Business information Systems Management pgp18

Case Questions

Case: Mobile Banking and Payments

Questions:

1. What were the SWOT of the African market at the time of the case for the finance
sector? For Telecom sector?

SWOT- African Financial Sector

Strengths

 Strong brand recognition of various banks

 Diversified portfolio offerings
 Big capital reserves

Weaknesses

 Available in only 140000 out of 600000 villages

 Insufficient infrastructure to server Africa’s large population
 High cost and time required to reach remote areas

Opportunities

 Unified electronic payment infrastructure

 Beneficial for social security schemes and subsidy
 Cost of cash could be reduced to one third of current level
 RBI has liberalized guidelines permitting customer charging
 Unique biometric based Identification number, Aadhaar has wide reach

Threats

 Brand dilution by CSPs

 Severe consequences on financials
 Strict rules and regulations by RBI

SWOT – African Telecom sector

Strengths
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Case Questions

 High penetration of mobile phones

 One of the fastest growing networks
 High foreign investment
 A large number of players
 Innovative services being introduced

Weaknesses

 Late in adopting new technologies

 Large investment required to start a telecom business
 Little R&D
 Slow regulatory reforms
 High import and low export of technology products

Opportunities

 Value added services for healthcare, education, banking and entertainment

 3G and 4G
 Increasing popularity of smartphones
 Fiber connectivity to be introduced
 A large population still needs to be covered

Threats

 Political instability
 Strict regulatory practices
 Competition from foreign players
 Weak IPR Protection
 Taxes and duties

2. How well did you think Eko was able to combine the opportunities of the market to its
advantage?
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Case Questions

Ans: Eko was able to combine opportunities of the market to its advantage due to the
following reasons

First mover advantage: Early to recognise the target segment consisting of migrant
labourers, handcraft vendors, rickshaw pullers and domestic help

Innovative products: Addressed the need of target segment through various innovative
products such as No-Frills Account and Tatkal Remittance Service

Benefits to customers: Outlets open from 8 am to 10 pm, seven days a week with nominal
fees and less transaction time

Favourable regulatory policies: The BC regulation gave Eko an opening through which they
could source bank accounts and configure them for mobile transactions

Objective of Government and RBI: Financial inclusion had been an important goal for the
government and RBI

3. What challenges lay in store with Eko? How well has Eko been able to overcome all the
challenges?
Ans
The Initial Hiccups: First couple of years were very tough for Eko which dried their initial
funds of Rs 23.7 mn
Overcame by: Forging partnership with Centurion Bank of Punjab as a BC for opening no-
frills accounts
Partnership with Centurion Bank ended very early when it was acquired by HDFC, as a
result of which it had to shut down all 2000 accounts it had acquired
Overcame when: It received a grant of Rs 97 mn from CGAP Technology Program – a
program co-funded by Gates Foundation
Not project itself as another software platform company
Overcame by: Building Eko into a consumer brand as per its founder’s vision and
outsourcing its technology development
Thus it efficiently managed most of the challenges in the past but the main challenge lies
ahead in deciding its future course for expansion
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Case Questions

4. What would be the challenges of the BC model for the government?

Ans:
BC model would pose significant challenges for the government. The financial viability of
BCs depends on large volume of transactions. At present BC don’t get to process enough
transactions to make the business look lucrative. People who need BCs’ services but
don’t use them are those who either don’t know about BCs or are apprehensive about
availing the services of BCs. So lack of awareness is another major challenge for the
government. BC also face challenges such as lower remuneration from banks and
managing their CSPs.
5. What are the essential factors that Eko stressed on during its operations?
Ans
• Users were largely illiterate but were ‘number-literate’ migrant workers
• Most of the users used ultra-low cost mobile handsets and had no or limited data
services
• Leveraging the existing behaviour of users
• Mobile number of account holder to be used as identifier instead of their bank account
numbers

6. Considering the competition would you suggest Eko to reconsider its business model?
What specific advice would you give to Eko?
Ans
It is not a good time to change direction as Eko has achieved modest success in some
cities. It needs to maintain its original vision of being a consumer brand by being in
contact with end consumers. Government regulations has made the remittance model
economically viable. The experience of international firms like M-PESA also suggests this
as the right path. Good proposition of expansion of Eko’s current services in segments
such as utility bills and insurance payments etc. Eko has already built expertise in this
area. A large population is still unbanked indicating a huge potential market for the kind
of services offered by Eko.