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Sunday, June 19, 2011

Low-cost banking on mobile

Two engineers from the country’s premier engineering institution decide to venture out on their own and create social impact. In the process, they create Eko, a service that fosters financial inclusion. The banking service leverages community relationships for increasing the reach of basic financial services. It provides a safe gateway for funds deposits and withdrawals. The service is meant especially for people from low-income backgrounds. Read how Eko has pioneered banking services for the country’s large unorganised sector in the second of the five-part series from India Brand Equity Foundation’s Innovations from India: Harbingers of Change
India has a large working population. Based on estimates, India has a workforce of about 540 million people that participate in economic activities. Out of this, approximately 6 per cent serve in the organised segments of the public and private sectors, while the rest serve in the unorganised segments.
The organised workforce is well addressed by regular banking channels. However, not much is known about the reach of banking channels within the unorganised sector. This sector comprises the owners of over 35 million micro, small and medium enterprises, farmers and landless labourers. The last two categories are known to have the least access to banking and other financial services. In other words, these customers are considered unviable by banks. This lack of banking reach creates a situation in which even the basic financial needs (such as insurance, credit/loan requirements) of these consumers are not met by an institutional setup. So most of the time, they are left at the mercy of the local money lenders, who charge astronomically high interest rates. Therefore, a need has always been felt for a no-frills bank that can offer basic banking services to these segments of the population.

In an initiative that was focused on addressing this need, Abhishek Sinha and his brother, Abinav Sinha, both alumni of the Birla Institute of Technology (BIT) at Mesra (Bihar), decided to start a mobile-based banking service. They had begun their professional journeys by working for reputed companies in the IT services industry. In 2002, Abhishek co-founded Six DEE Telecom solution, a telecom value-added services company. This company focussed on the online mobile prepaid recharge platform. Abhinav joined Six DEE as product manager. However, both of them exited Six DEE in 2007.
Then, in February 2009, both of them launched Eko in Delhi.
Below are the drivers for their initiative in the mobile-based banking services delivery space:
To lower the cost of financial transactions. Mainstream banks and financial institutions prefer customers of a particular income profile. This is because the cost of serving a particular client is substantiated by potential earning from that client.
To simplify the delivery of financial transactions at the front-end. Banking and financial services are limited by the presence of financial channels (that is, bank branches, ATMs and so on). Eko’s vision was to leverage the most easily available and most easily accessible device, the mobile phone, for delivering banking services.
To develop a business model that is extremely scalable. Since Eko was focussing on people with a very low income profile (earning $1 to $2 per day), it wanted to create a model that would be able to achieve economies of scale.
At the same time, the Reserve Bank of India (RBI) came out with a regulation on mobile banking services as a means for social inclusion. The regulation by RBI had a guideline which stated that non-profit companies can only become a ‘business correspondent’ akin to an outsourced bank branch. In addition, the RBI also came out with another regulation that allows grocery stores, petrol pumps and similar retail outlets to be appointed as sub-agents of business correspondents.
These regulatory precursors helped SBI and Eko to come together and offer no-frills mini-savings accounts. These accounts allowed customers to maintain zero account balance, which is the opposite of conventional consumer banking practices. Under the arrangement between SBI and Eko, it became possible for mini-savings bank account holders to deposit, withdraw, remit and check balances using SMSes.
The Eko model
Here are the key attributes of the model that has been adopted by Eko:
Leveraging the trust of community enterprises. Eko has partnered with local mom and pop stores, chemists and other such retailers who are trusted by the local population. These local retail stores act as mini bankers or customer service points (CSPs) in the ecosystem. The Eko customer walks into any of the retail outlets licensed to operate as an authorised CSP in the area. These local retailers help customers to open accounts, and facilitate transactions such as deposits, withdrawals and transfers of money.
Targeting the low-income population. The banking service targets customers with an income from $65 to $323 (about Rs 2,900 to Rs 14,500) per month. The key drivers for targeting this income segment was that they were either unbanked (that is, not using banking channels) or were underbanked (that is, no access to banking or very limited use of banking).
Providing a secure gateway. Eko customers type the bank’s short code, then an asterisk, then the mobile number of the person they are paying, then an asterisk, then the amount, followed by another asterisk. Account holders get booklets with pages of 11-digit codes. Seven digits of these are random numbers, with four randomly placed black marks, where the person enters his or her PIN. Eko has also partnered with VeriSign to ensure secure transactions.
Leveraging a customised banking platform. Eko has developed a low-cost banking platform called “Simpli Bank” which allows real-time transactions. Simpli Bank is a leaner version of a core banking platform, which helps in reducing the cost of providing banking services to the people.
The service has been designed to be very simple to use and execute. The following steps explain how a customer of Eko can make a deposit:
Step 1: The customer walks into a CSP.
Step 2: The customer asks the CSP to make a deposit.
Step 3: The CSP punches in a code *539*customer mobile number* amount to be deposited*signature code # (The signature code is a transaction code. These codes are given to customers in a booklet).
Step 4: Once the transaction has been completed, both the customer and the CSP receive a confirmation SMS.
Step 5: Upon receiving the SMS, the customer pays cash to the CSP. Simplified system, lower transaction costs
This innovation by Eko has helped deliver a lot of benefits to unbanked citizens. Currently, Eko has about 75,000 to 80,000 people as savings account customers. These customers are based out of the NCR region (includes Delhi, Gurgaon, Ghaziabad and Noida), Bihar and Jharkhand (states in east India with a huge migrating workforce). Almost 2,000 people transact currency amounting to $43,000 (about Rs 19.3 lakh) on a daily basis using the mobile commerce channel, from about 500 CSPs.
Eko also started remittance services in the middle of 2010. This has helped the migrant workforce to send money to their homes without having to open a savings account. All that they need is the bank account number of the person to whom they would like to transfer the money. Since the launch of this service, Eko has seen almost 2,000 to 3,000 people using this service exclusively, on a per day basis.
The cost per transaction using Eko’s system is $0.1 (Rs 4.5), while in a bank branch it would be $1.5 (about Rs 67) per transaction. The service is available to customers on all mobile phones, including the most basic models. It does not require WAP/GPRS or any application to be downloaded on the phone. A person can open an account at the nearest CSP with zero deposit, and can save up to $2,200 (or Rs 1 lakh). A potential customer does not have to go through the regular process of enrollment while opening a bank account. All that is required to open a savings account is a photograph, ID proof (such as a voter ID card) and a personal mobile phone.
Eko’s customer base has grown rapidly. Eko started operations in February 2009 with 17 CSPs and less than 10 customers. By October 2010, it was able to acquire 75,000 to 80,000 customers and 500 CSPs.
The business model is also very simple and sustainable. Eko is paid for every customer it acquires and for every transaction that is processed. The CSP gets 10 per cent of the transaction. Eko’s initiative has started generating revenue. It has been able to generate $28,000 (Rs 1.3 million) and expects to generate $2.6 million (Rs 120 million) per annum.
Going forward, Eko plans to set up 500,000 such licensed outlets in two years. It has received a grant under the Consultative Group for Assisting the Poor (CGAP) Technology programme. The CGAP is housed at the World Bank, but operates as an independent entity. It is a consortium of 33 public and private banks in the world. The technology fund is co-funded by the Bill and Melinda Gates Foundation.source

Real Time Directions on Mobile with Tata DOCOMO's Location Based Services

-- Navigation and positioning are crucial to so many activities and yet the process has always been quite cumbersome and inexact. Over the years all kinds of technologies have tried to simplify the task, yet it may not have been as successful, to be adopted conveniently by the user. Therefore keeping in line with the brand premise of keeping things simple, TATA DOCOMO, the GSM brand of Tata Teleservices Limited has launched 2 new Location Based services called Route Finder and Smart Pilot. For both the services, Tata DOCOMO has tied up with NAVTEQ, the leading global provider of digital map data and location content in 760 cities across and all 3G circles. source
Experience easy Navigation with Route Finder and Smart Pilot services, Powered by NAVTEQ; Location Based services available to all 3G prepay and postpay customers

Bhopal, Madhya Pradesh, June 18, 2011 /India PRwire/
Route Finder service is simple and useful, accessible on SMS and facilitates the end-user to get directions to the desired place from his/her current location in the form of an SMS or a link (as per the phone capability of the customer). Customers with data-enabled phones will get directions as via link and while clicking on that link, customers will be able to visually see the static map indicating the route from current to selected location. Users without data-enabled phones will get directions as text messages.
Some of the NextGen features of Route Finder include:
  • Automatic source-location detection without user input;
  • User-friendly results; and
  • Results delivered in SMS as well as via link, depending on handset capability of the customer

To access Route Finder service, customer will have to send sms to 533331 mentioning the destination to reach. The service is charged at introductory price of Rs.5 per successful query-response, there are no additional data charges for accessing maps. This service is available to all 3G customers, and works on all handsets.


Smart Pilot is a unique, SMART mobile based voice guided navigation service which offers information as well as navigation details to reach any destination across India. Smart Pilot application helps customers to navigate with intuitive, voice guided, step-by-step directions. With this service, they can also avail options like setting destinations by address search, searching point of interests like ATMs, petrol pumps, railway station etc and also can find places on interactive maps. To use the service, the user downloads an application on the phone, just by sending 'smart pilot' as a keyword to the tollfree shortcode 53333.
"Tata Teleservices commitment to simplifying and enriching people's lives is manifest in this fun and simple offering for the fast growing for location-based services domain. We collaborated with NAVTEQ as they fulfilled our requirements for accurate mapping data while offering a robust Points Of Interest (POI) database with millions of POI, including restaurants, places of worship, shops and hotels that we can utilize to create these applications," Mr Shailendra Singh, COO, MP & CG , Tata DOCOMO, said. "We believe in offering services that are technically simple and convenient, which add value to every subscriber regardless of the handset capability, it is only then that the facility will be used to the fullest."
"A recent NAVTEQ research on mobile navigation showed that consumers who commute by foot or public transit spend as much as half of their commute using their mobile phones. The study also revealed that consumers who have had positive interactions with GPS technology provides a strong foundation for interest in location based services. We believe that Route Finder and Smart Pilot are two powerful applications that will enable an increasing number of India consumers to start experiencing the benefits of navigation, essentially savings in time, fuel and money." said Rajat Tandon, director - sales, NAVTEQ India.
Smart Pilot service is particularly useful for going to places with long and complex routes, multiple intersections and turns with the unnamed roads. It also offers multiple options, including total distance time; graphical & interactive icons for turns, manual navigation, route plotted on map and simulate navigation to see all actual turns taken. Additionally, customers can save their favorite locations/routes and also share the same with their friends. What's more! There will be no data accessing charges, post subscribing to the Smart Pilot service.
The subscription charges of Smart Pilot application are Rs 10 per day (non-renewable) and there are 3 different channels through which customers can subscribe the service namely, SMS channel where in customers can simply send SMS to 53333 (toll free). Post the same, customers will get a link to download the application; while there will be no cost for downloading the same. IVR channel can be availed by simply dialing IVR short code 155223 (toll free) to subscribe to the application. Customer Care SMS channel is the third method where in customers can send SMS 'SUB SMART PILOT' to 155223(toll free). The service can be accessed on all GPS enabled handsets with activated internet Plan /facility.
Notes to Editor
About TATA DOCOMO
TATA DOCOMO is Tata Teleservices Limited's telecom service on the GSM platform-arising out of the Tata Group's strategic alliance with Japanese telecom major NTT DOCOMO in November 2008. Tata Teleservices Limited has received a license to operate GSM telecom services in 19 telecom Circles and has also been allotted spectrum in 18 of these Circles. It has rolled out its GSM services in Tamil Nadu, Kerala, Orissa, Karnataka, Andhra Pradesh, Madhya Pradesh-Chhattisgarh, Haryana-Punjab, Kolkata, Rest of West Bengal, Jharkhand, Bihar, UP East, UP West, Gujarat, Himachal Pradesh and Rajasthan, while Tata Teleservices (Maharashtra) Limited has launched GSM services under the TATA DOCOMO brand in the Mumbai and Rest of Maharashtra Circles. TATA DOCOMO has become the first Indian private operator to launch 3G services in India in all the nine telecom Circles where it won the 3G license. In association with its partner NTT DOCOMO, the brand finds itself suitably positioned to leverage this first-lover advantage. With 3G, Tata DOCOMO stands to redefine the very face of telecoms in India. Tokyo-based NTT DOCOMO is one of the world's leading mobile operators-in the Japanese market, the company is the clear market leader, used by over 50 per cent of the subscribers.source