Fino To Add 600 People; Sees Transaction Fees Dominating Revenues As SFB

Fino Payments Bank will be adding another 600 people over the next three years as it transitions to become a small finance bank (SFB), a top official has said.

However, the Navi Mumbai-headquartered entity projects the transaction income will continue to dominate revenues even as an SFB, and is expected to account for three-fourths of the revenues three years after starting lending operations, managing director and chief executive Rishi Gupta told PTI.

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'Our biggest asset (as we transition to SFB) is the wide network built over nearly two decades and the absence of an asset or loan base,' Gupta said.

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Pointing to existing SFBs, he said that many of them were engaged in microfinance before becoming an SFB, and the legacy play in riskier, unsecured assets, in a sector that has been facing headwinds lately, has made it necessary for them to de-risk and pursue secured advances.

Gupta said up to 80% of Fino's advances as an SFB will be secured in nature, as part of the plans in the making.

The SFB will target its existing base of 8 lakh merchants who are presently rendering payment services to up to 1.6 crore customers across the country, Gupta said, adding that Fino can also help meet the funding requirements of the merchants.

Apart from that, it will also dip into the 1.6 crore customers, Gupta said, adding that it possesses considerable understanding about them, their requirements and repayment abilities as it has the data from the past.

From a revenues perspective, Gupta said the transaction fees will contributed 75% of the topline even after three years of operationalising the SFB, hinting that the reliance on the interest income will be limited.

Courtesy the distribution strength, the SFB will be able to limit its cost of funds, Gupta said, adding that at present, it has liabilities of over Rs 3,000 crore with the cost of funds being less than 2%.

Gupta said Fino is looking to build an artificial intelligence-powered, fully digital customer onboarding journey, and added that it is in the process of migrating to a new core banking platform.

However, the cost of transition to the SFB will be very limited, Gupta said, adding that a bulk of the core banking system cost has already been incurred.

The bank will be focusing on hiring more people, which will help it gain the right expertise to handle the newer processes as an SFB, Gupta said, pointing out that it aims to add over 600 people over the next three years. The bank currently employs around 3,000 people.

It will adopt a hub and spoke model, wherein the existing network will be utilised for SFB operations, and around 100 outlets or hubs will be processing the requirements for the network under them, Gupta said, claiming that this will also limit operational costs as there is no spending on branches.

The Reserve Bank had last month given an in-principle nod to Fino Payments Bank to convert itself into an SFB, and allowed it an 18-month period to meet certain requirements before getting the final approval.

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