Bank in a shop, Shop in a bank

Story source: Livemint

“Abhihlasha,” a pilot project being run in the Uttam Nagar area of Delhi is putting the mobile phone banking story in action. The initiative is a collaboration between Eko India and Centurion Bank of Punjab (now taken over by HDFC).

The modus operandi of the system has been designed simple. The mobile phone of the customer is his or her account number. To open an account, a customer needs to deposit an identity proof with an Eko retailer (Eko retailer is just a normal shop doubling up as a Eko cash point or Eko retailer), who then hands over a booklet that contains a welcome letter, the product leaflet, a manual and a small “signature” booklet, that has 100 signatures, each a 10-digit number that has four blank Xs, or digits to be filled in by the customer at the time of a transaction. [Livemint story excerpt]

The benefits of mobile phone banking, especially for India, are compelling and have been amply demonstrated by this pilot.

• Transaction costs are close to nothing in terms of capital expenditure. Banks only need to pay the commission per transaction. Makes sense when Abhishek Sinha reveals that each physical banking transaction costs a bank more than Rs100 a customer and each ATM transaction more than Rs15.
• Conditions like maintaining a minimum balance are done away with. This is a genuine step towards addressing the banking needs of the poor.
• The Eko retailer gets secondary source of income – who knows, with its popularity it may be the primary source of income too!
• Being highly accessible, one can deposit smaller denominations multiple times rather than wait to save a bigger amount.

Financial inclusion has been a focus area for the government for some time now. Abhilasha, without doubt, is an attractive idea for banks who have been trying to come up with viable ideas to serve the rural and the poor. It has beautifully changed the paradox of a large unbanked population but a high mobile phone penetration into a win-win situation.