Fino Payments Bank allows 8.6L merchants to offer digital banking services to last mile

Fino Payments Bank, a fintech company with a banking license, serves the middle to low income segment of the population across rural and semi-urban areas. Backed by marquee investors like ICICI Group, BPCL, Blackstone, IFC, Intel and LIC, it brings banking at customers' doorstep through a vast phygital network, a mix of both physical outlets and digital platforms. As an innovative business model, the listed-firm aims to play a significant role in not only taking digital banking to the masses but also manage cash efficiently. In an exclusive interview, Shailesh Pandey, Chief Sales Officer of Fino Payments Bank, tells Bizz Buzz about the expansion of its branchless network in Telangana and Andhra Pradesh

Fino has around 170 branches all over India, including four in Hyderabad and two in Vijayawada. Its distribution network in India has increased to 8.6 lakh merchants by December 2021 from 6.4 lakh in March 2021

Our customers are at the middle and bottom of the pyramid. Their income levels are around Rs 15,000-50,000 a month. We have around 40 lakh customers right now, including one lakh from AP and Telangana

Let us know about Fino Bank's journey to becoming a trusted digital banking services provider for lakhs of customers in India?

Fino Payments Bank is a subsidiary of Mumbai-based Fino Paytech. As a group, we have been offering a diverse range of financial products and services via pan-India distribution network and proprietary technologies for 15 years. We are pioneers in terms of financial inclusion and trying to provide digital banking services to the last mile.

When the Reserve Bank of India (RBI) conceptualised payments bank as a new model of banking in India, we were among the few players who received the final approval to start operations because of our performance and working experience with different banks. Though we got the license in 2015, our platform went live in 2017.

At that time, people thought phygital banking was a tough model and we won't be able to make progress on that. But, we have been consistently doing well for the last four years. Recently, the company has reported 116 per cent jump in net profit at Rs 14.1 crore for the quarter ended December 2021 against Rs 6.52 crore in the same quarter previous year.

We intend to keep growing the business. Once we were profitable, then we thought about going for listing on stock exchanges as markets like profitability. We have launched Rs 1,200-crore initial public offering (IPO) for subscription on October 29, 2021 and it was subscribed 2.03 times on the last day of subscription that concluded on November 2, 2021.

How is Fino's branchless banking services through merchants paying off?

India has over 6.6 lakh villages, of which more than 29,000 are in Andhra Pradesh and Telangana. Physical bank branches in villages are commercially not feasible and there was limited or no access to a bank at the last mile. As a transactions-led bank, our prime focus is to help this segment adopt and use banking services.

There is a large untapped market that requires quality services and our endeavour is to fulfill this need through DTP-based framework (distribution, technology and partnership). We believe that the wider our distribution base, the more business we can do and greater access we can provide. With a vision to offer banking services at every village, we expanded our network.

Initially, we started with branches which used to be the trust point to the customer in a traditional way of business. These branches used to be far off for a rural or semi-urban customer. So, we stalled this model and created banking outlets. All retailers, kirana stores and telecom recharge players can provide our basic banking services.

Our micro ATM-enabled branchless-banking model transforms the local merchants into a human ATM or mini-bank branch. Here, one can open a new bank account, cash deposit or withdrawal, transfer money and pay bills. Third party offerings such as gold loan and insurance products are also available through our partners and one can even pay loan EMIs.

These merchants provide assisted digital banking services, which the customers find convenient. At these banking outlets, transactions are on the rise, indicating a growing acceptance of the merchant point as a reliable local banker. More transactions lead to higher income for merchants and increased convenience for customers.

We have around 170 branches all over India, including four in Hyderabad (Telangana) and two in Vijayawada (AP). These branches act as hubs but all banking outlets work independently for their cash requirements. Our distribution network in India has increased to 8.6 lakh merchants by December 2021 from 6.4 lakh in March 2021.

The network includes 4 lakh APIs (Application Programming Interface). These APIs are fintech players providing banking services to their outlets. We are their preferred partners as back engine. Out of 65,000 banking outlets in AP and Telangana, around 25,000-30,000 are APIs in both Telugu States.

As a payments bank, we cannot issue loans. We have partnered with ICICI Bank, India Infoline and a fintech company KrazyBee. We refer our clients to them and they provide credit. While ICICI Bank and India Infoline offer gold loans, KrazyBee provides personal loans. As we move ahead, we plan to give various products and services to different categories of customers.

Are there any special schemes or programmes to attract customers?

The banking outlets provide instant activation of accounts with cheque book, debit card and pin. To encourage card usage, we offer discounts on purchases across merchant establishments. Any bank's customer can visit our banking outlet to transact and the experience is leading to more people opening their accounts.

We cater to a segment of customers with specific banking needs and literacy levels. We do a lot of local activities such as Nukkad Naatak (street plays) at the village level to create awareness and attract customers. From the offerings perspective, we introduced subscription-based current and savings accounts (CASA) with a one-time annual fee of Rs 449.

The response from customers to this product is optimistic as there are no other hidden charges and penalties for not maintaining a monthly minimum balance. We have opened five lakh accounts during the last quarter. We have been exploring innovative ways to understand the customer better.

How is the competition from other players like India Post, Airtel and Paytm?

We target the mass market while other payment banks are mostly catering the banking needs of urban customers. Our customers are at the middle and bottom of the pyramid. Their income levels are around Rs 15,000-50,000 a month. We have around 40 lakh customers right now, including one lakh from AP and Telangana.

The bank has seen 80-85 per cent growth rate during the past three consecutive years. Last year, we opened 12 lakh accounts. This year, we have done 13.5 lakh accounts during the first nine months. We look for more partnership opportunities so that our banking outlets can provide the entire banking services to the customers.

We also allow other bank customers to be serviced at our end. Bharat Petroleum Corporation (BPCL) is our strategic partner. As many as 8,000 BPCL petrol bunks offer round-the-clock banking services such as cash deposit and withdrawal to the customers. We try to double our network pan-India.

Are there any specific plans to expand in the South?

To improve banking access, we are focusing on expanding our branchless network across geographies, along with going deeper in existing locations. Currently, a majority of the network is present in the North, West and Central regions. We are now focusing on expanding our footprint in the South and East.

We have already made some inroads in the South States. Our plan is to provide banking access to as many villages as possible by increasing our network across the South. We aim to be where our customers are by providing them access to a range of relevant offerings, convenience and choice to transact anytime, anywhere and on any platform.

Budget gave a boost to the digital payment segment. How is the company going to utilise it?

Government has been focusing on digitalisation for a while and this augurs well for new-age banks like Fino. We have implemented and hugely benefited from initiatives such as JAM (Jan Dhan, Aadhaar, Mobile) for account opening, Aadhaar enabled payment systems (AePS) for banking transactions and UPI for payments and remittances.

Our micro ATMs have also played a critical role in extending the reach of digital banking in remote rural areas. We will continue to innovate and explore avenues that are beneficial for us, our merchants and the customers.