A recent Business Line article profiles Vortex, a low-cost ATM developer in India. Having been started by IIT Madras alumni and researchers, Vortex is beginning to facilitate rural banking through solar-powered ATMs that are installed in remote locations across India. Investors in Vortex include Tata Capital, social venture capital fund Aavishkar, the International Finance Corporation, and Ray Stata. Vortex’ targets include reaching 3,000 ATMs by 2013 and 10,000 ATMs over the next two years.

Solar powered ATMs created by Vortex are helping improve life in rural areas.

Innovation that makes a difference to people’s lives in the Indian context is often very different from what the developed world considers cutting-edge. Take the example of Vortex.

In the winter of 2004, this correspondent was invited by the then start up company to the TeNeT research labs inside IIT Madras to witness a demonstration of how a low-cost medical device can be used in tele-medicine. While this was an interesting concept, there was another exciting project going on simultaneously to develop low-cost automated teller machine (ATMs) to be used in rural areas.

Developed in that small room by the alumni of IIT Madras along with the institute’s researchers, Vortex has changed Indian banking with its low cost Gramateller ATMs. It took four years of research and development for Vortex to commercially launch the machines in 2008.

However, there has been no looking back during the last four years for Vortex. It has supplied 450 ATMs so far and is set to deliver another 250 in the next 3-4 months. It rolled out India’s, or possibly the world’s, first large-scale installation of solar-powered ATMs by setting up 300 of these ATMs for State Bank of India.
Rural outreach

A majority of Indians live in semi-urban and rural areas where access to banking is still limited. Though the concept of personal banking has undergone a major transformation with the introduction of Core Banking, the impact in non-urban locations has been limited. This is where Vortex is helping banks by having solar powered ATMs installed in remote places where setting up conventional machines – the ones you see in urban areas inside an air-conditioned room – is next to impossible due to the poor power situation.

Says L. Kannan, founder and chief technology officer of Vortex, the mission was to help banks expand in rural areas by designing ATMs that are rugged, easy to use (by using biometric system) and eco-friendly. More importantly, the machine should consume up to 90 per cent lesser power and hence can be economically operated using solar power.

Led by entrepreneurs and IIT alumni V.Vijay Babu (CEO) and Kannan, Vortex benefitted from the presence of luminaries like Ray Stata (Founder and Chairman of Analog Devices Inc), Jean-Philippe De Schrevel (Chairman, Oasis Fund), Arun Diaz (Management Consultant; formerly Head – Programme and Change Management, Standard Chartered Bank), on its board.

The five patents filed by Vortex are a testimony to the efforts of the company. Vortex was selected as one of the top 10 start-ups that will ‘change your life’ by TIME magazine; was one among 31 visionary companies selected as Technology Pioneers 2011 by the World Economic Forum and was a finalist of the Wall Street Journal Asia Innovation Awards 2010.

There is a myth that the cost of the machine could be reduced by removing some of the features. Vortex dispelled this by placing a cash dispensing mechanism, which was a vertical system than the conventional horizontal. “The latter, which has a couple of conveyor belts, consumes lots of energy for the motors,” says Kannan. “We tested around 300 machines by placing them in extreme summer locations. We did not have any software glitch due to the weather,” he said.

Vortex’s ATMs are currently serving even remote parts of rural India – using technology as an enabler to improve the quality of life. Its portfolio comprises Gramateller Indi ATM, Gramateller Duo ATM and solar power options for both these models.

The ATMs can operate at up to 50 degrees without an air-conditioner, which is impossible for other machines. One machine was installed in the Rann of Kutch (in Deora) bordering the Thar district in Rajasthan. Another machine is located in a cold place in Uttarkhand. Both these machines have withstood extreme weather conditions, says Kannan.

Investors in Vortex include Tata capital, Aaavishkar, International Finance Corporation and Ray Stata.

Says Kannan, a major problem in rural areas is the availability of power. Often, power cuts last a minimum of 6 hours in most rural areas across the country. A conventional ATM requires 500 watts of power every day while Vortex’s machines require just 70 watts.

Normal ATMs require a minimum of 35 degrees to maintain the machines, since they are made of special grade steel similar to the ones used in armoured vehicles. The steel needs lots of energy. However, Vortex’s machines can be nearly 30 per cent more economical overall, with the total cost of ownership being nearly 50 per cent less than the normal ATMs.

While the bank’s branches have a power problem, there is no way that ATMs could have access to power. That’s where ATMs run using solar energy come in very handy for machines located in rural areas, says Kannan.

For an installed ATM to be viable there should be at least 200 transactions a day. This is a benchmark in both urban and rural areas. A normal ATM costs Rs 3.5 lakh to 4 lakh, and if a UPS and an air-conditioner are included the cost increases to Rs 4.5 lakh. However, a Vortex machine costs Rs 2.75 lakh – since an air-conditioner is not required and the UPS is built inside the machine, he said.

Vortex’s plant in Chennai has a capacity to manufacture 2,000 ATMs annually and can be expanded to build 10,000 units. The company’s target is to reach 3,000 machines by next year and 10,000 units during the next two years – a sign of what could be the demand for the company’s product.