Fino Payments Bank, which began operations three years ago, is targeting a network of 10 lakh customer touchpoints by March 2023 and aims to convert itself to a small finance bank once it is eligible after completing five years, Rishi Gupta, its MD and CEO, told THE WEEK in an interaction.
Fino Payments Bank, which counts private equity firm Blackstone, ICICI and oil marketer Bharat Petroleum among its investors, had commenced operations from July 2017. A payments bank can offer a plethora of products like payments and remittance services, small savings accounts, but not loans or credit cards, Fino Payments Bank has tied up with ICICI Bank to offer gold loans and it currently does around Rs 150 crore worth gold loans. It also has tie-ups with a few insurance companies to offer their insurance products to customers through its bank.
It is also exploring tie-ups with other banks and non-banking financial services companies to offer other merchants and consumer lending products like two-wheeler loans and personal loans. A conversion to a small finance bank will help Fino Payments Bank offer credit-related products in-house too.
“We are now hitting $8-10 million revenue per month. When we look at small finance bank, we see there is lot of demand from our customers. Right now we are trying to fulfill this demand through partnerships. In the long run, we believe as a payments bank we can definitely survive and grow. But, we will not be able to capture the full opportunity. That is the reason, we want to convert to a small finance bank,” said Gupta.
According to Reserve Bank of India guidelines a payments bank with at least an experience of five years can convert to a small finance bank. Fino Payments Bank will complete five years of operation in July 2022. By the end of the financial year 2023, it aims to have 10 lakh customer touchpoints. Currently, it has 5 lakh touch points, including 8,000 at BPCL’s fuel stations, through which its customers can transact digitally.
In South India, which contributes to around 20 per cent of its revenue, Fino Payments Bank has 35,000 merchant points and the aim is to double the network by March next year.
“A decade ago, one would have to travel 10 kilometres to reach a banking point. We have to move that to 100 meters of home or office. With that endeavour we started building a physical model and opened 2.5 lakh own touchpoints across the country, we have another 2.5 lakh merchant points, where people can do basic banking services, bill payments, money transfer etc. We want to move that 100 meters to zero meters, essentially a completely digital platform where a person will do all the transactions through the mobile phone as well,” said Gupta.
Over the last couple of decades, banks and NBFCs have expanded rapidly, but still millions of people are not part of the banking ecosystem. Fino Payments Bank sees an opportunity as large as 500 million bankable people in rural areas and the migrants in cities. The Navi Mumbai-based payments bank is aiming for 5 million customers by March 2022, from 2 million currently.
“Our job is not eating into or taking the slice of the cake, which is already there. But, we want to make the cake bigger,” said Gupta, when asked about how the bank aims to grow in a highly competitive market.
The company has been seeing strong growth in transactions, and according to Gupta the COVID-19 pandemic, which hit the economy hard, has only given it a boost. From facilitating around 1 million transactions in 2017, Fino is now clocking over 35 million transactions per month.
In the September quarter of last financial year ended March 2020, Fino did Rs 23,000 crore worth transactions, in the current quarter, it expects Rs 34,000-35,000 crore worth transactions, according to Gupta.
The strong growth in transactions has helped the bank turn profitable. In the April-June quarter, the bank reported an operating profit of Rs 11 crore, compared with a Rs 3.5 crore loss a year ago. The lender had reported a profit in the Jan-March quarter too.