MICROCAPITAL STORY: FINO Reaches Two-million Unbanked Populations in India and Releases Micro-Loan Management Software

Financial Information Network and Operations Ltd. (FINO), a technology organization that produces biometric smartcards and micro-loan management software, has completed 2 million enrollments of customers in India. The number of enrollments increased from 1 million to 2 million in less than 4 months with an average of 20,000 customers being enrolled per day. FINO’s rapid growth is in part due to the extensive network of banks and other financial and government institutions utilizing their technology. That network includes Axis Bank, Bank of Baroda, Corporation Bank, DGB, ICICI Bank, ING Vysya, OBC, PNB, and UBI.

Currently, many Indian microfinance institutions use rudimentary technology systems that lack efficient reporting and credible transaction trails or alternatively incorporate manual field operations. The cost of these transactions can be in excess of 20%, which in turn pushes up borrowing costs for customers. The paperwork and human effort traditionally involved is inefficient when compared with the smartcards that allow users to process financial transaction securely and allow financial institutions to supervise transactions electronically.

Mark Stoleson, President of investment organization The Legatum Group which bought a $4.5 million stake in FINO in 2007, said “FINO’s smart card technology and back office support platform will enable the microfinance industry to scale rapidly… this inclusive approach will provide more accurate data and ultimately drive down the cost of capital for clients.”

An example of FINO’s technology being used in the field is a joint venture with Don Bosco Boys School and Union Bank. The venture provides children with a chip photo card they can use to deposit the savings from their daily wages in the bank. The card also serves as an ID to get a driver’s license or a ration card. Sanjay Kuberkar, Chief Operating Officer of FINO, said, “We expect through this scheme to work out a feasible solution that will empower street children by enabling them to open regular accounts with banks and save their earnings.”

FINO also recently announced its end-to-end micro-loan management solution Fino-Saral. The product is designed with a configurable business rules engine which enables the bank implementing the software to fine tune their existing products and launch new products quickly to meet changing needs of their customers. The software also addresses the common problem of many rural areas lacking network connectivity by allowing for all transactions to be booked immediately and logged in the back-end MIS system.

FINO was started in 2006 with the objective of building technologies to enable financial institutions to serve the underserved and the unbanked sector and also to service the technology requirements of entities engaged in servicing the bottom of pyramid customers. Along with the Legatum investment, FINO is funded from the international sector by Intel Capital and The International Finance Corporation, from the private sector by ICICI Bank Limited , ICICI Lombard General Insurance Company Limited, and The Institute for Financial Management and Research (IFMR), and from the public sector by Corporation Bank, Indian Bank, LIC, and Union Bank of India.

Scott Everett, Research Assistant

Additional Resources:

PRLOG: Home, “FINO reaches two-million unbanked populations in India”, November 4, 2008

MONEYCONTROL: Home, “FINO introduces state of art Micro loan management systems”, October 15, 2008

TIMES OF INDIA: Home, “Street children line up to take the best course”, November 2, 2008

B4MD: Home, “Case Study: IBM and Fino – boosting microfinance services in India”

MicroCapital article, May 31, 2007, “New Zealand-based Billionaire’s Legatum group buys $4.5 million Stake in Indian Microfinance Firm”