Fintech entrepreneur powers 30,000 livelihoods, 52 million unbanked Indians

A line can be different for different people. For a leader, it is the promise of a better future; for a humorist, the punchline that makes you laugh, and for the poet, a tiny bit of soul.

But for the FIA Sema Prem, one line of an article took her straight from college to the world of fintech startups. As a student at the Massachusetts Institute of Technology (MIT) in the United States, she was surprised to learn that half of the world’s population had no access to banking services.

“I was reading this article, and this line struck me, that half the world is unbanked. And of that, 800 million are in South Asia,” Seema said in an exclusive interview with Your story. “And that’s when I decided to start working on it.”

It’s not like she wasn’t aware of the plight of the underprivileged before. Born into an army family and having lived in some of the remotest corners of the country, Seema was acutely aware of the growing gap between haves and have-nots and keen to work towards a more equal India. That line in the article just showed her what to do.

Seema then entered MIT’s $100,000 Entrepreneurship Competition with an idea that combined her experience working at a mobile service provider with the efficiency of fintech.

She won second place, leading to the birth of the Gurugram-based banking services companyWorld FIA in 2012. “So you could say that the FIA ​​is the culmination of my desire for social inclusion. Because I’m an army kid. And I’ve lived in some of the most backward places in the country, where I’ve seen great inequities,” says Seema, an engineer who also has an MBA from XLRI.

She first co-founded FIA – which stands for Fearless, Inclusive and Agile – with Sameer Mathur, also an MIT alumnus. But Sameer has since left the organization.

FIA offers assisted banking services through partnerships with financial institutions. The fintech startup has outlets across India manned by micro-entrepreneurs who are appointed after rigorous vetting.

But Seema was not taking any risks, especially since the FIA ​​operates in areas with low literacy. “I think in the beginning one of the biggest challenges was risk. So we realized that risk had to be a priority because we work in a very low-literacy, very low-resource environment.”

And this is where the technological part of fintech came in. “So we realized we needed to get into predictive systems very, very early on and consider innovating around the technology.”

FIA’s third hire was the risk manager for Max New York Life (now Max Life Insurance) for the Eastern Region, baffling her colleagues who then thought she should instead bring in more salespeople to grow the business. ‘company.

“And I think (the hiring) paid off,” she says. “Consistently, over a period of time, using technology…using predictive systems, we’ve been able to keep our fraud in low-literacy environments very low.”

A series of happy events

And in what turned out to be a series of happy events, the FIA ​​recruited State Bank of India (SBI) as its first client, focused on the most remote corners of the country and qualified for grants from international organisations.

Let’s first look at his deal with SBI. In 2006, the Reserve Bank of India introduced a policy to deepen financial inclusion by allowing banks to partner with private actors to set up outlets on their behalf. These “mini-bank branches”, equipped with a laptop computer, a biometric device and a printer, are managed by a banking mitra, also called a commercial correspondent. The FIA ​​agreement to do it for SBI gave it a scale that others could only dream of.

Second, its focus on the remotest corners of the country meant a huge untapped market and negligible competition. This decision to operate within India was not by choice but at the insistence of its customers. “Our clients told us ‘go rural, and then we’ll give you profitable urban centres’. So we had no choice but to go to rural India,” says Seema. “And that’s when we realized it was tough, but the opportunity was there. Because people were unbanked. There is no competition. And it gave us a scale to stay sustainable year after year.

The FIA ​​was profitable in its first year of operation and did so without getting money from investors – each of the achievements is rare on its own, but the combination of no fundraising and early profits is almost unknown in the fintech sector. FIA’s profit increased by 35% to Rs 15.07 crore on revenue of Rs 120.1 crore in the 2021 financial year.

The grants the FIA ​​received from international institutions helped – it was able to continue to grow without raising funds from investors. “Of course, the first steps were difficult and the grants from the World Bank and the Millennium Alliance Consortium…helped us to stay operational and profitable from the beginning. If it hadn’t been for the grants, we certainly would have sought funding early on, as we were growing rapidly.

Uninterrupted growth

Today, the FIA ​​has touched the lives of over 52 million Indians through its services, is present in 712 of the country’s 773 districts and has supported over 30,000 people, and all this on a profitable basis.

Even Seema’s most aggressive growth plans had not prepared it for the type of growth that FIA has seen. “When I was building the Excel models, we used to say that if an agent had on average around 500 customers, that was great…. And then eventually we end up with agents who have up to 25,000 at 50,000 customers So they are four times (the size of) some of the rural bank branches from a customer perspective.

Seema is visibly proud as she talks about how the FIA ​​has changed lives for the better. She gives the example of Manas Ghosh, a dairy farmer who also ran a small paper mill in Burdwan, Bengal. He was considering migrating to one of the bigger cities to meet his family’s growing expenses when the FIA ​​appointed him as a bank agent. His life completely changed after that.

“Now suddenly back in Burdwan he earns Rs 25,000-30,000 per month. At the same time, you know, providing a service,” says Seema. “The job satisfaction that I see in him and the pride that he talks about his work with is phenomenal.”

The FIA ​​is also keen for more women to become its agents. “Because having a woman leading the center means you’ll have more inclusion,” she says.

It’s agents like Manas that the FIA ​​will rely on for success as it takes its first steps towards becoming a neobank, a kind of digital-only bank. “The advantage we see for the FIA ​​when we start lending is that we already have the clientele and our agents have a strong affinity with the clients,” Seema points out. “Much of the lender’s time is spent on collections, but our mechanism is already in place, as the transactions take place in our centers.”

The idea to develop in the neobank, however, came from its customers. During one of her visits, Seema noticed that cash vouchers lured villagers with deceptive schemes that offered incredible returns. “And that’s when we realized that with the commercial correspondent model, we were only offering basic banking services,” says Seema. “But then there’s this huge segment of people who wanted loans, who wanted insurance, and who wanted, you know, higher investment products in order to plan for retirement. That’s when we thought we were going to create the neobank.

Seema realizes that his dream of creating the world’s largest neobank for the poor will require more funds than the FIA ​​can generate internally. This has now made it open for investment. “Our target segment is very clear. These are the underserved and underbanked people around the world,” she says. “It’s always been about transforming a billion lives.”

Edited by Saheli Sen Gupta