Fino Payments Bank: Leveraging Rural Banking enabling Technology

"Our strategy is DTP (Distribution, Technology, and Partnerships) and our approach is PHYGITAL, having a mix of physical outlets with digital platforms. Customers have a choice to avail of our services either at a physical outlet with assistance from the merchant or branch staff or carry out transactions on their own through BPay, our mobile banking app", asserted Anand Bhatia, CMO & Head Analytics, Fino Payments Bank in conversation with Poulami Chakraborty of BW Businessworld.

Would you please share with us how Fino Payment Bank is playing a crucial role in improving banking access in rural areas? What additional benefits or how is Fino Payments Bank superior to other Payments Banks in the country?

The RBI envisaged payments banks to improve access to banking services through technology platforms and promote digital payments. We believe all the active payments banks have been doing their bit towards this objective. 

We started operations in June 2017 by adopting an asset-light, variable cost merchant-led model to improve banking access. Scale and reach are the keys for our model and for that the neighborhood shops or merchants such as Kirana, mobile repair, photocopying/ dtp outlets, dairy outlets, etc were a perfect fit. 

The owners of these shops are from the local community, present in the neighborhood for long and the shops are open for extended periods of the day, the people who frequent them are familiar with the shop owners. The introduction of micro ATM and Aadhaar enabled payment system (AePS) devices transformed the neighborhood shops into local banking points. Outlets of our strategic partner Bharat Petroleum (BPCL) also act as Fino banking points. 

Currently, we have a network of over 5.5 lakh banking points spread across 700 districts, with over 80% of the network present in Tier 4, 5, and 6 locations. 

This extensive alternate banking channel brought about a paradigm shift in the way people bank. Customers need not travel long to go to a traditional bank branch, instead, they can visit the local Fino banking point at their convenience and avail assisted digital banking services. Be it new account opening, deposit, withdrawal, money transfer, bill payments, life, and health insurance purchase.  Interestingly a Fino banking point may be on an average within 800 meters of a consumer.

The impact of such distribution was visible during the lockdown. The neighborhood banking points proved to be saviors for those struggling as they made cash available to them during the toughest time. Even the beneficiaries of the Government’s direct benefit transfer schemes in remote rural locations were able to withdraw cash from Fino points without the need to visit their bank branch. Such convenience, comfort, and always-on service paved way for trust in the network. 

We have been experimenting with providing our consumers, who are Fino account holders and customers of other banks, with a simple URL . They can open the URL and see the closest Fino banking points.  During the lockdown, we saw enthusiastic usage even in large cities where residents of housing societies used this service to bring the bank (our human ATM) to their doorstep. 

Even now we get over 1 lakh hits every month largely from rural markets such as Bijnor, Mandsaur, Kalahandi, etc. This is very encouraging as it shows that the consumer there is increasingly using ‘digital tools’ to access financial services.

All this reflects from Fino’s performance that has been growing since the start of operations:

  • June 2017, 25000 points: one million transactions a month worth around Rs 1500 crore
  • Jan 2021, over 5.5 lakh points:  More than 40 million transactions a month worth over Rs 12500 crore! 
  • We have been adding about 14000 merchant points every month. Plan to have a network of 10 lakh points by 2023!

Our focus is on bringing the bank literally to the consumers’ doorstep. We recently evaluated results of people who were using the search option to locate their nearby Fino bank outlets. They had to SMS FINO (Pincode) to 9008890088. 

  • Almost 50% of the queries showed an outlet within 250 meters, while the average distance to an outlet was 800 meters. 
  • The other very critical differentiator is using consumer behavior. We met our merchant's outlets who are doing well and figured their secret sauce. It was as simple as service with a smile and inquiring about the customers’ well-being. 
  • This creates reasons to frequent the same outlet. 34% of the other bank account holders who use our micro ATM network keep coming back!

The ability to offer a savings account to such customers benefits the ecosystem considerably. From the customers’ perspective, the bank comes home!

In light of the context of digital literacy in rural areas, what are your observations about rural people in banking domain? How safe is digital payment for the rural population?

In our experience of servicing the rural masses, we found that biometric authentication-based digital payments are incredibly safe. We are also offering the use of Iris scans as a bio authentication tool. 

Banks being custodians of public money have to ensure their safety. For that banks implement fraud risk management solutions that make it easier to spot deviations in customer transaction behavior even with limited data trends. This helps identify fraudulent activities and take corrective action. 

With growing data usage and smartphone penetration, customers are slowly getting confident about adopting digital banking. The first steps to digital start with using digital media (FB, YouTube, OTT apps, games etc) and visiting e-commerce sites. Each positive experience brings them closer to digital banking adoption. This is where phygital or assisted digital is so critical. 

We are seeing the results as our average debit card spends on e-commerce purchases has gradually raised from Rs 800 a couple of years ago to Rs 1500 per transaction now. Most of this is in rural markets and the result of increased confidence in such transactions. Needless to mention such consumers show higher banking activities too.

Please elaborate a bit on the PHYGITAL approach that Fino PB has adopted in its model of operations?

This has been our go-to mantra from day one. Our strategy is DTP (Distribution, Technology, and Partnerships) and our approach is PHYGITAL, having a mix of physical outlets with digital platforms. Customers have a choice to avail of our services either at a physical outlet with assistance from the merchant or branch staff or carry out transactions on their own through BPay, our mobile banking app.

For those customers who are new to banking or fearful of technology, our merchant helps them take the initial tentative steps to using digital means. Like handholding the 2-3 use cases that matter, which makes the customer confidence. 

To be able to do this needs a good mix of technology (an easy to use the platform), training (equipping the merchant with what to do) and marketing (motivating the merchant).

Human ATM is one of the first ever concepts laid by Fino PB. Please share the concept.

The concept of a human ATM is that our merchant is a walking, talking, smiling, empathetic and always ready to help ATM! He is equipped with the right android device to process transactions, be it deposit, withdrawal or money transfer. He is also equipped with the cash required to dispense. This cash comes from the loan repayments made at our points by customers of over 70 NBFCs, who have tied up with Fino Payments Bank.

The staff at over 8000 cash-rich outlets of our strategic partner BPCL also acts as human ATMs providing convenience to customers. 

The warmth of the relationship and the ability to dispense the exact amount that a consumer may want is a big draw.

How will the budget 2021-22 go to impact the banking sector as a whole? For that matter, how will be PB be reaping the benefits of the current budget session?

On the retail side, we see a huge plus. The focus on infrastructure spends simply means that there will be more employment or work and hence more money available for consumers. Our customer segment can spend, save and remit.  

We stand to gain disproportionately when this happens as we are integrated into this customers’ ecosystem as their last-mile banking partner. 

What are your plans of newer tech-led innovations and expansion?

We are a fintech with a banking license as such our focus has always been on developing customer-centric technology solutions. 

While micro ATM and AePS devices have changed the rural banking landscape, we are currently working on the following innovations:

  • Video KYC for easier merchant onboarding without the need to physically present KYC documents
  • IRIS authentication for better and enhanced customer banking experience 
  • Use of Indic languages in communication
  • Going forward, we will also provide facial recognition-based banking, which is currently on pilot phase. IRIS and facial recognitions are part of the AePS mechanism, which currently uses fingerprint authentication. 
  • Analytics is critical for us and we are totally invested in it to make our ecosystem more productive. The ability to see data allows us to customize offerings right down to each individual customer and Fino banking partner. This reflects in the increased debit card spends, higher usage of the bank account. More the usage of banking, better is it for the ecosystem.

We are making good use of concepts like Lookalike Models, Propensity of Buy and Maps. These are not new ideas, but just implemented better.