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ICT Financial Inclusion Award Application

Financial Inclusion Network & Operations Limited

Project Name: e-Inclusion: Financial Inclusion at the Bottom of the Pyramid through use of technology
Details of the Applicant (filing the nomination) Name: Kanika Tiwari Address: FINO, Tarun Bharat , Plot 38 - 39 , sector 30, Sanpada west City: Navi Mumbai State: Maharashtra Country: India ZIP: 400705 Telephone No: 022-4161-3521 Mobile No: +91-9619850331 Email: kanika.tiwari@fino.co.in

Details of Project/Initiative Implementing Agency Name of the organization: Financial Inclusion Network & Operations Limited Address : FINO, Tarun Bharat , Plot 38 - 39 , sector 30, Sanpada west City: Navi Mumbai State: Maharashtra Country: India Zip: 400705 Name of the Head of Organization: Manish Khera Telephone No (with country code): 022-4161 3499 Mobile No (with country code : +91-9769033000 E-mail: manish.khera@fino.co.in
Web: www.fino.co.in

Details of the Programme/Project/Initiative Brief description of the programme/project/initiative: FINOs Technology Solution for Financial Inclusion is a complete end-to-end suite of products that enable institutions such as Banks, Microfinance Institutions, Government entities, Insurance companies etc. to take their financial products and services to the doorstep of millions of unbanked and under-banked households at bottom of the pyramid, through hand held devices, biometric Point of Transaction(PoT), biometric smart cards, mobile technologies and managed backend database on FINO's servers. India has over 400 million unbanked individuals residing in both urban and rural areas of the country, which is about 267 million adults, of which about 60 million fall below the poverty line. FINOs technology platform currently reaches out to more than 34 million of these BPL people, which is close to 35 per cent of total BPL population. FINO caters to this set of customers by acting as a formal channel, linking them to large and well-regulated financial entities in India and beyond her borders. FINO has anchored itself around four tenets: 1. Complete suite of financial products and services (Savings, Insurance, Credit, G2P transfers and remittances), 2. Low cost of service to end customer by leveraging the FINO architecture, 3. Offering turnkey technology solutions and business correspondent services, 4. Utilising the FINO technology architecture, which is proven, scalable and robust. FINO today processes five million financial transactions per month and enrolls new customers at an average rate of 50,000 per day . The FINO technology platform includes: - SMART CARDS as the medium for authentication & storing information. The cards are responsible for managing the customer demographic, fingerprint authentication, product relationships _ their status and transaction history. - PoT (Point of Transaction) a secure, biometric handheld device used to carry out transactions. - SWITCH - the PoT talks to the switch to transmit data captured on the field, using ISO 8583 protocol - CBS the Core Banking System, which has been built as a shared back end banking engine that provides accounting, MIS, reporting and monitoring facility for all asset and liability products that the micro sector requires. The core component comprises of three sub units viz. Channel interfaces, Product Engines and Data Repository, enabling centralized data processing and data management of remotely captured transactions in the field.

FINOs Technology Solution addresses a crucial need in the country - that of Financial Inclusion and has the largest acceptance among Financial Institutions and has received awards and recognition from reputed organizations. FINO works on National priority projects (NREGA, RSBY, SSP, etc.) for the central and state governments. FINO has an in-house Technology R&D team to develop and enhance offerings and a Centralized Processing Centre, which is ISO 9001:2000 certified and has a robust contingency management procedure.

Why was the project started: Necessity, they say, is the mother of invention. Likewise, observing the acute but widespread problem of Financial Exclusion among the masses in India, FINO was envisioned to come up with a solution for Financial Inclusion. Despite their best intentions, it had been a challenge for banks, insurance companies, micro-finance institutions and government entities to reach out to people in the vast rural landscape of India. With approximately 450 million individuals outside the ambit of the formal financial system, it was an enormous task to take banking, insurance and other financial services to the masses. The hurdles faced included were amplified by a general lack of awareness, high costs of delivery, accessibility problems, strict KYC norms, lack of infrastructure, and the overall perception that this customer segment was not financially viable for banks to service. High costs coupled with low returns did not make microfinance viable beyond a certain threshold, thus hampering growth. Thus FINO began the search to find alternate ways to address the micro-market and the customer segment at the bottom of the pyramid, through unconventional channels at lower costs. The idea was to push the envelope in a highly regulated environment and come up with a technological solution to enable banking transactions in a distributed manner using low scale resources instead of only at licensed locations by well-trained banking staff. Using advanced technology, a thorough understanding of its customers requirements as well as the deficiencies of the current delivery system and motivated by a deep-rooted commitment to serving the populace of the country, FINO's operations have gone from solely building technologies for Financial Inclusion to becoming an end-to-end Technology as well as Operational Services provider that can boast about its bottom of the pyramid(B-o-P) customer base of above 34 million. FINO's robust, scalable model can acquire customers at a very rapid pace in the toughest of the working conditions in the rural hinterland. FINO completed its first million customer enrolments in 365 days, the second million in 180 days, third million in 69 days, fourth million in just 50 days, and fifteenth million in a remarkable 37 days. FINO is currently acquiring customers incrementally at the rate of over 50,000 customers per day with an average three million

transactions per month and delivering to their doorsteps the entire gamut of financial products and services on behalf of banks, insurance companies, MFIs, NGOs and government entities.

Objective: To provide access of financial services like no frills saving account, loans, recurring deposits , insurance and remittance etc on a biometric based smart card technology platform and financially include the unbanked bottom of the pyramid customers who do not have access to traditional brick and mortar banking system

Target group: FINO's clients span the entire spectrum of financial service providers - banks, MFIs, insurance companies and government entities, enabling them to deliver a wide range of products and services, including savings bank accounts, loan products, recurring deposits, remittances, insurance products, government disbursements etc. India has over 450 million unbanked individuals residing in both urban and rural areas of the country, which is about 267 million adults, of which about 60 million falls below the poverty line. FINO currently covers more than 34 million of these BPL people, which is close to 35 per cent of total BPL population FINO is currently acquiring incrementally over 50,000 customers per day. FINO is doing more than 5 million transactions per month through its network of 15,000 agents spread in 24 states and more than 266 districts in the country. FINO's technology enables government agencies to implement and disburse national priority projects like the Mahatma Gandhi Rural Employment Guarantee Act (MGREGA) and Social Security Pensions (SSP).

Geographical reach: In a short span of 5 years, FINO has the distinction of covering 24 states, 309 district panchayats, above 5884 gram panchayats and more than 50000 villages in the country. Date from which the project became operational: July 13th, 2006 Is the project still operational: Yes, FINO is the largest ICT enabled financial inclusion initiative enabler in India with more than 70 percent market share.

10 points that make the programme/project innovative? 1. FINO's technology architecture is designed to be an interactive system - from the biometric device based enrolments to transactions using handheld devices to detailed information reporting for the clients (banks, insurance companies, MFIs, governments etc.) 2. FINO's in-house Technology R&D team is constantly striving to create a complete suite of Products to meet the Financial Inclusion needs of Financial Institutions. Product Innovation in FINO is derived from its deep insight into the requirements of the client segment gained from pioneering work done with MFI, Banks and Research organisations. 3. FINO Products are based on an in-house developed framework that combines world class proven biometric technologies with Standard Banking Architectures. 4. A parameter-led product approach ensures quick time to market and enables quick delivery of services to wherever they are needed. 5. The products are highly secure, robust and user friendly with in built Risk Management mechanisms. 6. Unlike most platforms in the MFI Sector, where Switch & CBS are applications which are hosted and maintained by a third party and cannot be hosted at the client location, all our applications including Switch & CBS are developed, hosted & maintained by FINO. Therefore, if required, these can be hosted at the clients' premises too. 7. FINO can proudly claim to be a pioneer of Door-step Banking in India as FINO's architecture truly enables secure and low-cost transactions for any service and every provider at any location across the country. 8. The technology platform enables disbursement of the entire gamut of financial and allied services including: Savings A/c, Loans, Recurring Deposits, NREGA/SSP Payouts, Insurance, Remittance etc. 9. FINO facilitated the standardization of the delivery platform, back-end database management system and data maintenance format, effectively solving the issues faced in government schemes that were plagued by design and implementation problems and were therefore unable to reach out to the unserved/underserved markets. 10. FINO has created a innovative model that is efficient, scalable, sustainable, low-cost, interoperable and simultaneously profitable. Realizing that the challenges faced in the financial inclusion sector were similar to those in other verticals of our business, the same knowledge and experience was harnessed and adapted to devise the ideal solution for deploying financial benefits for the bottom of the pyramid customer segment.

List the 5 achievements of the programme/project? 1. There have been 3 key milestones: - Development of the Switch - Development of the FINO Applet - Development of the Core Banking System (CBS) 2. FINO has not only revolutionized the savings and microcredit space but also made a huge impact through its technology in the public health services delivery system through Rashtriya Swasthya Bima Yojna (RSBY). FINO has opened the micro health insurance market for multiple stakeholders to the tune of INR 45 billion (2008-2013). It is noteworthy that the health insurance market in India is estimated to be around INR 50 billion, which covers around 2 per cent of the country_s population. The hallmark of FINO has always been its speed and scale. Today, FINO holds the largest market share in RSBY enrollments across the country. 3. The success of FINO's model in the financial inclusion space is validated by the 34 million plus previously unbanked populace of India that has successfully been empowered by FINO in a short span of 5 years.

4. FINO has the distinction of covering 24 states, more than 309 district panchayats and more than 5884 gram panchayats and 50000 villages in the country. The technology platform enables disbursement of the entire gamut of financial and allied services including: Savings A/c, Loans, Recurring Deposits, NREGA/SSP Payouts, Insurance, Remittance etc. 5. FINO can proudly claim to be a pioneer of Door-step banking in India as FINO's architecture truly enables secure and low-cost transactions for any service and every provider at any location across the country. FINO has been awarded at various global platforms for its ICT led financial inclusion solutions at grass root level and for successful implementation of it innovative branchless banking model on field.

List the 5 key challenges faced while implementing the programme/project/initiative and how they were overcome: 1. FINO facilitated the standardization of the delivery platform, back-end database management system and data maintenance format, effectively solving the issues faced in government schemes that were plagued by design and implementation problems and were therefore unable to reach out to the unserved/underserved markets. 2. The development of the formal banking channel and cost-effective distribution has been inhibited by an acute lack of awareness, shortage of formal financial services infrastructure in rural areas, excessive paperwork and the absence of accurate data. 3. The main problem that FINO attempts to address is that of Financial Exclusion prevalent in India. Statistics reveal that there are over 500 million unbanked individuals in the country, which is about 135 million households or 267 million adults. Of these, about 30% or 60 million fall below the poverty line. Banks, Insurance companies, Government entities, MFIs and NBFCs face two main hurdles in successful delivery of their services and/or products to this customer segment - that of high costs and inadequate human resources to reach them. FINO address both these problems by leveraging its agent or Bandhu network, which is the backbone of FINO. 4. The existing Cost model is not suitable to serve micro-transactions. FINO has developed a low cost, robust and proven biometric technology model which enables micro transactions at a very low cost. 5. Existing channels require Literacy and Urban density, Banking industry was developed and architecture designed to serve the Rich. Online connected Core Banking System . Expensive Branch Network Expensive ATM whereas the FINO model is easy to implement. The KYC required for opening the account in the formal banking system was a major issue for the micro transaction customers but with FINOs biometric authentication this issue is resolved.

List the 5 points how can the programme serve as a model that can be replicated or adapted by others? 1. The FINO architecture is fully inter-operable across 24 banks and 134 million plus customers. Low value high volume transactions require a dedicated switch and / or backend for account hosting as a common infrastructure owned by banks. The FINO system is designed for micro-transactions and account hosting. 2. FINO, over a period in time, is inclined to become the mainstream architecture in the country for electronic payments by the masses. All this, while being a financially viable business model for the company.

3. Capacity enhancement through a utility approach promises easy scalability 4. Enriched MIS from aggregate to granular levels with customized reports 5. Reduced IT infrastructure /Admin/Maintenance costs

List 5 points to elaborate on the scalability of the programme/project/initiative 1. The FINO platforms simplicity and robustness comes from an amalgamation of its 3 integrated pillars - Core System (channels interface, products engine and data repository), Distribution System (enrollment stations, smart cards and hand-held, field transaction devices) and Information System (MIS and credit bureau). 2. In the 5 years since its inception, FINO has completely backward integrated its functioning, and is therefore able to provide complete end-to-end solutions at lower costs unlike most other players in this segment that are providing isolated products or services. These factors render the platform not only highly sustainable but easily scalable and replicable as well.

3. The paperless architecture of FINOs technology renders it inherently environmentfriendly. The interoperability of the cards makes them very useful to migrant BPL families. The card design allows it to be used as a multi-application card i.e. the card is flexible enough to add on other services like public distribution system, subsidy, education vouchers and other welfare schemes.

4. FINO ICT enables payments of government benefits to the poor people through a secure biometric architecture making sure money is available to the rightful beneficiary.

5. FINOs card can also be used for payments for purchases and in that capacity FINO is the VISA equivalent in rural areas since its architecture is fully inter-operable across the 20 banks that it services.

Additional Information:

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