customer signature in a highly convenient and organized manner.

Software components

• Kiosk OS the OS manages the overall kiosk functionality.
• UI application the software makes the loan application process smooth and highly convenient for the applicants.
• Loan Management application the software takes care of the loan application process, approval and the final disbursement based on bank’s policy or other rules and regulations.
• Remote monitoring application track the performance of the kiosk terminal, and is instrumental in gathering usage and maintenance-related data.
• Credit score assessment software the software performs the risk assessment based on the applicant’s financial history, credit score and other relevant metrics.
• Payment Gateway Integration the software facilitates loan repayments via kiosk machine.
• Security application The security application protects the customer data, and includes firewall and data encryption.

How does a micro loan kiosk work?

The kiosk works on the basis of self-service loan application and disbursement. And it does not involve the conventional paper works, time-consuming human intervention and repeat branch visits.

The customer just needs to visit one of the kiosk terminals with all the relevant documents. Once eligibility and verification get completed, the loan amount is instantly disbursed through the kiosk terminal. And the quick disbursal of loans adds to the convenience of the customers.

Here is how a micro loan kiosk works.

1) User identification and authentication

As the preliminary step, the user has to go through the identification and authentication process. The user needs to scan the government ID card or the relevant document at the ID scanning device to perform the authentication. The users may also perform biometric authentication, if the kiosks are equipped with biometric device authentication.

2) The application processes

• Input user credentials After successful authentication, the kiosk terminal prompts the user to enter the user credentials like contact information, details regarding salary, status of employment etc.
• KYC via video conferencing One of the key features of Panashi micro loan kiosk is its seamless video conferencing capability.

The user may submit all the necessary documents for KYC via the kiosk terminal. And the documents are verified by a remote agent through live video chat. The use-specific device integrations of the kiosk terminal offer top-notch user experience, thereby streamlining the document submission process.

Benefits of video conferencing

Video conferencing capability of the micro loan kiosk makes the application process smooth and convenient. Even applicants with limited exposure to technology can access the kiosk terminal as part of loan application. The benefits are listed below.

• User convenience The live agent can guide the users/applicants through the entire process eliminating all sorts of confusions or delays. The incorporation of large print keyboard and the integration of use-specific components make user navigation highly convenient.
• Improved security the agent remotely verifies the applicant, and every submitted document, and this prevents malpractices and fraud.
• Reduced errors the real-time agent-assisted verification eliminates the chances of errors while submitting or uploading the documents.
• Build customer trust The live interaction with the remote agent is instrumental in building trust and rapport with the customers. The customers may clear all the doubts and queries during the live interaction which serves as a “confidence-booster”.
• Enhanced customer experience the streamlined application process, remote agent assistance, improve the overall CX. To add on, the customer need not wait in front of help desks or spend hours in physical branches for loan issuance.

3) Credit score check

Checking the credit score of the applicant is one of the important aspects of issuing any loan. The kiosk makes use of a dedicated credit score assessment application to check the credit score. The assessment is done by evaluating the financial history and reliability of the applicant.

The credit score verification is done through an integration with national credit agencies. The National credit agencies gather data based on multiple aspects like the applicant’s financial history, outstanding debt, repayment records, etc. The applicant’s financial data is retrieved from one or more credit agencies for better accuracy. All these processes take place in few seconds. After evaluating the credit score and performing the risk assessment, the system decides applicant’s eligibility for the loan.

Yes, the process is smooth, straight-forward and quick.

4) Approval and disbursement

Once the applicant is declared eligible, the system approves the application and generates the loan amount, along with the rate of interest and tenure.

And there you go! It’s instant approval. The approved amount is disbursed either in cash or transferred to the bank account of the applicant. If the applicant prefers to collect the loan amount in cash, the sanctioned amount gets disbursed via the cash dispenser in few seconds.

5) Confirmation receipt

Once the amount is disbursed, the kiosk machine instantly issues a digitally signed copy of the loan agreement and disbursement receipt. The receipt is issued both in print and digital formats. The digital conformation receipt is sent to the applicant via email or SMS.

Certain Facts on Microfinancing

• 1.4 billion people worldwide, are still devoid of bank accounts – Word Economic forum.
• Microfinancing have resulted in an increase in the account ownership rates of Saudi Arabia and UAE. During the time period 2011 to 2021, Saudi Arabia witnessed an increase in account ownership rates from 46% to 74%.
• In the same time span, UAE witnessed an increase in account ownership rates from 60% to 85%.
• Some of the leading microfinancing banks and establishments in the UAE are Emirates Development Bank, Mashreq NeoBiz, Noor Bank, Commercial Bank of Dubai, RAKBANK etc.

Benefits of micro loan kiosk terminals

Micro loan kiosks present several benefits to both banking and non-banking financial institutions in the middle-east. The major benefits are listed below.

• 1) Video conferencing facility
  • Improved customer experience and satisfaction - The live video chat facility via remote assistance helps the customers accomplish KYC-related formalities easily without any errors. The live chat assistance instils confidence and trust among the customers.
  • Avoid loan frauds and malpractices – The customer identity and documents are verified thoroughly by the remote agent, and hence no room for financial frauds and other discrepancies.
• 2) Instant approval and disbursal if the applicant is eligible, the loan amount gets instantly approved and disbursed, without any waiting period.
• 3) Cash disbursal facility Panashi’s micro loan kiosks are equipped to disburse the loan amount in cash which significantly helps the underbanked population. In the practical sense, the facility helps the blue-colored workers, domestic workers, and other individuals who have limited access or exposure to technology.
• 4) Easy repayment via kiosk terminal the service provider can integrate loan repayment facility into the kiosk machine, so that customers can pay their monthly EMIs via the same kiosk terminal. Repayment option via micro loan kiosks, again, adds to the convenience of the customers. The benefit is obvious, they need not visit physical branches or perform app-enabled/online repayments.
• 5) Secured transactions the customer information and transaction details are data-encrypted. Data encryption prevents unauthorised access or intrusions of any kind, and keep the transactions safe and secure.
• 6) Remote monitoring and maintenance The micro loan kiosk or the network of kiosks can be monitored effectively from a centralized location by a remote admin. The admin may deploy software updates and patches, as and when required. Moreover, the technical team may perform software-related repairs or troubleshoots remotely without visiting the actual site of the kiosk. Avoiding site visits as part of system maintenance and repair also reflects in cost savings.
• 7) Gather vital customer data The kiosk system can gather vital customer information related to loan preferences, opted amounts, loan approval and cancelled data etc. The data helps the service providers optimize their loan offerings to better suit the needs of the target customers.
• 8) Financial inclusivity By helping the underbanked communities with financial services, the instant micro loan facility ensures financial inclusivity.
• 9) 24/7 financial services the kiosk terminal operates 24//7 providing consistent and uninterrupted services day in and day out.
• 10) A perfect alternative for physical branches The kiosk terminal serves as an automated loan approval and disbursal platform with reduced operational expenses. Deploying these kiosk terminals at strategic locations helps financial institutions widen their presence and customer reach. And of course, the kiosks are far more economical than the conventional money-lending physical branches.
• 11) Helps underserved population Apart from deploying these machines in urban centers, you may deploy them in rural areas too. This helps in serving the needs of the underserved population in rural areas.

To conclude

Micro loan kiosks play an integral role in improving the financial accessibility and inclusivity, especially to the underserved and underbanked populations. These kiosk terminals consume far less space and resources compared to the conventional branch set up, thereby presenting an affordable, automated and secure microfinancing platform. They serve as highly convenient facilities for accessing loans to meet the immediate financial or emergency needs of a large number of individuals. Therefore, micro loan financing should not be a financial decision alone. The money lending houses, the Islamic financial institutions and other microfinancing establishments have much to consider regarding the social implications.

If any assistance needed in the conceptualization and implementation of micro loan terminals, Panashi’s dedicated technical team is always at your disposal. Let’s have a quick chat!