“We chose the mobile phone because we could see it becoming near ubiquitous and the first low cost network-linked computing device for millions of users in India,” shares Sinha. This business idea was validated when he won the TIE-Canaan Entrepreneurial Challenge, a business plan competition open to early stage entrepreneurs. He set up Eko in 2007 with an initial investment of US $0.5 million (from founders, family and friends) with a fundamental principle of giving everyone a bank account through a mobile-based platform. It later received grant funding of US $1.78 million from the CGAP (Consultative Group to Assist the Poor) Technology Program, a division of the World Bank that is co-funded by the Bill & Melinda Gates Foundation.

 “We believe that mass media investments are needed in marketing by our principals so that a pull can be created for the products that we distribute for them.”

Overcoming hurdles
Setting up Eko had its own set of challenges. “For bankers, this was a new territory. Their appetite and assessment for risk is different from that of a FMCG (Fast Moving Consumers Goods) company or a mobile network operator,” recalls Sinha. Eko had a major setback when its first pilot attempt in Uttam Nagar, New Delhi, with Centurion Bank of Punjab (CBOP) had to be shut down when HDFC Bank acquired CBOP. This apart, as this is a regulated business, whenever there was a change in regulation, the business dynamics of Eko changed too. “However, the regulator has been progressive in this country and that has certainly helped make things better,” adds Sinha. Even as the company has grown, so have the challenges. Attaining legitimacy and trust as a partner of the bank and getting access to bearer channels (in which primary data or voice communication is carried) from mobile network operators have proven to be some major operational challenges for Eko. Other challenges include coming up with a viable business model for rural markets and support for aggressive mass media communication campaigns from banks.

The business model
Eko is a business correspondent (BC) and a mobile banking technology provider in India. As a BC of the State Bank of India and ICICI Bank, it aims to build low cost financial services infrastructure to increase the reach of these financial institutions to the unbanked in the urban and rural areas. To achieve this, it converts retail shops into a distribution and payment infrastructure, extending the reach of banks to enable small value financial transactions instantly. The company identifies the retail outlets based on parameters like location, reputation, kind of services provided, financial ability and literacy.

Eko’s solution allows customers to open bank accounts, deposit, withdraw and remit money real time with the agent using the number dialling option from any mobile phone. “We have experimented with micro insurance and remain positive of finding a sustainable partnership with one of the insurance majors,” says Sinha.

The banks compensate Eko for every account opened and transaction serviced through the network of agents (the retail shops). “We have also found alternative and innovative applications for bringing banking services like payroll for unbanked customers,” shares Sinha. This is currently being used by healthcare workers like ASHA (Accredited Social Health Activists) from the State to receive their incentives directly into their bank accounts linked to their mobile phones. Eko is paid a fee by the bank for the actual disbursal.

The technology advantage
The company has designed its technology based on a few parameters that make Eko’s solutions easily accessible by its users. It chose the USSD (Unstructured Supplementary Service Data) protocol which works on basic GSM and CDMA phones. USSD is a fast and secure mode as it is session-based and is instantaneous unlike an SMS which is a ‘store-and-forward‘ technology. The experience of the customer is also like a missed call because the user only has to dial the number, but no one picks up the phone, like in a missed call. It uses number dialling since number literate users exceed language literate users.

By using this mobile technology, Eko also reduces the cost of financial services. While it costs banks Rs. 200 to open an account, Eko does it for Rs. 20. For transactions, it costs banks Rs. 40 to serve a customer at a bank branch while Eko does it for Rs. 5 or less. “Our attempt is to bring down the cost by a very significant order of magnitude as we scale,” shares Sinha.

The customer’s advtange
The customer has the benefits of using a neighbourhood store which means he/she does not waste productive hours for banking. The mechanism is easy and apart from account opening, the customer need not fill forms for services like cash deposit or cash withdrawal. Since all transactions are done by dialling, it makes it much less intimidating when compared to going through the same process in a bank. “Most of our customers have an income of less than Rs. 8,000 per month,” says Sinha. The cost of our services is well within the reach of the small ticket customers.

To acquire customers, the company has carried out many low cost campaigns in a language its target audience can understand. “We have done this through street-plays, comics, canopies, agent training and call centre support,” says Sinha. He adds, “We believe that mass media investments are needed in marketing by our principals so that a pull can be created for the products that we distribute for them.”

Expanding its network
Since its inception, the company has processed in excess of Rs. 1,800 crore worth of transactions for over 12 lakh customers. It currently handles more than two lakh financial transactions each month with transaction turnover exceeding Rs. 75 crore per month. With 1,800 outlets, it operates in Delhi-NCR, Bihar, Jharkhand and Uttar Pradesh (UP) on its own, and also has support through affiliate networks of the two banks in Maharashtra, Gujarat and UP.

In July 2011, it raised US $5.5 million from Creation Investments Social Ventures Fund, a U.S. based private equity fund, to fund the growth of its mobile banking platform and agent footprint. In the next one year, Eko is planning to expand to several geographies across India. This apart, it is also looking at entering new customer segments like small businesses or institutions that need support in solving cash management problems, given a large base of their customers with small ticket sizes of transactions. With an aim of reaching a five-fold growth in the number of outlets over the next one year, the company is all set to facilitate deeper financial inclusion and outreach to the unbanked in India.

Concept in Brief

Since its inception in 2007, Eko, which aims to give everyone a bank account through a mobile-based platform, it has processed in excess of Rs. 1,800 crore worth of transactions for over 12 lakh customers. It is a business correspondent (BC) and mobile banking technology provider in India. As a BC of the State Bank of India and ICICI Bank, it aims to build low cost financial services infrastructure to increase the reach of these financial institutions to the unbanked in the urban and rural areas. It converts retail shops into a distribution and payment infrastructure, extending the reach of banks to enable small value financial transactions instantly. Eko’s solution allows customers to open bank accounts, deposit, withdraw and remit money in real-time with the agent, using number dialling from any mobile phone. Eko’s solutions are easily accessible by its users because of its simple user-interface and ability to make instant transactions with instant confirmations.