Eko India Financial Services
Encyclopedia
Eko India Financial Services Pvt. Ltd. is an India
n financial service company, which is a business correspondent (BC) service for State Bank of India
(SBI) and ICICI Bank
, India's top two largest banks, and provides no-frills bank accounts and deposit, withdrawal and remittance services to customers (nearly 80% of whom are migrants or the unbanked
section of the population) through mobile banking
. With Bharti AXA
Life Insurance Company, it provides Bharti AXA Life - Bachat Bima, micro-insurance policies.
It was established by brothers Abhishek and Abhinav Sinha in 2007 and two other founders who left after a year, and allows low-wage immigrants workers in the Indian urban areas to remit money to their homes using mobile phones. Sanjay Bhargava was the first Chairman. He made important contributions to the business model of the company and invented a security method that enabled a low end mobile phone to be used to initiate transactions securely. However, the two brothers Abhishek,Abhinav and a few other early employees of Eko deserve credit for scaling Eko. Today it has 180,000 users doing more than 6,000 money transfer
transactions a day through a network of 700 "branches" (banking agent
s), in which neighborhood grocery and pharmacy stores serve as "Customer Service Points" (CSP), in Delhi NCR, six districts of Bihar
and one district of Jharkhand
state, processing Rs. 3.5 crore
every day, in 2010 more than Rs. 100 crore were processed through its branches.
In 2010, it was chosen amongst the 'NASSCOM
EMERGE 50 – The League of Ten for 2010' list by NASSCOM
, the Indian chamber of commerce, for "50 Emerging companies which are redefining the benchmark of excellence for the next generation of SMEs."
s and as per recent study by the Centre for Micro Finance (CMF), only 22% of India’s migrant labourers have bank accounts, this is because many do not have identification or “official” residency. This makes saving money difficult, and having access to other facilities like money transfer to villages back home through banks, available to only 1/3 of the migrants, instead most have to rely on informal networks like friends, families, hawala
couriers or bus drivers etc., making it prone to , not just risky but also time-intensive and expensive.
Based on the recommendations of the Khan Commission, the Reserve Bank of India
, in its 2005-2006 policy year introduced the concept of 'Business Correspondents' to enhance financial inclusion
in the Indian banking sector
, at the time co-founder Abhishek Sinha, a graduate of BIT Mesra, was working with Mahindra Satyam, and was involved in developing a mobile commerce
application for a foreign company. Eventually inspired by a similar program in Brazil, M-Pesa
model in Kenya where Vodafone-enabled subscribers send cash to other phone users by SMS, Globe Telecom
and Smart Communications
, both in Philippines, Abhishek Sinha along with brother Abhinav Sinha launched Eko in September 2007 with $0.5 million donated by family and friends as financial service company providing peer-to-peer money transfers, cash deposits and withdrawal, wage and salary payments, micro-insurance, and micro-credit facilities to individuals through small neighbourhood shops, which became their banking agent
s. Eko planned tied up with Centurion Bank of Punjab
in 2008, to open no-frill accounts, fell through after latter merged with HDFC Bank, and the company hit a rough patch.
Bill Gates
visited the Uttam Nagar, New Delhi situated mobile banking project of Eko, in November 2008, and an important turning point for the company came in March 2009 when it received a "grant funding" of $1.78 million from Consultative Group to Assist the Poor (CGAP)
Technology Program which is housed within the World Bank
and co-funded by Bill & Melinda Gates Foundation
.
In February 2009, State Bank of India
(SBI), the largest state-owned banking and financial services company in India, appointed Eko Aspire Foundation as its official business correspondent, which works actively in the field, while its Eko India Financial Services provides technological and non-technological support to the former. Thus around October 2009, with another grant from CGAP Eko started operations with the launch of 'SBI Mini Savings Bank Account' at Uttam Nagar, New Delhi
on February 23, 2009, this allowed account holders to carry out financial transactions like deposit and withdrawal from their accounts through their mobile phones at various SBI Eko Customer Service Points, like local grocery store
s, stationery stores, petrol pumps, PCO
s and pharmaceutical shops in far flung villages of Bihar
and Jharkhand
and Delhi, where the low-wage people rarely have access to a banking system. By November 2010, it had 180,000 users carrying out over 7,000 transactions per day through its 500 “branches” in Delhi and 200 more in Bihar and Jharkhand, the hometowns of many maids and migrants. Eko gets a tiny commission from the bank for each transaction; further on the retailer who operates as Eko's banking agent also gets commission on every account he holds and gets a cut on each transaction, and by August–September 2011, it started turning profit.
Meanwhile, it also tied up with ICICI Bank
, India's second largest bank which started a Apna Savings Account scheme, and started gathering international business media attention, journalist Thomas Friedman
wrote about it in the New York Times (Nov 2010)., while Business Week profiled it (Jan 2011).
In August 2010, Eko India was chosen amongst the 'NASSCOM
EMERGE 50 – The League of Ten for 2010' list by NASSCOM
, the Indian chamber of commerce, for "50 Emerging companies which are redefining the benchmark of excellence for the next generation of SMEs." In October 2011, Eko was selected as a Tech Awards laureate and won the cash prize for Economic Development. Creation Investments Social Ventures Fund I, a leading private equity impact investment fund, and other co-investors are investors in Eko as they support financial inclusion for the bottom of the economic pyramid.
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
n financial service company, which is a business correspondent (BC) service for State Bank of India
State Bank of India
The State Bank of India is the largest Indian banking and financial services company with its headquarters in Mumbai, India. It is state-owned. The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making it the oldest...
(SBI) and ICICI Bank
ICICI Bank
ICICI Bank Ltd. is India's second largest financial services company headquartered in Mumbai, India. It offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of...
, India's top two largest banks, and provides no-frills bank accounts and deposit, withdrawal and remittance services to customers (nearly 80% of whom are migrants or the unbanked
Unbanked
The unbanked are citizens of a country who do not have their own bank account. Along with the underbanked, they may rely on alternative financial services for their financial needs, where these are available.-The unbanked in the United States:...
section of the population) through mobile banking
Mobile Banking
Mobile banking is a term used for performing balance checks, account transactions, payments, credit applications and other banking transactions through a mobile device such as a mobile phone or Personal Digital Assistant . The earliest mobile banking services were offered over SMS...
. With Bharti AXA
AXA
AXA S.A. is a French global insurance group headquartered in the 8th arrondissement of Paris. AXA is a conglomerate of independently run businesses, operated according to the laws and regulations of many different countries. The AXA group of companies engage in life, health and other forms of...
Life Insurance Company, it provides Bharti AXA Life - Bachat Bima, micro-insurance policies.
It was established by brothers Abhishek and Abhinav Sinha in 2007 and two other founders who left after a year, and allows low-wage immigrants workers in the Indian urban areas to remit money to their homes using mobile phones. Sanjay Bhargava was the first Chairman. He made important contributions to the business model of the company and invented a security method that enabled a low end mobile phone to be used to initiate transactions securely. However, the two brothers Abhishek,Abhinav and a few other early employees of Eko deserve credit for scaling Eko. Today it has 180,000 users doing more than 6,000 money transfer
Money transfer
Money transfer generally refers to one of the following cashless modes of payment or payment systems:*Wire transfer, an international expedited bank-to-bank funds transfer*Electronic funds transfer, an umbrella term mostly used for bank card-based payments...
transactions a day through a network of 700 "branches" (banking agent
Banking agent
A banking agent is a retail or postal outlet contracted by a financial institution or a mobile network operator to process clients’ transactions...
s), in which neighborhood grocery and pharmacy stores serve as "Customer Service Points" (CSP), in Delhi NCR, six districts of Bihar
Bihar
Bihar is a state in eastern India. It is the 12th largest state in terms of geographical size at and 3rd largest by population. Almost 58% of Biharis are below the age of 25, which is the highest proportion in India....
and one district of Jharkhand
Jharkhand
Jharkhand is a state in eastern India. It was carved out of the southern part of Bihar on 15 November 2000. Jharkhand shares its border with the states of Bihar to the north, Uttar Pradesh and Chhattisgarh to the west, Orissa to the south, and West Bengal to the east...
state, processing Rs. 3.5 crore
Crore
A crore is a unit in the Indian number system equal to ten million , or 100 lakhs. It is widely used in India, Bangladesh, Nepal, and Pakistan....
every day, in 2010 more than Rs. 100 crore were processed through its branches.
In 2010, it was chosen amongst the 'NASSCOM
NASSCOM
The National Association of Software and Services Companies of IT software and services related activities for use of both the software developers as well as interested companies overseas....
EMERGE 50 – The League of Ten for 2010' list by NASSCOM
NASSCOM
The National Association of Software and Services Companies of IT software and services related activities for use of both the software developers as well as interested companies overseas....
, the Indian chamber of commerce, for "50 Emerging companies which are redefining the benchmark of excellence for the next generation of SMEs."
History
India has about 100-120 million migrant workerMigrant worker
The term migrant worker has different official meanings and connotations in different parts of the world. The United Nations' definition is broad, including any people working outside of their home country...
s and as per recent study by the Centre for Micro Finance (CMF), only 22% of India’s migrant labourers have bank accounts, this is because many do not have identification or “official” residency. This makes saving money difficult, and having access to other facilities like money transfer to villages back home through banks, available to only 1/3 of the migrants, instead most have to rely on informal networks like friends, families, hawala
Hawala
Hawala is an informal value transfer system based on the performance and honor of a huge network of money brokers, which are primarily located in the Middle East, North Africa, the Horn of Africa, and South Asia...
couriers or bus drivers etc., making it prone to , not just risky but also time-intensive and expensive.
Based on the recommendations of the Khan Commission, the Reserve Bank of India
Reserve Bank of India
The Reserve Bank of India is the central banking institution of India and controls the monetary policy of the rupee as well as US$300.21 billion of currency reserves. The institution was established on 1 April 1935 during the British Raj in accordance with the provisions of the Reserve Bank of...
, in its 2005-2006 policy year introduced the concept of 'Business Correspondents' to enhance financial inclusion
Financial inclusion
Financial inclusion or inclusive financing is the delivery of financial services at affordable costs to sections of disadvantaged and low income segments of society. Unrestrained access to public goods and services is the sine qua non of an open and efficient society...
in the Indian banking sector
Banking in India
Banking in India originated in the last decades of the 18th century. The first banks were The General Bank of India, which started in 1786, and Bank of Hindustan, which started in 1790; both are now defunct. The oldest bank in existence in India is the State Bank of India, which originated in the...
, at the time co-founder Abhishek Sinha, a graduate of BIT Mesra, was working with Mahindra Satyam, and was involved in developing a mobile commerce
Mobile Commerce
Mobile Commerce, also known as M-Commerce or mCommerce, is the ability to conduct commerce using a mobile device, such as a mobile phone, a Personal Digital Assistant , a smartphone, or other emerging mobile equipment such as dashtop mobile devices...
application for a foreign company. Eventually inspired by a similar program in Brazil, M-Pesa
M-Pesa
M-PESA is the product name of a mobile-phone based money transfer service for Safaricom, which is a Vodafone affiliate. It was initially developed by Sagentia before transitioning to IBM...
model in Kenya where Vodafone-enabled subscribers send cash to other phone users by SMS, Globe Telecom
Globe Telecom
Globe Telecom , commonly known as Globe, is a telecommunications company in the Philippines. Globe provides mobile, fixed line, and broadband Internet services.- History :In 1928, Congress passed Act No...
and Smart Communications
Smart Communications
Smart Communications is a wholly owned mobile phone and Internet service subsidiary of the Philippine Long Distance Telephone Company .On June 30, 2010 the company reported that it had over 45 million cellular subscribers.-Brands:...
, both in Philippines, Abhishek Sinha along with brother Abhinav Sinha launched Eko in September 2007 with $0.5 million donated by family and friends as financial service company providing peer-to-peer money transfers, cash deposits and withdrawal, wage and salary payments, micro-insurance, and micro-credit facilities to individuals through small neighbourhood shops, which became their banking agent
Banking agent
A banking agent is a retail or postal outlet contracted by a financial institution or a mobile network operator to process clients’ transactions...
s. Eko planned tied up with Centurion Bank of Punjab
Centurion Bank of Punjab
The Centurion Bank of Punjab was an Indian private sector bank that provided retail and corporate banking services. It operated on a strong nationwide franchise of 403 branches and had over 5,000 employees...
in 2008, to open no-frill accounts, fell through after latter merged with HDFC Bank, and the company hit a rough patch.
Bill Gates
Bill Gates
William Henry "Bill" Gates III is an American business magnate, investor, philanthropist, and author. Gates is the former CEO and current chairman of Microsoft, the software company he founded with Paul Allen...
visited the Uttam Nagar, New Delhi situated mobile banking project of Eko, in November 2008, and an important turning point for the company came in March 2009 when it received a "grant funding" of $1.78 million from Consultative Group to Assist the Poor (CGAP)
Consultative Group to Assist the Poor (CGAP)
The Consultative Group to Assist the Poor is a consortium of 33 public and private development agencies working together to expand access to financial services for the poor in developing countries...
Technology Program which is housed within the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
and co-funded by Bill & Melinda Gates Foundation
Bill & Melinda Gates Foundation
The Bill & Melinda Gates Foundation is the largest transparently operated private foundation in the world, founded by Bill and Melinda Gates. It is "driven by the interests and passions of the Gates family"...
.
In February 2009, State Bank of India
State Bank of India
The State Bank of India is the largest Indian banking and financial services company with its headquarters in Mumbai, India. It is state-owned. The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making it the oldest...
(SBI), the largest state-owned banking and financial services company in India, appointed Eko Aspire Foundation as its official business correspondent, which works actively in the field, while its Eko India Financial Services provides technological and non-technological support to the former. Thus around October 2009, with another grant from CGAP Eko started operations with the launch of 'SBI Mini Savings Bank Account' at Uttam Nagar, New Delhi
New Delhi
New Delhi is the capital city of India. It serves as the centre of the Government of India and the Government of the National Capital Territory of Delhi. New Delhi is situated within the metropolis of Delhi. It is one of the nine districts of Delhi Union Territory. The total area of the city is...
on February 23, 2009, this allowed account holders to carry out financial transactions like deposit and withdrawal from their accounts through their mobile phones at various SBI Eko Customer Service Points, like local grocery store
Grocery store
A grocery store is a store that retails food. A grocer, the owner of a grocery store, stocks different kinds of foods from assorted places and cultures, and sells these "groceries" to customers. Large grocery stores that stock products other than food, such as clothing or household items, are...
s, stationery stores, petrol pumps, PCO
Public call office
A Public call office is a telephone facility located in a public place in India and Pakistan. It is also another name in the United Kingdom for a public telephone box .-PCO in India:...
s and pharmaceutical shops in far flung villages of Bihar
Bihar
Bihar is a state in eastern India. It is the 12th largest state in terms of geographical size at and 3rd largest by population. Almost 58% of Biharis are below the age of 25, which is the highest proportion in India....
and Jharkhand
Jharkhand
Jharkhand is a state in eastern India. It was carved out of the southern part of Bihar on 15 November 2000. Jharkhand shares its border with the states of Bihar to the north, Uttar Pradesh and Chhattisgarh to the west, Orissa to the south, and West Bengal to the east...
and Delhi, where the low-wage people rarely have access to a banking system. By November 2010, it had 180,000 users carrying out over 7,000 transactions per day through its 500 “branches” in Delhi and 200 more in Bihar and Jharkhand, the hometowns of many maids and migrants. Eko gets a tiny commission from the bank for each transaction; further on the retailer who operates as Eko's banking agent also gets commission on every account he holds and gets a cut on each transaction, and by August–September 2011, it started turning profit.
Meanwhile, it also tied up with ICICI Bank
ICICI Bank
ICICI Bank Ltd. is India's second largest financial services company headquartered in Mumbai, India. It offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of...
, India's second largest bank which started a Apna Savings Account scheme, and started gathering international business media attention, journalist Thomas Friedman
Thomas Friedman
Thomas Lauren Friedman is an American journalist, columnist and author. He writes a twice-weekly column for The New York Times. He has written extensively on foreign affairs including global trade, the Middle East, and environmental issues and has won the Pulitzer Prize three times.-Personal...
wrote about it in the New York Times (Nov 2010)., while Business Week profiled it (Jan 2011).
In August 2010, Eko India was chosen amongst the 'NASSCOM
NASSCOM
The National Association of Software and Services Companies of IT software and services related activities for use of both the software developers as well as interested companies overseas....
EMERGE 50 – The League of Ten for 2010' list by NASSCOM
NASSCOM
The National Association of Software and Services Companies of IT software and services related activities for use of both the software developers as well as interested companies overseas....
, the Indian chamber of commerce, for "50 Emerging companies which are redefining the benchmark of excellence for the next generation of SMEs." In October 2011, Eko was selected as a Tech Awards laureate and won the cash prize for Economic Development. Creation Investments Social Ventures Fund I, a leading private equity impact investment fund, and other co-investors are investors in Eko as they support financial inclusion for the bottom of the economic pyramid.
See also
- Financial inclusion in India
- Branchless bankingBranchless bankingBranchless banking is a distribution channel strategy used for delivering financial services without relying on bank branches. While the strategy may complement an existing bank branch network for giving customers a broader range of channels through which they can access financial services,...
External links
- Eko India Financial Services, website
- Leaders of Tomorrow: Eko India Financial Services at The Economic TimesThe Economic TimesThe Economic Times is an English-language Indian daily newspaper published by the Bennett, Coleman & Co. Ltd.. The Economic Times was started in 1961. It is the most popular and widely read financial daily in India, read by more than 8 lakh people...