G E Balajee, IFMR Blog Team in conversation with Abhishek Sinha, CEO, Eko India Financial Services Private Limited on the Business Correspondent model, its challenges and prospect.
1. Mr. Sinha, let me start by asking you a question that is most frequently associated question when it comes to technology – the cost. How real is the cost factor?
First of all, there is cost. We cannot say that cost is not there, especially when you are putting the infrastructure in place. I believe that the Business Correspondent [BC] model is an infrastructure model that uses technology. You are putting infrastructure of outreach locations, last mile distribution and the other things that enable transactions to happen in an auditable, real time manner. Since it’s the initial days of setting up this infrastructure, it actually comes at a cost and that cost is high when you start to look at it on a ‘per transaction’ basis.
If you compare the costs, today, some may say they are high, some may say are low, but in the long term of this infrastructure development, I really don’t see that there is going to be much of cost differentiation. Today EKO claims that there is no Capex, because I don’t have to have a Point of Sale Material or Terminal, and today FINO or Integra will have Capex in their model. Organisations come from various perspectives, and because we are a startup having very limited depth in our pockets, we had to innovate something wherein the Capex was practically zero.
Just imagine if we were Reliance, one could have ordered a million terminals and the cost would have come to a fraction of what we have today.
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