Making formal financial systems work for the poor- Leveraging existing bank branches to service the needs of migrant workers
An innovation that leverages existing banking infrastructure to offer a formal,reliable and affordable remittance service to 2 mn migrant workers across India.
About Your Organization
FINO PayTech Limited
India, MM, Mumbai
Country where this project is creating social impact
India, HR, Rewari
Is your organization a
How long has your organization been operating?
More than 5 years
Has the organization received awards or honors? Please tell us about them
Young Global Leader Award by World Economic Forum
Mr. Manish Khera, CEO of FINO, has received the Young Global Leader (YGL) Award from the World Economic Forum.
CFO 100 Roll of Honor By CFO India magazine
Mr. Rishi Gupta - CFO, FINO has been awarded "CFO 100 Roll of Honor" - an effort to recognize the top 100 senior finance professionals in India, who have made a difference with their acumen, attitude and energy.
Skoch Financial Inclusion Award
FINO has recently been awarded, by Skoch Foundation, for it’s contribution in the financial inclusion space.
FINO has been awarded by Sankalp – Intellecap Forum in the “Growth Enterprise” Category for its technical innovation in implementation of RSBY programme, one of the largest micro-insurance program in the world touching 30+ million customers.
Manthan South Asia 2010 Award
FINO's technology solution was awarded as the Best Project in the category "e-Inclusion: Financial Inclusion at the Bottom of the Pyramid through use of Technology".
Asia Insurance Review Awards
FINO was awarded "Technology Initiative of the Year" for transforming the delivery of micro-insurance services.
Financial Times Sustainable Banking international award
FINO won Financial Times Sustainable Banking international award for 'Achievement in Banking at Base of the Pyramid' in recognition of the impact made by the company in the field of Financial Inclusion. FINO was the only nominee to be selected from India.
FINO was honored by EDGE (Enterprise Driving Growth & Excellence) Network in June 2009 for using Information Technology in maximizing business impact.
'Excellence in Innovation' -2nd Indira International Innovation Summit.
FINO was presented 'Excellence in Innovation' Award during the 2nd Indira International Innovation Summit.
Frost & Sullivan South Asia Product Line Strategy Award
FINO was presented the Frost & Sullivan South Asia Product Line Strategy Award in 2008, in the 'Integrated Smart Cards and Biometrics Market' category.
'Breakthrough Award' -17th Annual Card Tech Secure Tech 2007 conference held at San Francisco, USA.
FINO won the 'Breakthrough Award' in the New Markets Category at the 17th Annual Card Tech Secure Tech 2007 conference held at San Francisco, USA.
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Select the stage that best applies to your solution
Established (past the previous stages and has demonstrated success)
How long have you been in operation?
Operating for 1‐5 years
Which of the following best describes the barrier(s) your innovation addresses? Choose up to two
The Need: What problem are you trying to solve?
In India, over 100 million migrant workers confront a significant challenge every month- how to remit their earnings to their families, back home, in a safe, timely and affordable manner. Majority of these workers do not have access to formal financial services- per an estimate, 70% of the domestic remittances, in India, flow through informal channels (cash couriers, hawala, etc.) that are unsafe, expensive and time-consuming. Workers, in several cases, end up losing their hard-earned income to unscrupulous middlemen.
FINO PayTech, through it’s innovative business model, strategic relationships, cutting-edge technology and a vast customer service network offers a safe, reliable and affordable option, for transferring funds, to migrant workers.
The Solution: What is your solution? Be specific!
FINO PayTech’s service addresses the need of migrant workers by establishing and operating a customer-friendly “frontend” of 30,000+ customer service points and utilizing innovative technology, like biometric solutions, to meet mandatory KYC norms. FINO PayTech’s remittance service leverages existing investments in backend infrastructure (technology, processes, etc.) of banks and makes it possible for migrant workers to use a formal channel which was, in the past, either difficult or not possible for them to use.
The key elements of FINO PayTech’s remittance service (strategic relationships with formal financial services providers like banks, pan-India network of 30,000+ service agents and robust & scalable technology) circumvent the barriers, faced by migrant workers, to access and avail remittance services from banks. This service allows migrant workers to safely remit funds, from an accessible customer service point and at an affordable cost.
The Model: Walk us through a specific example of how your solution makes a difference; include your primary activities
FINO PayTech’s solution consists of the following key activities/processes-
Strategic relationship with formal financial services providers (banks) - FINO PayTech leverages the services delivery infrastructure of banks to serve a hitherto under-served customer segment- migrant workers. This existing infrastructure plays a dominant role in influencing the end customer experience and is thus, key to the successful delivery of the core service.
Simplified processes - Reduced KYC norms allow FINO PayTech to enroll and service migrant workers, on behalf of banks, who may not meet standard KYC requirements for opening and operating a bank account.
Establishment and maintenance of customer service points- The customer service points, strategically located and with convenient “office hours”, offer easy access and obviate the need for migrant workers to visit the bank branches and potentially, lose half a day’s work.
Innovative technology- FINO PayTech’s smart card solution, coupled with biometrics, allows migrant workers to remit money without the need to complete cumbersome documentation every time and averting the risk of submitting incorrect recipient information by mistake.
All of the above come together to make it possible,for a migrant worker, to walk into one of FINO PayTech’s customer service points, at a time and day convenient to him/her and securely transfer funds to his/her family back home.
The Marketplace: Who are your peers and competitors? Identify others also working to address the needs you are and what differentiates you from them. What challenges could these players pose to your success or growth?
The domestic remittance market, in India, is estimated to be $ 10 billion annually. Given that only about 30% of the domestic remittances are channeled through the formal sector, the primary competitor for FINO PayTech and other formal players remains the informal medium- cash couriers, hawala, etc. The market is at a very early stage of it’s development and all market expansion efforts, by formal players, especially in the area of customer awareness, would benefit the end customer and the industry as a whole.
Compared to other players,FINO PayTech’s service is differentiated in the following aspects- largest customer service network (30,000 service points), ability to transfer funds between 2 different banks as against within a single bank’s network and favorable pricing.
This Entry is about (Issues)
Founding Story: We want to hear about your "Aha!" moment. Share the story of where and when the founder(s) saw this solution's potential to change the world.
Dharavi, in Mumbai (India) is one of the largest slums in the world. Spread over 500 acres, Dharavi’s population is estimated to be between 600,000 and a million. Dharavi residents include migrants from all over the country- in a city where house rents are among the highest in the world, Dharavi provides a cheap and affordable option to those who move to Mumbai to earn their living.
FINO PayTech, founded in 2006, is headquartered in Mumbai, India. In the initial years, FINO PayTech was exposed to the challenges, faced by migrant workers, in availing formal financial services, while establishing customer service points and offering banking services in Dharavi. These valuable experiences lead the organization to explore the possibility of offering reliable and affordable remittance services, in partnership with banks, to migrant workers across the country.
Please describe the goal of your initiative; outline what you are trying to achieve
FINO PayTech’s goal is to offer an affordable and a reliable remittance service to over 100 million domestic migrants in India. Our objective is bring an end to the dependency that migrant workers have on informal solutions by removing the key barriers that prevent migrant workers from utilizing formal channels for meeting their remittance needs.
Given that an estimated 30% of the household consumption expenditure, in remittance receiving households, is financed by remittances, FINO PayTech appreciates the value that this service has for millions of people in India. It is this realization that continues to motivate the team to deliver a reliable service every time a customer steps into the customer service point.
Which barrier(s) to financial inclusion does your solution seek to address? (select all applicable)
Physical and other accessibility obstacles that prevent communities from reaching financial services, The lack of affordable financial products tailored to the needs of underserved and excluded communities,.
If you selected 'other' above, please specify which other barriers to financial inclusion you solution seeks to address:
For which underserved or excluded communities will your solution create access to valuable, affordable, secure and comprehensive financial services?
FINO PayTech’s remittance service is targeted at solving the challenges faced by domestic migrant workers in India. Majority of the workers who migrate to larger cities, for earning their livelihood, are less educated and belong to socially disadvantaged groups. These workers typically work in brick-kilns, unskilled construction, loading and unloading of commercial goods transport vehicles, etc. where living and working conditions leave much to be desired. A slightly well-off category of migrant workers would be working as security guards, in the hospitality industry, as domestic help and/or as plumbers and carpenters.
Since dependency on informal channels, for sending remittances, also poses a problem for the families, dependent on remittance incomes, which run the risk of not receiving the much-needed funds in time, FINO PayTech’s service has an impact on the migrant’s family members as well. Remittances enable higher spending on education, health and investments.
Could your solution work in other geographies or regions? If so, where?
FINO PayTech’s solution leverages existing banking infrastructure coupled with innovative technology and a large, customer-facing service network to serve migrant workers.
The solution has the potential of working in other geographies and regions where there has been rapid industrialization/urbanization, in recent years, leading to a large concentration of migrant workers in select cities/towns who face challenges in accessing formal financial services channels.
Our understanding is that industry players in the following countries/regions could draw learnings from our work and benefit from our experiences while addressing the unique requirements of their local markets - China, South-East Asia, Sub-Saharan Africa and Latin America.
If your solution is dramatically successful, how will things be different in 10 years?
With rapid urbanization being experienced in developing countries across the world, the challenges faced by migrant workers is only beginning to be realized. To ensure long-term, sustainable economic development and to avoid social unrest, it is extremely essential, for all stakeholders, to identify and meet the needs of fellow citizens who leave their families behind for earning a living in the cities.FINO PayTech’s solution is a step in this direction.
Our solution has also demonstrated the critical value of partnerships and the active participation of various stakeholders as being absolutely essential for serving low-income customers, profitably.
In the next 10 years, the success of our solution would position us to meet the needs of the target customer and also create the blueprint, for similar efforts, not only in the area of financial services, but in other domains of social importance as well.
What will have had to have changed to make this happen?
FINO PayTech would continue to innovate in order to achieve the following- increase the footprint of it’s service network, improve the quality of it’s processes & services and offer comprehensive financial services to migrant workers through it’s existing infrastructure.
FINO PayTech would like all stakeholders to work, in a collaborative fashion, with the objective of meeting the financial as well as non-financial needs of the under-served segments. We would also encourage industry players to explore the potential of leveraging existing infrastructure (banks in our case) to serve low-income customers as against efforts to develop a parallel solution from scratch.
What has been the impact of your solution to date?
FINO PayTech's solution has, so far, made it possible for over 2 million migrant workers, across 6 states in India, to remit money to any of the 80,000+ bank branches across the country, at any point of time during the year, reliably.
Our service has lead to an estimated annual savings of USD 4 million for our customers, who were previously dependent on informal means for sending remittances to their families.
Indirectly, our service has positively impacted the lives of 8 million family members by ensuring timely receipt of funds on a regular basis. This, in the long run, is expected to lead to better outcomes in the area of education, health and overall financial well-being.
Given that remittance destinations are usually in low-income states and in under-developed regions, our service is creating stronger local economies by ensuring smooth flow of funds, throughout the year, in 5 of the least developed states in India.
What is your projected impact over the next five years?
Over the next 5 years,FINO PayTech, would like to increase the footprint of it's network and quality of it's services to serve more than 5 million migrant workers and an estimated 20 million family members across India.
What barriers might hinder the success of your project? How do you plan to overcome them?
The industry is still at a very early stage of it’s evolution. Lack of awareness, among migrant workers, about affordable and formal remittance solutions leading to the dominance of informal players is the biggest challenge facing the industry. FINO PayTech faces the same challenge.
As an industry player, FINO PayTech focuses it’s efforts on increasing customer awareness by running financial literacy campaigns, in target locations, with high concentration of migrant workers. This has resulted in an increased uptake of our services. FINO PayTech also reaches out to family members, at the remittance destinations, by making them aware of the risks of using informal channels for receiving funds.
An industry-wide initiative, with a similar objective, would benefit all stakeholders.
Winning entries present a strong plan for how they will achieve and track growth. Identify your six-month milestone for growing your impact
Improve quality of service
Identify three major tasks you will have to complete to reach your six-month milestone
Financial literacy campaigns targeted at increasing awareness and establishing the right expectations among potential customers.
Productivity and customer service training for channel partners managing customer service points.
Improvements in technology platform.
Now think bigger! Identify your 12-month impact milestone
Increase volume of transactions
Identify three major tasks you will have to complete to reach your 12-month milestone
New product innovation
Identification of new target locations (remittance origination points as well as destinations)
Tell us about your partnerships
FINO PayTech delivers it's remittance service in collaboration with banks.
FINO PayTech acquires and services the customer per the regulatory guidelines and business processes established in consultation with the partner bank. FINO PayTech utilizes it's 30,000+ customer service points to acquire and service customers while leveraging the bank's backend infrastructure to transfer funds to over 80,000 bank branches across the country.
Are you currently targeting other specific populations, locations, or markets for your innovation? If so, where and why?
FINO PayTech first launched it’s services in major migration hubs of India- Delhi and Mumbai. The company, gradually, expanded it’s presence, in regional hubs, of both North as well as South India.
Given the concentration of economic activity and industries, in select cities, across the country, big as well as small, there is a need to explore new locations for establishing customer service points. The following cities and states are the major markets for domestic remittance services in India- Delhi, Mumbai, Hyderabad, Bihar, Uttar Pradesh, Maharashtra, Orissa, Gujarat and Madhya Pradesh.
What type of operating environment and internal organizational factors make your innovation successful?
FINO PayTech's innovative remittance service has been made possible because of a supportive regulatory environment, in India, which allows and encourages banks to partner with other organizations for increasing their reach beyond the traditional, brick & mortar branches.
As an organization, FINO PayTech, has built it's business around meeting the financial needs of under-served customers, both rural as well as urban, in India. It is this focus that encourages the organization to continuously innovate on new products and improved services delivery mechanisms while trying to unearth newer sub-segments within the larger target market.
Please elaborate on any needs or offers you have mentioned above and/or suggest categories of support that aren't specified within the list
FINO PayTech would welcome interested researchers to collaborate with it's product teams for developing and executing research projects, in specific geographies, in India, focused on assessing existing customer service levels and potential areas of innovation.FINO PayTech would also be interested in collaborating with international stakeholders in highlighting the challenges faced by migrants.