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Maximum Social Impact : Eko India Financial Services : SimpliBank
A cloud based core banking system with a mobile phone front-end aimed at helping people in the lower income group to do banking
Thursday, July 01, 2010
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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Maximum Social Impact |
| Company Scenario |
| Before Deployment |
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Providing banking services to lower-income group
people is financially non-viable for financial services companies.
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A largely illiterate/semi-literate population who
don't know how to operate a bank account.
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| What was deployed |
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A Core Banking System developed by Anduril
Technologies was deployed on Wipro's Cloud using Infrastructure as a
Service model.
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A simple, low-cost mobile phone was used as the
front-end for operating the account.
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| After Deployment |
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60,000+ customers spread across 11districts of Delhi,
Bihar, and Jharkhand.
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400+ customer service points made available for this
population.
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Customers can withdraw/deposit cash, do money
remittances, from their mobile phone.
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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.
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Matteo Chiampo COO, Eko Financial Services
What sets this project apart from others in its class?
This project provides a unique user interface, with simple number
dialing to perform various financial transactions over a mobile phone.
Essentially, it uses technology to minimize transaction cost, thus making
products aimed at low-income population potentially profitable for financial
services companies. There's no client app, no need to support a Java client,
or any other client-side application, yet it maintains a strong two-factor
security for transactions.
What were the challenges faced during deployment?
Business challenges include the need to maintain cost of transaction as
low as possible and ensure profitability in each small value transaction.
This required a creative approach in selecting technology components and
structuring partnerships required to implement the project. We had to
provide a universal interface, which would work on the
lowest-common-denominator handset (our reference test handset was a Nokia
1200, an ultra-low-cost handset that's very popular in India. It should work
without the need to use a SIM Toolkit, downloaded application, Java apps,
WEP/WAP, GPRS, EDGE or any other technology that may not be immediately
available to the mass market of prepaid low-income mobile subscribers. Then,
there was a need to 'teach less' and reuse existing consolidate behaviors,
in order to reduce the hurdle for customer acquisition and the cost of
customer education.
The key technical challenges we faced were a need to
provide a user interface readily usable by the target segment, which is
often semi-literate or illiterate. However, this segment of the population
is usually number-literate. This has led to a patent-pending user interface
to initiate transaction that's based exclusively on dialing of numbers,
mimicking existing 'star dialing' or 'missed call' behavior widely in use in
India. There was also a need to create a massively scalable infrastructure
(hardware and software), which could support the expected load of millions
of users and hundreds of thousands of transactions daily. |
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. Page(s) 1
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