FINO: Leveraging Technology for Financial Inclusion

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In 2006, ICICI Bank (ICICI ) started Financial Information Network and Operations Private Limited (FINO) to provide technological infrastructure to financial service providers, predominantly microfinance institutions, who aimed at tapping the unbanked Indian population. However, Manish Khera, the CEO, and his team discovered that there was an opportunity for them to become business correspondents (BC). This was because of a decision by the Reserve Bank of India (RBI ) in January 2006 to permit banks to engage the services of BCs or agents to muster deposits and dispense credit in rural and far-flung regions...

DEPLOYMENT OF TECHNOLOGY AT THE DOORSTEP
Under the BC mechanism, FINO was authorized by banks to open accounts for them. FINO sent its agents, referred to as bandhus (or friends), residing in the same area and capable of communicating in the same language. FINO developed a solution employing biometric and mobile applications, to overcome obstacles like identity, illiteracy, and absence of infrastructure, generally encountered by financial institutions trying to reach the segment at the 'bottom of the pyramid'...

BASIC OPERATIONS
The hand-held consoles carried by agents were equipped with a finger-print authenticator. When a customer enlisted, he/she was given a plastic card known as a biometric or smart card. This biometric smart card stored information like name, age, address, account details, and fingerprint impressions of the concerned individual...

NEEDS NOT QUITE DIFFERENT
Forecasts in 2007 by different financial institutions operating in the microfinance segment indicated that the number of urban poor was set to surpass the number of rural poor by 2013 to 2015. Mathew Sangma, working with a non-profit micro-lending institution Accion International as of 2007, stated that borrowings by the Indian urban informal segment amounted to US$5.5 billion in 2007, and two-fifths of this was constituted by lending by their kith and kin and moneylenders...

TARGETING MICROCOSMS
In 2007, Indian Bank introduced biometric cards in Dharavi, Asia's largest slum located in Mumbai, in collaboration with FINO to enhance financial inclusion. Explaining the rationale for introducing biometric-based banking in Dharavi, Sadanand Misra, General Manager and Circle Head of Indian Bank, observed, "When we visited Dharavi, we saw that people in this area were engaged in various activities like preparing eatables like dhoklas, chaklis, and other food products. There were others who were into handicrafts. No person was found jobless, but the only problem was that they could not save their income in a bank as they could not comply with the know-your-customer norms"...

By 2008, the Indian Government was encouraging the routing of funds for the National Rural Employment Guarantee Scheme (NREGS ) and the Rashtriya Swasthya Bima Yojana (RSBY ) via banks, to accelerate and make less complicated the mechanism of payments and transactions through the employment of technology. Khera expected this to benefit entities such as FINO...

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