From being a small tech-related vertical with ICICI Bank to becoming an independent fintech company with interests in banking and technology, Fino Paytech has come a long way. It was one of the first entities to apply for a payments bank licence when the RBI called for applications in 2015. Fino launched its payments bank in July 2017. Rishi Gupta, MD & CEO, Fino Payments Bank, speaks on the journey so far. Excerpts:
Fino Payments Bank will soon complete a year. How has the journey been?
Fino has always been known for its financial services distribution capabilities. The journey so far has been exciting; it has reinforced Fino’s strength in distribution. We started with over 400 branches and 25,000 touch points across 14 States from Day One. This includes our partner BPCL’s outlets across the country. On the product front, our partnerships with the ICICI Group, Exide Life, and other institutions have allowed us to offer a range of products. The response has been encouraging.
How easy or difficult was it to transform into a bank from a banking correspondent and remittance company?
Transforming from a B2B entity to a B2C company was challenging: it involved a change in mindset, attitude and culture. Along the way, we seamlessly passed on the decade-long experience of working with the underbanked customer segment to the new team. As a BC, our association with end-customers was limited to the mandated services. Now, as a bank, we own the customer, the processes and the resources, introduce our own products as well as our partners’, and decide on which geography to operate in.
Becoming a bank helped our existing remittance business: we doubled the value and volume of transactions from earlier. Before the launch of the bank, we were doing remittances worth ₹300 crore a month; now it’s about ₹750 crore a month! From the customers’ trust point of view, transforming into a bank has been a winner.
Who are your customers and how have you positioned yourself with them?
Our customers are the mass market segment, typically small business owners, shopkeepers, low-income households, industrial workers, farming community, who earn anywhere between ₹1 lakh and ₹6 lakh per annum. This segment is largely underbanked due to lack of access to quality banking services.
Fino Payments Bank has been positioned as a neighbourhood bank offering anytime, anywhere banking in a simple, convenient and paperless manner powered by biometrics. What makes Fino’s banking experience unique is the convenience it provides by being closer to a customer’s workplace or residence, that is, at marketplaces and in residential areas. Also, customers of any bank can do transactions due to the interoperable nature of our banking platform.
How has your customer base grown? How do you plan to grow further?
Currently, we have around 4 lakh customers. We are adding 5,000-6,000 customers per day through our branch network; this should scale up to 10,000 customers per day in three months.
Our focus is not only on opening new accounts but also on providing banking services to non-account holders. To expand our reach, we plan to increase our branch count to 600 and double our network of access points to 50,000 by next fiscal. Our aim is to service 50 million customers in five years.
How does this strategy fit in with the industry trend towards branchless banking?
‘Phygital’ is our approach: having a mix of physical and digital touch points. Our customer segment currently needs assisted services: we will handhold them in their evolution from assisted to self-service through our digitally enabled points, including doorstep banking with micro ATMs.
More than 60 per cent of our transactions today happen outside of branches. About 25 per cent of our customers have downloaded our mobile banking app BPay, while 50 per cent have RuPay debit cards. From branch to branchless, tab to app, Fino Payments Bank enables banking for all.
Payment banks are only allowed to take deposits, so how are you convincing customers to open an account?
The first thing people need is access to simple, convenient banking services, which Fino offers.
We are closer to their place of stay or work, we even go to their doorsteps and are open till late hours, allowing them to come to our points at their convenience.
With Fino, a customer can open a bank account and get instant RuPay debit card with green PIN in only 10 minutes. All a person requires to do is present an Aadhaar number and carry out fingerprint authentication.
Of course, the quality of connectivity, especially in rural areas, needs to improve.
What are your other customer offerings and how are they different from those offered by other players?
We offer current and savings account (CASA), domestic and international remittances, bill payments, life, health and general insurance, gold loan sourcing and BC lending services. Our product mix model is based on partnerships with strategic players, a key differentiator.
Consider this: gold loan sourcing is going at the rate of ₹40 crore per month, while insurance regularly clocks over 10,000 policies a month across life and general spaces, with the premium crossing more than ₹1 crore.
Customers can avail these products and services from any device (Micro ATM, mobile, tablet) or platforms (branches, access points, doorstep banking). Our points also allow cash withdrawal through Aadhar-enabled payments systems (AEPS).
How do you make money, and when do you expect to be profitable?
Interest income aside, we do a lot of cross-selling of products for our partners. Going forward we will introduce more investment, savings and loan products through partners for the benefit of our customers.
At the holding company level (Fino Paytech), we aim to break-even next fiscal; at the bank level we are confident of achieving break-even in the year after the next.