Shailesh Pandey, Chief Operating Officer, Fino Payments Bank:
Ravi Lalwani: The BFSI sector is rapidly shifting toward more personalized and digital-first financial services. What specific advancements or strategic changes does your organization plan to implement by 2025 to meet evolving market expectations? Are there particular markets where you aim to expand your presence or market share?
Shailesh Pandey: In line with our growth plans along with efforts to enhance customer engagement experience, Fino Bank is focused on strengthening its 3-pronged D-D-D approach, i.e. Data, Digital and Distribution.
Data is the new oil. As a transactions-led entity, Fino has enormous customer transaction data. In FY24 we facilitated 2.11 billon transactions worth over Rs3.5 trillion! We deployed data analytics to analyze this data that helps gauge customer behavior and improve offerings, which further leads to increased engagement and long-term association. In addition, data also helps understand merchant behavior, which is critical in improving his / her productivity.
Technology is the backbone of Fino’s business model wherein its digitalization efforts bring banking closer to our customers through mobile first approach. We are strengthening our direct to customer (D2C) digital ecosystem by building digital assets and offering simple and easy to use products on FinoPay mobile app. For a rural-focused bank it is remarkable that nearly 40% of our 12.6 million customer base is digitally active. We aim to expand the digitally active base further by engaging with newer segments of customers, ie those who are digitally savvy and belong to a higher income population.
Our extensive financial services distribution network of over 1.8 million merchant points spread across the country facilitates the national agenda of financial inclusion. We are focusing on expanding our network in East, North East and South geographies, while consolidating presence in West, North and Central regions.
As you set financial goals for 2025, could you share specific targets, such as revenue growth, customer acquisition metrics, or cost efficiency ratios? How do you plan to leverage key market segments – like real estate, SMEs, or agriculturists – to reach these milestones?
In Q2 FY25 we registered 19th straight profitable quarter, a period starting from Q4 FY20. We have been growing consistently at around 20% YoY. In FY25 we intend to do better with our growth guidance of 25% riding on high margin products of CASA, CMS and digital payment services. Our TAM i.e. transaction, acquisition and monetization strategy is the driving force behind our consistent performance.
The 1.8+ million merchant network gets transaction footfalls of over 25 million every month facilitating deposit, withdrawal, money transfer and utility bill payments. This sets the stage for the next phase of customer acquisition i.e. ownership.
Fino opens more than 270,000 new accounts every month on an annual renewal fee basis, translating to over 3.2 million new CASA customers annually. Over 60% of the customer renew their accounts, leading to a healthy annuity income base.
We will continue monetizing the extensive network and digital ecosystem created to cross sell, offer various services through partnerships. We aim to continue on boarding merchants and customers at the current rate, setting the stage for the next growth phase.
Given the rapid digital transformation in BFSI, can you specify which technology initiatives you plan to prioritize by 2025? What are your key milestones, and how do you plan to measure ROI in terms of operational efficiency or customer satisfaction?
The bank is reducing the burden on its Core Banking System (CBS) through Hollowing the Core (HTC) initiative. It developed scalable and independent integrated products. This will accelerate development cycles, enhance scalability, and improve cost-effectiveness. The HTC initiative will be launched with the new CBS (Finacle) towards the end of FY 2024-25. Fino also worked on AI-based solutions like fraud management, risk management and cyber security, among others.
With customers increasingly seeking personalized, on-demand financial services, what innovative solutions or digital experiences (e.g., self-service portals, virtual assistance, or app-based financial planning tools) are in the pipeline to enhance customer experience by 2025? What metrics will you use to assess the success of these initiatives?
Fino customers are increasingly becoming digitally savvy, especially on UPI. The rise in smartphone penetration is driving this change. UPI transactions on Fino platform contributed to 1.55% to the overall UPI ecosystem transaction volume in September 2024.
With UPI transactions having the potential to increase further, we decided to strengthen our systems to meet the demand. We made a decisive investment by developing our UPI switch that eliminated dependence on external partners for routing and handling UPI transactions. We are the first payments bank to have such a technology that provides enhanced flexibility and scalability.
This strategic move not only reduced costs and improved efficiency, but also opened doors for partnerships with merchants, empowering the bank to offer a UPI solution for issuing and acquiring purposes.
These developments aim to provide faster and diverse options for UPI transactions, improving customer convenience and efficiency. This will help the bank provide UPI switching technology to API partners. Fino already has over 25 fintech partners.
Further, we offer customers the convenience of self-service through FinoPay mobile app through which new account can be opened as well as other financial services can be accessed or transactions done.
With respect to metrics, as a bank we consider transaction and customer movement from high cost to low-cost channels and stickiness.
As cybersecurity threats escalate, how is Fino Payments Bank strengthening its defence mechanisms? Do you plan to invest in specific technologies (like zero-trust architecture or AI-based threat detection) or achieve industry certifications by 2025? Could you also share any KPIs related to data breach reduction or customer data protection?
To avoid vulnerability, the bank implemented multiple layers of protection. Moreover, the bank established protocols for the transmission of data and put security measures in place to protect data confidentiality and prevent leakage.
The bank, through its internal processes/policies, has built-in adequate checks and balances to prevent frauds, misappropriation, theft and embezzlement, among others. Exceptions are being handled promptly for the recovery of loss.
The bank ensures regulatory reporting within time-line besides update to operational risk management committee and Board Committee.
Increased investment in analytics and model building is helping us in identifying fraudulent transactions and aberrations, among others. We are thus able to initiate corrective actions.
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