FINO: Leveraging Technology for Financial Inclusion|Finance|Case Study|Case Studies

FINO: Leveraging Technology for Financial Inclusion

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Case Details:

Case Code : FINC082
Case Length : 17 pages
Period : 2007-2013
Pub. Date : 2013
Teaching Note : Not Available
Organization : Financial Information Network and Operations Private Limited (FINO)
Industry : Business Correspondent
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"We strongly believe that technology can be leveraged to optimise reach towards all strata of the society for an inclusive and sustainable growth. FINOs' endeavour has been to bring cost-effective technology solutions for businesses, banks and government to reach out to every un-banked individual in the society and we have successfully capitalized on it..." 1

-Manish Khera, CEO, FINO, in May 2011.

"The good news about India's poor is that they do provide an opportunity for business ventures that care to address their needs and provide them services, to make decent profits." 2

-The Hindu Business Line , in September 7, 2010.

Business Correspondent company Financial Information Network and Operations Private Limited (FINO) helped banks and other financial institutions provide banking services to the downtrodden in the hinterlands and the unreached populace in the urban areas of India. Under the business correspondent model, FINO provided doorstep banking to these categories of individuals by employing handheld devices. Constraints such as lack of identity proof were overcome with the help of biometric technology that established identities via fingerprints. Through this business correspondent mechanism, FINO aided savings, remittances, insurance, and micro loans.

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FINO also created a steady stream of business by deploying its extensive agent and technology infrastructure for disbursing payments under the different government welfare schemes.

For FY 2011, FINO recorded consolidated revenues of Rs. 1,862.5 million and an EBITDA (earnings before interest, taxes, depreciation, and amortization) margin of 10.93% (Refer to Exhibit I for growth in FINO's approximate revenue from FY 2009 to FY 2012).3 As of March 2012, FINO was India's biggest business correspondent company.4 Given this comfortable position, experts expected FINO to benefit significantly from its industry leadership as, even by December 2011, over 50% of Indian adult population was either not covered or was under-covered by the financial institutions.5 This was also borne out by the fact that FINO seemed to be taking big strides in the lucrative business of prepaid mobile payments. However, the viability of FINO's business model had been a constant subject of debate because of the alleged reluctance on the part of banks to push more products through the business correspondent channels. Experts were also concerned about the Finance Ministry's move in 2012 to divide the entire country into 20 clusters and allocate each cluster to a single business correspondent based on a bidding process. Though the intention was to ensure that business correspondents could enjoy economies of scale, the perceived low rates at which business correspondents, including FINO, won different clusters, brought to the fore the question of the very viability of the business correspondent model in India.

Background Note - Next Page>>

1] "FINO Bags the Growth Enterprise in Technology Sector Award,", May 12, 2011.
2] Rasheeda Bhagat, "Reaching out to Under-Banked,", September 7, 2010.
3] "India's FINO Rated at 'Fitch BBB(Ind)',", October 13, 2011.
4] Taneesha Kulshrestha and Arundhati Ramanathan, "Banking on BCs,", March 3, 2012.
5] "Ten Million FINO Customers in India Use Multiple Micro-Banking Applications on Gemalto Smart Cards,", July 30, 2011.

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