While most of us would be having and operating our own bank accounts, there's
a large population out there, which doesn't even know how to open one. They
typically remain under-served either because they themselves are illiterate or
semi-literate or the value of their transactions is financially nonviable for
financial services companies to service them. The current paradigms cannot
viably sustain the cost of these small value transactions, as they are not
profitable. To tackle this problem, there was a financial inclusion mandate from
RBI, in which banks can take the help of external business partners to extend
banking services to the under-served. Its is under this mandate that Eko came up
with a different way of providing banking services for the lower/middle income
group and un/under-banked population of our country living in urban, semi-urban,
and rural India.
The company used the mobile phone as an enabling tool for small value
financial transactions. They developed a distribution network and a multi-modal
technology platform capable of profitably handling millions of consumers, across
different geo-locations accessing a variety of product offerings starting from a
'no-frills' savings account to mass payment solutions. The interesting thing
here is that the company has setup customer service points (CSPs) in different
parts of Delhi/NCR, Bihar and Jharkhand. These CSPs in turn serve as the “banks”
for the lower-income group people residing in that area. So your local pharma
shop for instance serves as a CSP for the lower-income group people such as
fruit-sellers, hawkers, etc.
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Known as SimpliBank, the platform is a hosted and managed, low-cost but
abridged Core Banking System for a bank. Currently, State Bank of India is Eko's
banking partner, and is using this system to extend its banking services to
people from the lower income group, residing in Delhi/NCR, Bihar, and Jharkhand.
The SimpliBank CBS itself supports many interesting features-a standard
double entry accounting system, multiple types of bank accounts, like savings,
current, money transfer, loan, etc. It has customer and Network management
modules, definable interest accrual and posting system based on Indian banking
guidelines. It has the ability to define various limits and fees as per RBI's
AML/CFT requirements. It supports secure signature booklet and real-time
transactions through 3 factor authentication. There's also a user/systems
management, audit trail, limits and fees.
Matteo Chiampo COO, Eko Financial Services
What sets this project apart from others in its class? What were the challenges faced during deployment? The key technical challenges we faced were a need to |
Operating the bank account is extremely simple, as various financial
transactions can be performed by simply dialing numbers on a mobile phone. It's
as easy as re-charging your pre-paid mobile phone. There's no client
application, no Java client, or GPRS connectivity required to operate an
account. The customers can do cash deposits and withdrawals, do money
remittances safely, instantaneously, and conveniently, all from their mobile
phone. Thanks to this project, cost of transaction has been lowered to a point
where financial services providers can profitably support small-ticket
transactions.
So far, the company is serving 60,000+ accounts with SBI. There are more than
400 CSPs spread across 11 districts of Delhi, Bihar, and Jharkhand. The CSPs
obviously get a small percentage of every transaction made. For the future, the
company plans to extend these services to Uttarakhand, Mumbai, and Punjab.
Moreover, plans are on to offer this service even to the regular population in
India. The expected life of this CBS is two years, and the company is working on
developing its next version to improve its capabilities.