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Saturday, July 26, 2008

Mobile Banking Innovation

Check these stats: It costs more than Rs. 100 a customer to bank for each physical transaction & more than Rs. 15 for each ATM transaction & 70% of India's 1.06 bn population does not have access to bank

Recently Mint newspaper published an article on the new mobile banking service being test run in Uttam nagar in Delhi. The technology is provided by Eko India financial services pvt ltd. and it allows Airtel users(currently) to access their bank accounts(Centurion Bank of Punjab)and make transactions using their mobile phone.
Now how does it work and what is the value to consumer, bank and local retailer acting as distribution channel.
Every locality has Eko relationship officers who act as salesman and convince user/bank account holders to avail the service. The user of the service can deposit/withdraw cash just by sending SMS. He then deposits/withdraws cash from the local retailer who acts as a distribution channel between bank and consumer & is known as Eko Cash points. After the transaction the user gets a SMS from Eko confirming the transaction. For his services, the local retailer is paid cash per transactions and the Eko relationship Officers are remunerated on the basis of customer acquisition.
Inorder to secure the process just like that of ATM, the user is also given signature booklets which has ten digit number to be given while making a transaction. The mobile phone number acts as the account number. The user can deposit any amount of cash & withdraw easily too just by using his mobile.
The benefit for banks is that it cuts down the cost of setting up an Atm and this is also branchless banking. The banks can thus allow very low/no minimum limit account to be opened which customers from bottom of the pyramid can use which ultimately means huge customer base
for banks.
(Statistics Source: Mint Newspaper)