FINO: Leveraging Technology for Financial Inclusion

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In the first quarter of 2009, NCR, a technology company and a maker of ATM machines, in collaboration with FINO, introduced a micro deposit machine (MDM) named FINO & NCR EasyPoint 70 Tijori (FINO Tijori). The micro deposit machines appeared similar to automated teller machines (ATMs) but were much tinier. According to Khera, they could be set up in normal kirana (provision) stores and did not need special construction as in the case of ATMs. They could function without a password. People could use these machines to deposit and withdraw money, remit money, enquire about the balance, generate a mini statement, and also accept and repay loans...

According to observers, FINO had always been keen on tapping the remittances market. Explaining the rationale for trying to tap the remittances market, Rishi Gupta, FINO's CFO and president of sales and marketing as of 2007, observed, "With a migrant population of 30.7 crore [307 million], domestic remittances contribute Rs. 40,000-60,000 crore [Rs. 400-600 billion], while international remittance stands at Rs. 1 trillion (one lakh crore) on annual basis."...

FINO TATKAAL
In 2009, FINO launched FINO TATKAAL, a remittance service, primarily comprising a no-frills bank account and doorstep banking, in Dharavi. As of November 2010, this service was also operational in two other Mumbai slums in Ghatkopar and Shivajinagar. This service was essentially targeted at the migrant residents of these slums, who were largely from Uttar Pradesh and Bihar, and, who had to remit money to their families back home...

CREDIT INFORMATION BUREAU FOR MICROFINANCE INSTITUTIONS
In February 2009, FINO launched Sayani Ravi, a credit information bureau to aid financial institutions providing financial assistance to the rural and urban poor in differentiating between the good and the bad borrowers. The initial information made available was the transaction details recorded by the 4 million smart cards belonging to FINO's customers...

FINO’s strategy was to provide the complete array of financial services. Organizations had hitherto been unsuccessful in the field as they arranged for, at best, a couple of banking services. Khera questioned, "If as a company you provide only remittance, then where will the customer go for other things?" FINO went with the assumption that a client tapped for a single product would also be purchasing its other products such as insurance, prepaid instruments, etc...

Experts felt that FINO had achieved impressive growth given the fact that it had registered an EBIDTA margin of 10.93% for FY 2011 when compared to the losses of Rs.63 million, Rs.172.7 million, and Rs.345.5 million that it incurred during FY 2007, FY 2008, and FY 2009 respectively. Even in FY 2010, it had registered an EBIDTA margin of -1.84%. , They were also impressed by FINO’s expansion in terms of the number of its agents on the field, its customer base, the number of districts it covered...

According to experts, since its inception, FINO had had on its hands the arduous task of trying to prove that the BC model could be a viable business on a standalone basis. FINO, according to them, had to itself face several obstacles on this path. For FY 2011, FINO had experienced an extended receivables position of 195 days because of late payments by banks and government. In August 2011, FINO complained that absence of interest from bankers in servicing micro credit costumers was adversely affecting its business...

Exhibit I: FINO's Revenue (Approximate)
Exhibit II: Kenya's M-Pesa
Exhibit III: Building Financial Muscle
Exhibit IV: Initiatives that Highlighted Fino's Positive Socio Economic Impact
Exhibit V: Increase in FINO's Agent Strength
Exhibit VI: FINO's Customer Base
Exhibit VII: FINO's Coverage (No. of Districts)

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