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A Case Study on FINO (1)

A Case Study on FINO (1)

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Published by: Piyush Singh Prasanna on Jun 20, 2013
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FINO (Financial Inclusion Network and Operations Ltd.) -Challenges in the distribution of financial services to thecustomers in rural India?
Submitted By: Piyush PrasannaAbhijeet MishraPrashant GoelMalvika MathurRohan Mazumdar
This Case Study Deals With The Major Issues And Challenges Faced By FINO In Service Delivery To The End Consumer AndHow it Resolves These Issues
FINO (Financial Inclusion Network and Operations Ltd.) - Challenges in the distributionof financial services to the customers in rural India?
“Improving the lives of the billions of people at the bottom of the pyramid is a noble endeavor. It 
can alsobe a lucrative one
C. K. Prahalad (IRDA Journal, 2009)
Q. What is the unmet need that FINO is trying to fulfill for its customers?Ans. There is a huge amount of unmet need of financial services in rural India. When our people startedconducting research for FINO, they found that there were between 400 to 600 million people in India whodid not have access to financial services. Globally there are 2 billion people who are excluded of thefinancial services.
FINO’s aim is to figure out how to meet the requirements of this customer segment.
 Q. Reaching this distributed, low-income customer base must require a highly innovative approach to the business model and cost structure. How did you go about developing this?Ans. To reach the rural unbanked, low income customers we completely redefined the banking businessmodel. Achieving this process meant setting up a delivery chain which was far less supervised and waslow skilled. The most important part was technology adaptation which was simpler and friendly androbust for the customer. This system was developed after several rounds of testing and iterations. Finallya paperless system (no deposit/withdrawal slips, no checks, etc.) was developed. To resolve theconnectivity issues, we designed a bio-metric system, FINO Smart Card, which the customer can useanywhere in India, through our FINO Agent (Bandhu) in an offline mode. These agents are provided withhandheld devices that could read the card as well as the finger prints, work without power and carryforward customer transactions. But even for such a simple and robust technology the scale of implementation was important and because of that we had an objective of serving 25 million customers induration of five years. And by using this Agent Model (Business Correspondent Model) we have reducedour operational cost drastically. The cost of serving a customer from a physical branch is around US$1.25. The cost of doing a self service transaction from a facility like ATM costs US$ 0.40. But the cost of doing transaction by an agent based system (business correspondent) model is US$ 0.10.-
Interview of Mr. Manish Khera, CEO of FINO by Ernst and Young 
Financial Inclusion Network and Operations LTD. was founded on 13
July, 2006. The major objective behind the foundation of FINO was building technologies to enable financial
institutions (FI’s) serve the
unbanked sector and also to service the technology requirements of entities servicing bottom of the pyramid customers. FINO is a multibank promoted, professional and financially strong with a Board
comprising of customer banks and MFI’s.
FINO currently enjoys the largest acceptance amongst the FI’
s and has received various awards andrecognition from reputed organizations. FINO is currently working on National Priority Projects such asMNREGA, RSBY, SSP, thus helping its clients to reach a critical mass to provide economies of scale tothe entire bottom of the pyramid customers.
FINO has a business model which is built on the concept of “Fortune
at the Bottom of the
Pyramid”. It
focuses on providing end to end technology and operation solutions to achieve a breakthrough in scaleand relevance of its operations which is considered to be of prime importance to deliver the maximumvalue to all the stakeholders in a sustainable way.
FINO’s vision statement states its social commitment and motto towards its customers and that is“Enabling
Financial Inclusion”
. The core value of FINO consists of: Entrepreneurship, Commitment,Integrity, Value Creation, Innovation and One Big Network.
Two core issues which FINO today faces are HR Issues and Information Gap.1.
HR Issue: 
Recruitment and retention is one of the major challenges faced by FINO as it strives toreach more number of clients and expand its geographical scope. Attracting a right talent provesdifficult because candidate must have, a prerequisite, a right mindset which fits with theorganizations vision and mission. Because of the continuous growth in competition, poaching of staff has become a major concern for FINO.
85% of the FINO’s
client is women but the number of women staff-member is considerably less especially in the senior management as well as lower management.
Information Gap
Lack of adequate knowledge about the company’s product and policy, leads toa consumer’s dilemma. The perception of clients in the rural area of the required service is at
times different from the service being provided by FINO. Sometimes information gap is createddue to lack of convincing ability of the FINO Agent to the customers. This leads to a variation between the intended service provided and expected services received.
Other Issues: 
Besides these two core issues, there are several small issues which lead to servicefailure. Some of these issues are, financial risks, operational risks, funding issues, governancerisk, external business environment risk etc.

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