Incubated by one of the largest private sector banks in India, Fino Payments Bank is on a mission to provide simple, convenient, paperless banking to Indians as part of the Digital India and Financial Inclusion missions. The bank targets 3-4 million customers in the first year of operations. Strategic partnerships include ICICI Group and Bharat Petroleum Corporation Limited.
Fino Payments Bank went live with 410 branches and 25,000 touch points on day one across 14 states of India on 17th July.
Rishi Gupta, MD & CEO of Fino Payments Bank
Rishi Gupta is the MD and CEO of the newly formed Fino Payments Bank. Till recently Rishi was the MD & CEO of the bank’s holding company Fino Paytech Limited, which was primarily in to 2 broad businesses:
- Providing biometric smart card and payments technology solutions to banks and other financial institutions in their financial inclusion efforts.
- Providing business correspondent services to public and private sector banks, insurance firms, government agencies etc to extend the reach of financial services to remote rural areas.
This interview with Fino Payments Bank is part of the ‘Fintech India‘ series.
How did you come about setting your focus on this particular category? Please tell us a little more about the company’s beginnings as well.
Fino Paytech was incubated by one of the largest private sector banks in India, ICICI Bank as part of its internal project on financial inclusion in 2005. At that time it was estimated that more than 50% of the Indian adult population, especially in remote rural areas, was unbanked and under banked. The objective of the project was to use innovation and technology to address this banking access gap.
Fino started off developing biometric solutions to extend the reach of banking and continues to innovate in the space. With RBI issuing BC guidelines in January 2006, Fino decided to become a separate company in July 2006 offering technology led BC services, with support from ICICI Bank and other like-minded investors.
We spent a lot of time understanding the challenges and developing solutions for making banking simple. We worked on an executional and viable plan to reach out to the massive market opportunity. In the process, we built the largest and most trusted business correspondent business in the country; enabling low value, high volume transactions across millions of customers in over 60,000 villages.
Fino has truly enabled financial inclusion by pioneering in building state of the art technology solutions like biometric smart card infrastructure, over the counter card issuance and mobile based solutions thereby bringing more and more people into the formal banking fold. This was much before biometric-based Aadhaar came into existence. We sort of pioneered biometric based banking in the country.
In the last 11 years, Fino brought financial services closer to over 100 million individuals across 28 states through a network of 25000 banking agents. This network manages a cash throughput of over Rs 15000 crores annually.
What transformations have you undergone as a company since starting up?
We were part of a new initiative 11 years ago, we created a sustainable model around that and along the way learnt a lot from it. Along the way we did pioneering work – we ran the first financial inclusion program in 2006, we introduced the electronic benefit transfers before it become direct benefit transfer in 2007 and the much acclaimed micro insurance program – Rashtriya Swasthiya Bima Yojana – in 2009. These were all projects that have had a tremendous impact on the society and more than anything gave people an identity.
Our understanding and the expertise of making things happen in the market that we are operating allowed us to manage large scale projects for banks, financial institutions and Government agencies.
As we grew, we continued being part of nation building projects such as UIDAI, the world’s largest biometric identity system, as enrolment partners.
Having faced challenges and emerged as the most reliable tech-enabled BC company, we set our sights on bigger things to enable financial inclusion. From servicing other banks’ customers as their corporate partner we envisioned a future where we have our own set of customers. This led to us venturing into retail business in 2013 through our product Fino Money that offered remittance services, bill payments and lending.
Our years of efforts received a fillip with the launch of Pradhan Mantri Jan Dhan Yojna of the Government in 2014 that accelerated financial inclusion initiatives in the country. This was followed by payments bank licenses, a visionary idea from RBI.
After a decade, we are again a part of yet another new initiative, this time as payments bank, which has been launched on 17th July 2017. Now, the banking and technology ecosystem is much more evolved thanks to regulatory support, innovation in technology and Government push on digitisation through Digital India and the use of UIDAI (Aadhaar) for enabling banking and payments.
Thoughts on the present Indian fintech landscape? How does it compare to the rest of the fintech majors in the world like Hong Kong, Singapore, United Kingdom, Sweden, etc. according to you?
The countries mentioned definitely might be doing better due to the inherent advantages they have in terms of smaller size of population, geography and largely evolved customers. For India, while it is an IT super power, to develop and execute solutions that integrate into the multiple cultures, customs and geographies for such a huge and varied country has always been a herculean task.
However, the last few years things have witnessed tremendous change on digital payments front, Aadhaar enabled payments systems, wallets, UPI etc. The chief enabler of disruption in the fintech sector has been the emergence and adoption of smart phones across segments of population. This has led to innovation in terms of applications that can be developed to address certain existing gaps to increase efficiencies.
Which are the sectors in Indian fintech where you think there are untapped opportunities? How does it fit in with your product and growth plans for the immediate future?
More than 90% of the transactions in India happen in cash. As such there is a huge potential for innovation in the digital payments space. For fintech players, whichever sector deals in cash presents an excellent opportunity.
Please tell us a little about your funding journey – the requirements & objectives in mind when you decided to raise a round/s; the fit you found or were looking for with your investors; what would you be looking for in the future as the business grows?
Since our inception in 2006, we have raised funds 5 times from 2007-2016. The last one where we raised Rs 400 crore from ICICI Group (Bank, Prudential and Lombard) and Bharat Petroleum Corporation Limited has been towards setting up Fino Payments Bank.
We believe in having strategic association with our investors, hence we look at such fitment that helps us have access to their strengths in terms of knowledge and expertise. ICICI Group, BPCL, IFC, Blackstone, LIC, Union Bank of India, Intel Capital are some of our marquee investors who have believed in our business model and supported us at various crucial periods.
Becoming a payments bank is a huge moment for us as we have taken a big leap from being a BC to a bank. Our focus will be only on creating a strong and successful bank by offering a wide range of financial products and services in a simple and convenient manner to our customers. In the process we will utilise our internal strengths as well as explore innovation with ICICI Group for banking and insurance products, and access BPCL’s strong distribution network to increase our reach.
What advice would you give to other fintech entrepreneurs?
If you believe in an idea, have passion, patience and perseverance to make it work.