Sector Outlook 2022: Fino Payments Bank is opening 7,000 new accounts per day: Rishi Gupta, MD and CEO

Rishi Gupta, Managing Director and CEO, Fino Payments Bank, talks about his business outlook for 2022, cross-border remittance services, expansion plans and profitability among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: The sector is looking quite promising amid the focus on digital payments. With your positioning, presence and expansion in the market, what is your outlook for 2022 for your company? 

A: 2022 is a very interesting year and I expect that it will go well. We were benefited due to COVID in 2021 as growth was seen from all aspects whether it is Kirana stores, digitisation, or retail. In the first half, we have seen a 51% growth in transactions and 36% in revenue. I expect that we will grow by 30-35% in 2022 and the market expectation is digital payment should grow by 25% and Fino’s growth has always been better than the market. So, we will try to grow by 30-35% and our growth has been better than this in the last few years. I think the growth should be good in 2022 and the numbers should also look better.

Q: RBI, recently, approved the cross-border remittance for your company under which you can start a money transfer service scheme. What does it mean for you and how big a business opportunity it will be for the bank and by when its financial implications will be seen?

A: We are already an active player in domestic money transfer and have a 30% market share in domestic market transfer. We have received RBI’s approval for international remittance in which we can do business with an international partner under the Money Transfer Service Scheme (MTSS) scheme. This is a $20-25 billion market per annum and maximum international remittances happen in India, itself. In the coming years, we have kept a target of 5% market share, and it will be achieved in the next two to three years. Most importantly, we have the benefit that we are present and spread out in such geographies as Gujarat, Maharashtra, Punjab, Kerala, Uttar Pradesh and Bihar and we are quite active in these states through our merchant network. Through those, we will open saving accounts there and provide cash withdrawal services. So, we will provide a cross opportunity to our customers which will make our saving accounts better and our digital strategy of cross-selling to the customer will improve further. The tie-ups in the international remittance will benefit us in many other things apart from the international remittance. We are targeting a 5% market share in the next 2-3 years in remittance.

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Q: You will have to partner with some company. So, have you thought anything about it, if yes, by when the plan will be finalised? Also, the sector is quite untapped. So, do you see a kind of first-time mover advantage in the segment and how will you tap it?

A: We have spoken to a principal-agent, and we are at the final agreement stage, and I expect that our product will be launched in the next three to six months. Our distribution is the biggest strength for us. We have set up a DTP framework through technology and partnership. To date, the remittances that happen, especially under MTSS, focused more on cash withdrawal because Fino has its presence, and it is a payment bank through which one can open a bank account. Our endeavour will be to digitise this cash international remittance business and put money in it through a saving account so that whenever the customer wants to withdraw, he can withdraw it.

Q: Since you operate in a highly competitive market and many big players are into it. You have a niche strategy and you have grown well so far, in fact, there the growth has been exponential in terms of the number of merchants connected and deposits. Do you think that you will see similar growth in the future as well and what will be your strategy for the purpose?

A: We are focusing on the lower of the middle order of the pyramid in the market, and we have 50-60 crore people and have set up a physical network for them through a merchant ecosystem. We are adding 1,200-1,500 merchants per day in our ecosystem and are spread in more than 90% of the geography. People who are below the middle pyramid need a Phygital Model, they need a physical and digital model and Fino has provided this model to them along with convenience. So, we have created a merchant ecosystem at places wherever they are living, which is quite convenient. We are doing business with them by providing a very simple financial services product, a simple app, and simple digital platforms. Our ecosystem is expanding. Earlier, last year, we were opening 3,000-3,500 accounts per day but this year, we are opening 6,000-7,000 accounts per day. So, the merchant ecosystem, customer ecosystem, both, are growing. Our merchant ecosystem has crossed the 8-lakh mark and our endeavour is to reach above 10 lakhs in the next six to nine months. Roughly, we have around 40 lakh accounts at present, and we have a target to reach the 1 crore accounts mark in the next 18-20 months. So, we are seeing growth in the merchant ecosystem and customer ecosystem. Apart from this, the rest of our products like Cash Bazaar product, the CMS we do with the companies or NBFCs, micro-finance companies, logistic companies, and e-commerce companies, is also growing well. So, in the coming time, we have built a foundation of the merchant ecosystem through which we are setting the Phygital model, and it will expand, and we will see a growth in it.

Q: You have seen profitability last year, so, will the profitability continue further or improve from here? Also, how will you address the concern of NPAs?

A: As a payment bank we do not do lending in our books. We have tied up with the NBFCs and banks for lending purposes due to which the assets go in their books. Thus, if any NPA happens it does not come in our book, so, there is no credit risk on us. Thus, NPAs can’t be created in our books. Secondly, as far as our profitability is concerned, we have grown by 73% in the first six months of the year. Going forward, we will have an endeavour to bring new products and services like international remittance. So, a good cross-over opportunity will be created. With an eye on the two, expansion and cross-sell, I think our profitability should improve further in absolute terms.