A few of the top words doing the rounds in the Indian economic scene this past year are microfinance, mobile revolution, financial inclusion, social responsibility, sustainable solutions, etc. There is one startup that will emerge from a mash up of these words – Eko India Financial Services Private Limited. Based on the idea of providing accessible banking services to the financially excluded and unbanked section of the society, Eko has left a very impressive mark on me.
Eko provides a low-cost banking platform – SimpliBank – which ensures real-time cash transactions over a mobile phone. Considering the fact that their target group is the middle and low income population in India where cash transactions on a mobile phone will bring up substantial trust issues, they have come up with a brilliant solution. Eko appoints local retail outlets (kiranawalas or chemists) as its Customer Service Points (CSPs). They have cleverly leveraged existing distribution networks and their interaction with customers to ensure that the adoption of their service meets as little resistance as possible.
Eko has tied up with the State Bank of India and thus, “SBI Mini Savings Bank Account” was launched in February 2009. Now, each customer gets one such account with SBI. For example, a rickshaw puller can save as little as Rs 20-30 each day, go to the nearest CSP and get that deposited into his account. The procedure will involve typing in the bank’s code, mobile number of the person you are paying, amount and signature on a mobile phone. This, too, has logic behind it and that is the comfort level of masses with numbers rather than words and forms. Eko’s tie up with VeriSign helps it secure its platform preventing money laundering.
Abhishek Sinha, CEO and co-founder of Eko, believes, “Mobile phones can bring about a paradigm shift in the way that banking transactions happen today” while punching in some impressive numbers to underline the potential of the market. He cites that over half a billion of the population owns a mobile phone and only a minority has access to financial services. Eko, currently, has opened over 60,000 accounts and has opened more than 400 outlets in Delhi and NCR Region, Bihar and Jharkhand. SBI pays Eko for every new customer they acquire and every transaction they process and 10% of this is paid to the CSPs. The bank makes its savings by cutting down massively on overhead costs that comes with a traditional branch.
The startup was initially funded by pooling in personal savings of the four founders – Sanjay Bhargava, Abhishek Sinha, Manoranjan Kumar and Abhinav Sinha. Eko is currently grant funded by The Bill and Melinda Gates Foundation through CGAP (Consultative Group to Assist the Poor) and is looking at bringing in investors in the coming year to expand. Bearing testimony to the effective implementation of their fundamental premise of giving everyone a bank account is the Maximum Social Impact award that Eko bagged in the PCQuest Awards for Best IT Implementation of The Year 2010.
Eko’s idea amazes me because here is a startup that has narrowed down to a fundamental problem plaguing this country – financial exclusion. It has developed a simple basic infrastructure, secured it and made it available on the mobile revolution that is penetrating India at a stunning pace. Additionally, they have kept in touch with India’s reality which reflects in the distributor system they have chosen. It also shows that social issues can be tackled aptly by proper revenue generating models.