Rajesh Kumar, a daily wager at a construction site in Noida, goes to an Eko outlet, dials a string of numbers in his Nokia 2600 model phone and gives one thousand rupees cash to the person sitting at outlet. Within a minute, the money is transferred to his mother’s Eko account, who is living at his native village in Madhubani in Bihar. She gets the cash from the Eko outlet, which is actually a kirana store. This happens frequently in Lucknow, Mumbai and the remote villages of Bihar.
The time is not far, when people will not require visiting post offices for sending money through money orders or need to depend upon any hawala broker. In a country of 1200 million, only an estimated 240 million people hold bank accounts, whereas, 900 million people hold mobile phones. If everything goes as desired, mobile money transferring which is also called branchless banking services, this new phenomenon can bring a paradigm shift in the inclusive growth and financial empowerment in the hinterlands of the country.
The Agents of Change
Airtel Money is one of the biggest players in mobile money transferring services. One can open an account with his mobile number and he gets eligibility of transferring money to another Airtel Money account or any bank account of his family or friend. He does not need to carry cash always. He can pay his utility bills like telephone, electricity, water or gas bills through his phone. He can buy movie tickets or he can do shopping in a retail shop and he does not have to pay cash or carry his debit or credit cards, he can pay the retail bill through his mobile if he has an Airtel Money account. However, the facility as of now does not have direct cash withdrawal. A daily wage worker, working in a metropolitan city, if he needs to send money to his relatives in his native village, Eko India Financial Services as a Business Correspondent of Banks comes with a technological revolution for the rural masses, hugely empowering them.
In March this year, the Finnish mobile handset maker Nokia has decided to exit its mobile money transferring business just after two years its existence since they wanted to focus on their core sector business.The company however had started mobile money services in 2010 through partnership with YES bank and Union Bank of India.
Although the service is called mobile money transferring service, but the service providers also require formal banks. Airtel Money which is operating in 300 hundred cities in the country, has a strategic alliance with Axis Bank, whereas, Eko India Financial Services has alliances with State Bank of India and ICICI Bank to provide services in urban as well as rural areas while YES bank is involved in urban areas.
In a country where three fourth of population is equipped with mobile phones even in the remote villages, mobile money transferring technology is bringing a revolution. If a customer wants to make any transaction such as deposit, withdrawal or transferring money to other beneficiary’s account, he dials a number, bearing a security code which is called Okekey with his personal pin and the transaction takes place. There is no need to have any high cost phone; the simplest of the simple phone can be used like Nokia 1100 phones. The customer does not have to download any application for making transactions.
According to Mughdha Bhargava, vice president – strategic accounts, Eko India Financial Services, “The entire transaction process functions on the concept of miss call, the dialing code begins from star (*) and ends at hash (#), when a customer dials, he does not pay any call charges like a miss call. This process can be done through a simple phone also, which is very affordable to the rural masses.”
On the technological innovation, Bhargava added, “A customer just need to bring his one identity card and a passport size photograph to open an account at an Eko counter, which works like a bank teller. When his account is opened, he can deposit money in his account by paying to the CSP. If he wants to withdraw some money, he dials star, his mobile number, star, CSP’s mobile number, star, the amount, star, the Okekey with his personal pin and #. After this process, the CSP gets a message and pay the cash to the customer. If he wants to transfer some money to other’s account, he has to put the recipient’s mobile number instead of CSP’s. The process takes only 20 seconds and the money gets transferred to the recipient’s account.
When a customer gets opened his account at the CSP which is also called Eko counters, he gets a booklet which carries 50 Okekeys having 10 digits each. The Okekeys work as a digital signatures of the customer during the transactions he makes. Every Okekey is different from the other but interestingly, the Okekeys have four blank spaces to enable individual customer. A customer has to put his personal pin in the blank spaces which becomes a digital signature for making any transaction. The Okekeys and the customer’s personal pin bear only numbers, which empowers even an uneducated person to make transactions because it is a common phenomenon that every illiterate person is at least a numeric literate.
Since rural India is lacking formal banking services, a person travels 15 to 20 kms for any banking transactions, which consumes his entire day, he losses one day job and a burden of hassles he gets. If a CSP is functioning in his village, he has a lot of freedom. He can go to the CSP between 7 am to 10 pm as per his convenience. The CSPs are offering a low-cost infrastructure powered by innovation and technology to enable instant, secure and convenient financial transactions.
A customer can walk-in to any CSP which is also called Eko counter to deposit, withdraw cash, send or receive money from any part of the country also he can recharge his mobile. It has created a world-class transaction platform called ‘SimpliBank’ that is used by multiple partners. A low-cost mobile phone acts as a transaction device for retailers and customers. Currently Eko is providing its services in Delhi – NCR, Lucknow – Kanpur, Bihar, Mumbai, and Hyderabad. On an average daily 7,000 transactions are done through its services.
As the Eko accounts belong to a bank depends upon which bank is working in that area, gradually the CSPs are also extension of banks and can help customers by getting filling applications of loans and they also work as a financial advisor in these villages. In transferring of money to another Eko account or Bank accounts, the bank gets a commission from the customer through the CSP. Every bank has its own commission rates which vary from each other. And Eko gets a certain percentage as commission in every transaction.
Commenting on the potential of mobile money, Sanjay Kapoor, CEO – India & South Asia, Bharti Airtel said, “While an estimated 240 million people across India hold bank accounts, more than 90 per cent of country’s population uses cash to pay for its daily needs. Additionally, a majority of customers continue to rely on traditional or time consuming methods like money orders and cheque remittances when it comes to transferring funds. On the other hand, the penetration of mobile telephony currently enriches the lives of over 900 million people in our country and can facilitate a paradigm shift in the way India transacts.”
Especially the hinterlands is lacking formal banks, mobile money transferring or branchless banking services can change the face of rural India. “The remittance is huge and mobile penetration is very deep in the country, it gives us an opportunity to reach out to many people even in the remotest areas”, added Bhargava.
On the know-how and success of mobile banking throughout the hinterlands, Bhargava added, “We are getting huge response from the people, about 7,000 transactions are done through the CSPs daily, after this success, we are planning of expansion of our services to at least 7 states, moving towards, Rajasthan, Himachal Pradesh and Punjab.”
On the further expansion of Airtel Money, Kapoor added, “We see the national rollout of Airtel Money playing a pivotal role in accelerating mobile based commerce in India and look forward to further extending the availability of this service in deeper pockets.” The mobile revolution has changed the face of India, even the poorest of the poor is connected with mobile phone. This is the cheapest, fastest and the best medium, one can reach to those people. And therefore, this medium has a lot of potential for expansion of branchless banking services in the country. In fact, a paradigm shift is arriving which is necessary for inclusive growth of the country.