Thursday, September 19, 2013

The Story of Tatkal Remittance- Eko

On 17th September 2013, Eko completed six years of its existence as a registered company. While it took over a year to move from a 'pilot' project which started by the end of 2007 to a live one, it was not till late 2009 that Eko discovered a real pain-point its customers faced, and in the process, its (current) primary revenue source. This is the story of Tatkal(Hindi. tatka:l, meaning: instant, right then and there).

Eko went live with the State Bank of India (SBI) through an inaugural transaction at Sumit Gupta's medicine shop in Uttam Nagar on 23rd February 2009.
Invitation to inauguration of the first Eko CSP for SBI
Mugdha's invitation, Barry sir (Retd. Vice Admiral Venkat Bharatan was the CEO of the Section 25 company Eko Aspire Foundation then)

At that point in time, our platform was offline and used to sync up to SBI through transaction dumps and handoff reports sent at the end of day. SBI had been working with ALW (A Little World), a very early participant in the Business Correspondent model promulgated by the central bank. ALW's front end agent device was then an NFC enabled phone and each customer had a card. SBI's Financial Inclusion switch provider Yalamanchili  (YCS) had already created an ISO8583 based transaction interface which was to be used to transfer the card transactions captured by ALW to SBI's Core BankingSystem.

There were a few things that were simply revolutionary about Eko:

1. Eko had a transaction system that simply worked on almost any simple mobile phone; no need for expensive smart cards or NFC enabled devices or add-on devices. Even a Nokia 1100 would do just fine for both the customer and the agent.

2. Eko was based on the pre-paid model. It was the first Business Correspondent who first put funds into the BC account with the bank on day zero and then did customer transactions against and upto the amount pre-funded. Pre-funding was prevalent in the telecom recharge sphere, but Eko had applied it on the BC model. This model de-risked the bank and to an extent even Eko from collection and settlement risk. This is today a norm in the BC world.

3. Eko devised an ingenious strong 2 factor authentication system that used a paper based technique. The system was called OkeKey (we are now using the second generation OkeKey system). This system also acted like an OTP (One Time Password) and ensured that the PIN did not travel in clear text even over an unsecured transport like SMS. Simple, cost-effective, quick and therefore for us, it represented an economically viable method to take secure transactions to every mobile phone that was out there.

We used to interact with a few really visionary people at SBI. First and foremost, Mr. S Mukhopadhyay, who was then GM-Outreach. For innovation to work, someone has to give a chance to the innovator to atleast showcase. Mr. Mukhopadhayay gave us a chance and we are thankful to him for that. Mr. L P Rai was then the DGM Technology for Rural Business and Mr. S S Jain who was the Chief Manager Technology for Rural Business. Without these people, Eko story would definitely not have been what it is today. I am sure my colleagues Mansi and Abhinav who used interact a lot more with them would agree.

Coming back to the interface that SBI had exposed through YCS. It was designed for card based transactions and therefore for proximate transactions (where the participants in the transaction have to be next to each other by design). Eko on the other hand had no such restrictions: as long as two people had a mobile number (or any other unique identifier), they could simply transact. So, to ensure that we could communicate in the same 'card' language, we designed a wrapper that would simply translate Eko's transaction parameters to what was required by the card based system and vice-versa. The aim then was to just ensure that the customer accounts opened at Eko's outlets would be online real-time and we will not have to do any end of day batch jobs for this.

So, in late 2009, the RB-DAU (Rural Banking - Dedicated Accounting Unit) team at SBI comprising of Mr. Shivaji More, Mr. Anil Trimakhe and Mrs. Shubha Shejale, along with the YCS team sitting there sent us the specs for the online transaction integration. This was basically a list of transaction formats describing what fields were required for each and the response formats containing success and failure indicators. Apart from this there was a process designed to migrate customers from our platform called SimpliBank to theirs through batch files- there was no programming interface exposed to us to do this real-time.

One among these transactions was a pair called FTWithdrawal and FTDeposit. It was essentially designed to power ALW's Fund Transfer system where a customer could come to an agent, keep his/ her card, indicate the recipient account holder's account details, provide authentication and the transaction would enable money to be transferred from the account holder's card to any existing account in SBI. This was also termed 'Tatkal'. This tatkal had little or no traction at that time.

Meanwhile, the then DMD, Mr. Diwakar Gupta and Mr. S. Mukhopadhay wondered if the BC model could solve a problem that was unique to the public sector banks, through its use of technology. The problem that the bank faced in its urban branches was that of over-crowding, congestion and therefore the quality and RoI of service. Abhishek, our CEO believed he had an answer there.

Abhishek always maintained that there was a remittance story that we needed to pursue although at that point in time, it was not clear to any of us how exactly this would play out. An earlier assumption was that we would need to open agents and through them customer accounts on both sides of a remittance corridor (like Delhi-Bihar). Then, a person in Delhi will use an agent to load money into his/ her account and then the customer could send money home to a relative in Bihar. The relative in Bihar could visit an Eko agent there and withdraw a required amount. We did pursue this agenda for quite some time. However, we soon realized that setting up both the ends of the remittance pipe was a huge exercise. It would take a significantly large base of agents on the sending and receiving size, a significantly greater effort to educate people on both the sides and consequently significantly deep pockets to be able to pull this off.

The integration took a long time: almost a whole year! Considering that we had to get the leased line in place, do the integration, development, get a number of permissions from a lot of 'departments', UAT, et al. The initial phase only consisted of migrating the customers to the CBS. Harish had helped a lot in getting some of the permissions and the leased line in place.

In June 2010, we sent out a process document that described 'remittance to core' to Mr. L P Rai and his team after a lot of review by Anand and Abhinav at Eko. Mr. Rai liked what he saw and made some suggestions in the process and transaction that have made this product hugely successful and he eventually drove its implementation. We had made a curious twist to the 'Tatkal' tale (ref: 4 paragraphs above) and that led to the birth of 'Tatkal remittance' as we know of today. This product and its clones and variations have today become one of the primary revenue sources for many BCs apart from Eko. What we did was to map the pre-funded account of Eko the BC to a virtual card. Then we did a fund transfer transaction where the FT withdrawal was made from the BC account and the FT deposit leg was made to any existing account on the CBS.

Thanks to the effort put in by our engineering team (which was then a part of another contractor Anduril technologies), we made the first test transaction on our staging platform on 23rd June 2010. After a bit of code hacking (one of those rare moments at Eko where I personally wrote code), we were able to successfully put this on production on 26th June. Matteo dialed the first ever production Tatkal transaction from Eko's Nokia 1200 phone (pic attached) and the transaction amount was Rs. 27 (we deliberately chose an odd number ;).

First tatkal end-to-end
The beauty of the whole system was its sheer simplicity, the ability to make a real-time credit into any of the existing 200 million or so accounts of the State Bank of India (rightfully called the banker to every Indian) and the fact that all that the agent (also called the CSP- Customer Service Point) required was a simple basic mobile phone. Unlike the corridor based remittance that we were earlier trying to pursue, the receiving end of the pipe had already been put in place by the bank and its existing BCs. All we had to do was to serve the source locations of migrants- essentially, urban financial inclusion. In the process, what we also achieved was decongestion of hundreds of bank branches. Customers who had to earlier forfeit their day’s work to travel to the branch, wait for hours in a queue there (most branches work only for a few hours of the day, say 10 AM to 3 PM), now had a great option – an Eko counter at the neighborhood grocery store. Unlike the branch, the store was conveniently open even after their work hours, there was no queue and the customers were at ease in a familiar environment.  The customer handed over cash to the agent along with the recipient’s account number, the agent dialled in the transaction and the money moved in real-time to its destination followed by confirmation messages on their mobile phones. This was Tatkal as we had redefined it.
Tatkal flow

The system ran on a trial basis for a month or so and then it went full steam. The rest is now a part of the history of remittances in India. In the first 10 days, we hit a remittance volume of Rs. 1 crore and by the end of August it touched 5 cr. In the entire year before, we would not have done these volumes! The only marketing we did was to tell a few of our CSPs "Don't tell anyone!". Actually! Today Eko, through its platform SimpliBank has handled over Rs. 6,000 crore (6 billion rupees) in cumulative transaction volumes (all included). We still hold the distinction that almost all of these transactions were done using mobile phones. Not only that; today, there are atleast 5 other companies in India doing more or less the same thing.

While there are a hundred challenges before Eko today and we may only have a few answers as yet, the experience of having gone through the grind, having figured atleast some things out, having built something that real customers really needed, being able to earn a revenue out of it, having done all that on the foundation of technoogy innovation and having seeded an entire industry on its precepts, that has been quite a journey!

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