1. A REPORT
ON
IDENTIFICATION OF RURAL CHANNELS OF
DISTRIBUTION FOR THE SALE OF INSURANCE
PRODUCTS AND PREPARE BUSINESS PLAN
ACCORDINGLY
By
Anurag Mehra
11BSPHH010989
FINO
A report submitted in partial fulfilment of the
requirements of MBA Program of IBS Hyderabad
Date of Submission: 18 April 2012

2. Table of Contents
1. Acknowledgement
2. SIP Certificate
3. Executive Summary
4. Introduction
4.1. Background
4.2. Objective
4.3. Methodology
4.4. Scope & Limitations
5. Industry Analysis
5.1. Porter’s Model
6. Company Profile
6.1. About
6.2. Vision
6.3. Mission
6.4. Investors
6.5. Management
6.6. Partners
6.7. Lines of Businesses
6.8. Solutions
6.9. Services
7. Project Specific Analysis
7.1. Product Profile(Marketing Mix)
7.2. Product Life Cycle
7.3. Competitor’s Analysis
7.4. On site Project Report
7.4.1.Current Strategy
7.4.2.Work Performed
7.4.3.Findings
8. Recommendations
9. Learning from SIP
10. References
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3. Acknowledgement
I hereby take this opportunity to thank FINO for providing me with a fruitful association by way
of Summer Internship. This association, however short lasting, has provided me with a
comprehensive insight into the Technical Expertise‘s present in the rural financial inclusion
Industry and pros & cons of the same. I would like to express my deep gratitude to my company
guide Mr. Anand Kumar Tiwari, State Head (Haryana), CDVG department who provided a
constant support, valuable inputs and encouragement in understanding the nuances of the
project.
I would like to extend my sincere thanks to my faculty guide Prof. Rajan Mani of IBS Hyderabad,
for his constant guidance, immense support; motivation and encouragement which inspired me
pursue my project with added interest and enthusiasm.
I would also like to thank my short term colleagues Mr. Lokesh Sharma for his co-operation and
all my friends, and my family members for their, support and help as and when required as well
as for inspiring me to put in my best efforts for this project.
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4. Executive Summary
Micro insurance is the provision of insurance services to low-income households, which serves as an
important tool to reduce risks for the already vulnerable population. It is in growth stage in India as
rural market is still untapped in India. My project title was to build a business plan for the sale of
insurance products in rural areas of Sonepat, Haryana. However, my work was to sell insurance
products in rural areas and make new customer enrolments for financial inclusion project.
My methodology in the project was different in both the project works. While doing the micro
insurance, I opted to visit the villages which have customer enrolments i.e. have our bio metric
cards, so that we can do their insurance. We visited these villages at the time of pension distribution
(for old age), the main reason for holding a camp at that place was that people were already
collected over there for a reason and they were our target market at that point of time. My
approach for financial inclusion project i.e. customer enrolments was to visit those villages where we
had low customer enrolments and those villages where customer enrolments were average but
transactions were low.
While doing the project I first tried to understand their current strategy, company did not have any
written strategy for marketing their product. In every village, we have one employee who is
belonging to that village only; we call our employee as “Bandhu” as this name relates to our
consumers. This person is our “Point of connection” with our consumers and plays an important role
in the company’s position in the consumer’s mind. This person always belongs to the village he is
assigned to so that people can believe him and they can rely on us.
After that, I went to sell the micro insurance with the “Bandhu” in villages, as said before we chose
villages with high customer enrolments. While doing the insurance of the people, I talked to several
of them to get the feedback of the company and product. There, I got to know that many of them
were buying our product because of reference i.e. “Word of Mouth” however; they were not aware
about the financial services and knew little less about product and company.
While doing the other project, financial inclusion i.e. customer enrolments, we chose villages where
we had low penetration. In those villages, we adopted “door to door” strategy in some villages and
in others we asked the head/sarpanch of the village to make a gathering, wherein we can tell them
about our services. While doing this project, I talked to people of these villages, and here I got mixed
people i.e. people who are not aware/does not believe in financial services and people who are
aware of these services but do not use as banks are very far. Those who were not aware of
services/who did not believe in these services, we told them about our services and its benefits in
their lives. Those who were not using these services, because of other reasons such as banks far
way, we made their biometric cards and enrolled them so that they can operate their account from
their village only.
My recommendation is to hold “Financial Literacy Program”, wherein we can hold camps to educate
rural people about financial services and its benefit in their life. By this medium we will be able to
grab higher market which is still untapped and our position will improve in minds of consumers.
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5. Introduction:
Background
Risk is pervasive in the lives of poor and low-income groups. Economic, social, natural, and other
factors distort household‘s risk management capability and their struggle to come out of poverty.
Faced with multiplicity of risks, poor and weaker sections are often forced to deplete their financial,
physical, social and human assets just to cope with the contingencies. Some common risks they
confront with are unemployment, illness, and accident, death of main earning members of the
family, crop loss, loss of livestock, fire, theft, drought, flood, and loss in petty trading activity due to
market factors. Some groups are more vulnerable to many of these risks than the others and unable
to cope with risk events. Hence, uninsured risk leaves many poor households more vulnerable to the
losses from negative shocks. However, impact of such risks lingers for a longer period depending on
the nature and severity of risks and strategy adopted by the household for coping. On the other
hand, household exposure to risks not only results in substantial financial losses but also the
suffering accentuates the fear and uncertainty relating to the risk. Because of this perpetual
apprehension, many poor households are less likely to take advantage of income-generating
opportunities which could be a way out of poverty.
Risk pooling and informal insurance are not entirely new to many low income households. Informal
risk-sharing practices have been around for generations. Options for protecting against risks includes
diversifying household resources and income, building assets, stocking food, investing in livestock,
renewing & strengthening social networks, saving and borrowing from informal sources,
participating in public social security programme, enrolling in insurance schemes etc. The risk
management approaches differ under socio-economic and agro-climatic conditions and also
depending upon its exposure to risk. Unfortunately, risk coping mechanisms are limited in assuring
benefits and typically cover only a small portion of the total loss of income and income generating
opportunity. Household‘s informal means to manage risks may not provide adequate and long term
protection, especially to poor and low income groups who are prone to loss of entitlements incurred
due to variety of risks. Households follow variety of coping strategies to manage different kind and
nature of risks that affect their income and consumption smoothing. But many informal risk coping
strategies come at a cost, as assets are depleted when trying to cope with risk such as distress sale
during crises, reduction of household expenditure on food, withdrawing children from school,
postponing or avoiding expenditure on health, social functions etc. It has both short term and long-
term adverse impacts on households. Though household diversification often viewed as positive
response against risk events many such coping strategies followed by the poor do compensate the
entire loss. If household risks are not carefully designed and strategically handled it may result in
bigger welfare losses. The situation would be worse when risks to life and livelihoods recur more
frequently and there is limited risk managing options. So provision of formal insurance cover to
these vulnerable groups could be useful to protect them against risks and supplement their risk
managing capacity. As formal insurance can directly impact on households‘ex-post risk coping
mechanisms, it is believed that household’s participation in insurance would help to maintain
income and consumption soothing and avoid asset loss. But access to and provision of formal
insurance is limited for the poor and low income groups. State-provided social security measures are
inadequate to cover all kinds of household risks. Under this condition many poor households may
tend to behave as resilient to risk events or their risk coping behaviour may result in huge welfare
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6. loss due to wrongly managed or unable to manage risks. It may also induce many poor households
to focus on low risk and low return activities or rely on a range of informal ex-post options, relief
measures, public social security measures etc. It provides huge scope for policy interventions as well
as business opportunity.
Therefore, it is important from policy point of view to understand different household risks and risk-
management strategies in one hand and the need and demand for insurance products, particularly
for low income groups. On the other hand, interestingly micro insurance has drawn attention of the
policy makers, insurers, business leaders and others in recent years. Micro insurance has been seen
as one of the major risk managing tools for the poor and low income groups and a potential market
for business. Experiences across countries in the world show that micro insurance has potential to
reduce household risk impacts and to provide business opportunity. By offering a payout after the
loss, it may avoid more costly ways of risk coping by the poor household and leaves their future
income earning opportunities intact. The sense of security linked to being insured through micro
insurance augment household welfare with positive impacts. Poverty and vulnerability among low
income groups mainly stems from their poor risk management capacity and exclusion from the
financial markets. Hence it is important to understand their need as well as demand for financial
products including insurance. Many poor and low income households may involve in activities or
enterprises of smaller scale but higher risk and uncertainty. It makes them disadvantageous because
they are more prone to economic and financial collapse. Under this situation it is interesting to
analyze how micro insurance can play a meaningful role in household risk managing efforts, in rural
credit and insurance market and providing business opportunity. In this regard we like to focus on
current scenario of outreach and efficacy of micro insurance in India, major factors that encourage
and prevent growth of micro insurance and other related issues for achieving broader objectives
such as financial inclusion and inclusive development.
Meaning and Definition of Micro insurance:
Micro insurance, commonly called as insurance for the poor, has recently drawn the attention of
practitioners in developing countries. In common parlance, micro insurance is the provision of
insurance services to low-income households, which serves as an important tool to reduce risks for
the already vulnerable population. There is no unanimously accepted definition of micro insurance
despite its profound use and understanding across stakeholders and others. A simple definition of
micro insurance is offered by Churchill (2006) is that it is an insurance that
(i) operates by risk-pooling
(ii) financed through regular premiums and
(iii) Tailored to the poor who would otherwise not be able to take out insurance.
Micro insurance is defined as ―...insurance that is accessed by the low-income population, provided
by a variety of different entities, but run in accordance with generally accepted insurance practices
... Importantly this means that the risk insured under a micro insurance policy is managed based on
insurance principles and funded by premiums‖ (International Association of Insurance Supervisors,
2007). Micro insurance is different from usual form of insurance. A macro definition of micro
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7. insurance states that it is the provision of financial protection contingent on the occurrence of
predefined risk in exchange for an ex-ante premium payment affordable to the clients. In terms of
micro definition, micro insurance is more complicated as there are different approaches. ―Micro‖ as
reference to low premium and low benefits may be affordable but it may not be effective enough to
manage risks of different types of different categories of clients. Micro insurance is often believed to
be an important component of a broader set of financial services under microfinance – making
available financial services for poor households and enterprises to sustain their livelihoods. Basically
there are two broad categories of micro insurance often commonly understood – one focused on
extending social protection to the poor in the absence of appropriate government schemes and the
other offering a vital financial service to low-income households by developing an appropriate
business model that enables the poor to be a profitable (or sustainable) market segment for
commercial or cooperative insurers. Micro insurance is also taken as group insurance that can cover
thousands of customers under one contract. It requires an intermediary between the customer and
the insurance company. This intermediary role has been played mainly by non-governmental
organization (NGO) and microfinance institutions (MFI).
Micro Insurance in India
In India development of micro insurance sector and related policy discussions has started few years
back. Within very short period, the sector has drawn attention of policy makers due to its
importance both at household level and the economy as a whole. Two major and recent studies by
the ILO (2004a and 2004b) depict broad picture of micro insurance sector in India. As regard to the
micro insurance products the study highlights that out of 80 listed insurance products 45 cover only
a single risk and only two or three products cover multiple risks. Majority of the insurance products
cover life (52%) or accident-related risks and addressed to individuals. Out of the 12 currently
available health insurance products seven products have been designed and restricted to groups and
five products have chosen to coverage to some critical illness at individual level but not the
reimbursement of hospitalization expenses. Most of the products require a single payment of
premium (i.e., a one-time payment) upon subscription. Private insurers had three times more
products than their public counterparts.
Some important observations about the demand for micro insurance in India are made in a recent
study by ILO (2004b). The study provides details of micro-insurance schemes operational in India.
Out of 51 schemes that are operational in India most schemes have started operations during the
last few years. As regards to beneficiaries, about 43 schemes, for which the information is available,
cover 5.2 million people. About 66% of the micro insurance schemes are linked with micro finance
services provided by specialized institutions or non-specialized organizations. Twenty two percent of
the schemes are implemented by community based organizations, and 12% by health care providers.
Life and health are the two most popular risks for which insurance is demanded. Twenty-five out of
37 schemes received some external funds to initiate their schemes. Twenty out of 32 schemes
received external technical assistance in the form of advisory services, technical services, training or
even referral services for their schemes. As regard, to the regional distribution of micro insurance
outreach about 74 % of total schemes operate in 4 southern states constituting Andhra Pradesh
(27%), Tamil Nadu (23%), Karnataka (17%) and Kerala (8%). Two western states Maharashtra (12%)
and Gujarat (6%) account for 18% of the schemes. About 56% of schemes deal with one single risk.
This shows low outreach and unequal distribution of micro insurance in the country. The study also
reflects the linkage between micro-insurance and micro-finance.
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8. Development of micro insurance is often related to microcredit, particularly in developing countries
like India. Though microcredit has dominated in microfinance market the entry of micro insurance is
only in recent past. In India micro insurance is a relatively new financial service and its outreach is
rather limited and unevenly distributed across states. The overall performance of micro insurance in
India is not very encouraging. According to a recent study by UNDP (2007), the outreach of micro
insurance is around 5 million people covering only 2 percent of the poor in the country. It shows
there is huge potential for micro insurance market in the country. A conservative estimation of size
of micro insurance market (both life and non life) in India ranges between INR 62,304.70 to
84,267.55 million (US$ 1,384.55 to 1,872.61 million). In case of life insurance, the market potential is
estimated to be between INR15,393 to 20,141 million (US$ 342.07 to 447.58 million) and in case of
non-life insurance, it is between INR46,911.70 to 64,126.55 million (US$1,042.48 to 1,425.03
million). The non-life insurance estimation is limited to four types of coverage – milch 17 animals,
livestock, health and crop insurance. The population used for this estimation is 40-50 percent of
those earning less than US$1 a day and 50-70 percent of those earning between US$1 – 2 a day. This
is expected to increase as demand grows and a wider range of risks are recognized as insurable.
However, high exclusion of poor and vulnerable groups from formal insurance cover in India is also
evident as per the UNDP study.
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9. Objective:
Identification of Rural channels of Distribution for the sale of Insurance Products and prepare
business plan accordingly.
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10. Methodology
While working in the company, I worked on two different projects, which included field work. They
come under Electronic Benefit Transfer (EBT) scheme of government and company. The two topics
are mentioned below:
 Micro Insurance
 Customer Enrolments.
Micro Insurance: In this, we were supposed to do the insurance of the rural people and achieve
our targets. Their normal strategies to do insurance are:
 Word of mouth
 Door to door
However, this time we adopted some new ones.
 We chose villages with maximum number of customers enrolled with biometric cards.
 We chose the time of the month when pensions are being distributed.
 We chose the same place for our camps where pensions are being distributed.
Customer Enrolments: In this, we were supposed to get new customers enrolled with our
company so that they can get benefit from our bio metric cards.
They do not have any specific strategy for the same. “Bandhu”, who is our employee and a person
belonging to village (most of the times) used to do it randomly. “Bandhu” is also responsible for the
transactions from the particular village, he is assigned to.
However, this time we adopted a new methodology i.e. to held camps. But while holding camps, we
carefully worked to the data given to analyse, where to hold them.
 We chose a village where the number of customer enrolments is less as compared to others.
 We chose villages where the numbers of enrolments are average; however the numbers of
transactions are less.
These are the two different methodologies; we worked on while working on two different projects.
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11. Scope & Limitations
Scope
 Word of mouth is very strong.
 Money is there.
 Investment is there but not with banks.
Limitations
 Transportation Problem
 Language Barrier
 Financial Illiteracy
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12. Industry Analysis
Porter’s Model
A means of providing corporations with an analysis of their competition and determining strategy,
Porter's five-forces model looks at the strength of five distinct competitive forces, which, when
taken together, determine long-term profitability and competition. Porter's work has had a greater
influence on business strategy than any other theory in the last half of the twentieth century, and his
more recent work may have a similar impact on global competition.
Porter referred to these forces as the micro environment, to contrast it with the more general
term macro environment. They consist of those forces close to a company that affect its ability to
serve its customers and make a profit. A change in any of the forces normally requires a business
unit to re-assess the marketplace given the overall change in industry information. The overall
industry attractiveness does not imply that every firm in the industry will return the same
profitability.
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13. Threat of
Substitutes(Low)
As, rural people are not much
aware of financial services,
substitue product would not
work.
Bargaining Intensity of Threat of New
Power of Competitive Comp(High)
Suppliers(High) Rivalry(High) As, rural sector is being
targeted for financial
As new firms are services due to high
As there are firms offering
entering into this potential, new
the same service, and many
segment, bargaining banks/cpmanies are
big firms entering into the
power of suppliers entering to tap this sector.
segement, this is really high.
increases.
Bargaining Power
of Customers(Low)
As, of now this is really low
because people in rural sector
are not financially literate.
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14. Company Profile
About
FINO founded in year 2006, headquartered in Mumbai, India, has emerged as a leading inventor,
innovator and implementer of integrated technology solutions for institutions like Banks,
Microfinance Institutions, Government entities, Insurance companies to enable financial inclusion
environment for the micro customers.
FINO caters to the industry needs across market segments by undertaking complete electronic
payment platform projects. FINO solutions are anchored around using biometric smart cart, hand-
held devices and Micro Deposit Machines to perform field operations and biometric authentication.
Today FINO, with its leading edge solutions plays a key role in India's quest for developing branchless
banking infrastructure.
Vision
"To provide innovative technical & management services for the masses, in both financial and non-
financial domains making a positive impact on their living standards and creating wealth for all
stakeholders"
Mission
"To achieve a breakthrough in the scale, relevance and reach of financial services for the un-served
and under-served masses throughout the world"
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15. Investors
Management
Manish Khera (Chief Executive Officer)
Manish Khera is the Chief Executive Officer and Whole Time Director of FINO Limited. Since FINO's
inception in 2006, Manish has lead FINO's efforts to connect micro-customers with businesses,
banks, government and investors. Under his leadership FINO has dramatically increased its
institutional acceptance, market leadership and global repute.
Manish's career began with ICICI Bank Ltd. in 1993. During his 13 years at ICICI, Manish has worked
in various areas including credit, government & rural banking, technology and alternate channels.
His last role in ICICI was of Joint General Manager heading Alternate Channels Group.
For his leadership and business vision, Manish was conferred as the Young Global leader by World
Economic Forum in March 2011.
Manish holds an M.Phil in Environment & Development from the Cambridge University, UK. He also
holds a MBA from Faculty of Management Studies (FMS, Delhi) and a BE (Electrical) from Delhi
College of Engineering (DCE, Delhi).
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16. Rishi Gupta (Chief Financial Officer)
Rishi Gupta is the Chief Financial Officer and President - Sales and Marketing of FINO Limited. His
responsibilities include Corporate Finance, Fund-raising, Investor relationships and Business
Development.
Rishi has more than 15 years of experience in manufacturing, banking and international institutions.
His career has overseen budgeting, accounting, project finance, corporate finance and relationship
management.
Rishi's illustrious career began with Maruti Udyog Limited where he went on to head Budget and
MIS department. Rishi then moved on to join ICICI Bank. Prior to joining FINO, he was working with
the regional office of International Finance Corporation in New Delhi.
In 2011 Rishi was awarded "CFO100 Roll of Honor" - an effort to recognize the top 100 senior finance
professionals in India, who have made a difference with their acumen, attitude and energy.
Rishi is a certified chartered accountant and cost & works accountant. He did his article training with
Price Waterhouse Coopers (PwC). Rishi also holds a bachelors degree in commerce from University
of Delhi.
Rajeev Arora (Director - Products & Operations)
Rajeev Arora is the Director and President - Products & Operations at FINO Limited. He is
responsible for strategizing and overseeing the field & central operations and product development.
Rajeev has over 19 years of experience in operations and banking.
Rajeev began his career with National Thermal Power Corporation (NTPC). Prior to joining FINO, he
was associated with ICICI Bank in Corporate Banking where he was managing relationship with large
corporate, specializing in the infrastructure sector. He has also managed relationship with various
state and central governments extensively to work on various large e-Governance projects focused
on government to citizen interaction and payments.
Rajeev has done is post-graduation in business administration (MBA) from Indian Institute of
Management, Calcutta and holds a bachelors degree in electrical engineering.
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17. Partners & Customers
Banking Partners
Government Partners
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18. Insurance Partners
Lines of Business
Banking
We make 'anywhere banking' a reality for world's micro transaction customers
FINO has created a robust, safe, and streamlined alternative channel for Banks at lower costs,
making Financial Inclusion financially viable for them, and thus opening up a mammoth customer
base. Not only has this helped Banks, but it has also altered the lives of the beneficiaries - the rural
customers who were excluded from the formal banking system until now.
Government
The Indian government has introduced various schemes for the benefit of the bottom of the pyramid
population of the country. However, there are immense challenges and constraints faced in ensuring
that these benefits reach the correct beneficiaries. These hurdles include the huge amount of
paperwork and human effort involved, a massive information gap, the lack of accessibility and
infrastructure, a largely illiterate populace and above all fool proof identification.
FINO's through its Technology solutions has been working with both state and central governments
for providing (EBT) Electronic Benefit Transfer for the implementation of various Government
schemes including
 National Rural Employee Guarantee Scheme (NREGS)
 Social Security Pensions (SSP)
Retail
FINO has developed an online micro-payment and delivery platform for a unique bouquet of Value-
added e-Services to the micro customers, at their door-step through partnerships/tie-ups with
various service-providers.
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19. FINO Third Party Services aims at first-of-its-kind speedy, convenient, accessible and affordable
channel of online micro-payment system for all customers through its network of FINO-Bandhu &
retail channel.
FINO Third Party Services are available to its customers through secured mobile-transaction systems
as well as Points of Transaction and Backend processing platform
FINO Third Party Services includes following kind of services –
 Recharge.
 DTH Recharge.
 Railway Ticket Booking /Bus booking.
 Insurance Premium Collection.
 Utility Bill Payments (Mobile & electricity bills, municipal taxes).
 SIM card connection selling
FINO Third Party Services will allow our clients to offer their products and services in the rural and
semi urban areas exhaustively resulting in immediate up scaling of customer base and business
revenues for minimal investment with economic payback in short time.
Insurance
FINO's technological solution has proved to be the game changer in the health micro-insurance
sector in India by enabling Insurance companies to reach out to customers at the bottom of the
pyramid and serve their needs, while maintaining financial viability.
As a key enabler and facilitator of financial inclusion, FINO has unlocked a INR 45 billion potential
micro-insurance market for health insurance companies, triggering a sea change in their delivery
system by providing them with the geographical coverage, scalable technology platform and
processing capabilities required.
FINO facilitated the standardization of the delivery platform, back-end database management
system and data maintenance format, effectively solving the issues faced in earlier government
schemes that were plagued by design and implementation problems and were therefore unable to
reach out to the un-served/underserved markets.
Leveraging its experience in the micro-finance sector and applying it to the micro-insurance sphere,
FINO has created a model that is efficient, scalable, sustainable, low-cost, interoperable and
simultaneously profitable.
Technology
FINO solutions enable distribution of financial services in remote locations with minimum
connectivity and infrastructure.
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20. The user entities can enrol customers in the field and issue smart cards as well, if required.
This customer data collected during the enrolment process needs to be uploaded to the backend
systems for data de- duplication checks, account opening and reporting purposes.
Customers can transact in the field through a number of media such as ATM/ Micro Deposit
Machine, POS and/ or mobile. These transactions can be pushed to the backend Core Banking
System either in an online mode or offline mode depending on the business requirement and
connectivity available.
Supporting these functions are different systems which perform very different supporting but
relevant roles.
There is a Terminal Management System that manages issuance/ blocking/ application updating of
POS devices; a Card Management System to manage issuance, hot- listing and re- issuance of cards.
All these systems are a result of the field experience gained over the last 4 years in tough and
remote locations. These systems provide services that are very relevant to entities operating in this
sector.
Solutions
Customer Enrolment Solutions
FINO has developed applications that can be used to acquire micro customers in the field using
simple processes and minimalist of the hardware (including mobiles) to address the infrastructure
challenges on the ground. FINO also offers services to Indian entities to rapidly acquire micro
customers using this technology. FINO is currently acquiring customers at the rate of 50,000 per day.
Customer Acquisition System
The system allows customers to be enrolled/ acquired at their door step unlike a bank model which
forces customers to come to the branch. The process is quicker and simpler both for the customer
and the bank, yet maintains the banking rigour.
Operations Solutions
This component manages all logics for data messaging to generate information for day-to-day
planning and management of operations. The principals may utilize some of the pre-designed
reports by FINO or ask for customized reports.
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21. Hardware Solutions
FINO Financial Inclusion Solution is driven by robust yet affordable technology and products. FINO
provides a full suite of biometric products for enrolment, storage and verification with all back end
system elements to achieve different financial inclusion applications.
This technology will enable our clients to offer a rich spread of simple and accessible solution with
our range of products including hand held devices, biometric smart cards, backend switch, Micro
Deposit Machine.
Services
Business Correspondent Services
FINO FINTECH FOUNDATION
FINO has formed FINO Fintech Foundation to enable its solutions to reach micro customers. This is a
Section 25 company under the Indian Companies Act of 1956 has been incorporated in June 26th
2007.
FINO FINTECH FOUNDATION has been established to carry on the activity of promoting sustainable
livelihoods for the rural poor and underserved classes by helping them become economically self-
reliant, through the provision of Financial and Insurance services and technical assistance in an
integrated and sustainable manner.
The activity of this Company is not for profit and is working with FINO’s partners to establish an end
to end distribution platform thereby ensuring reach to Banks and other financial institutions in those
geographies and amongst that section of the population which has been considered
ROLE OF FINO FINTECH FOUNDATION
Creation of Bandhu (FINO Agents) network across the country to deliver financial services through a
combined technology-and-distribution channel to enable a rapid reach-out to the under-banked
population.
Assist banks in designing new products and services for the under-banked populations by working
closely with them, and acting as the key resource who truly understands end-customer’s financial
needs.
Managing a training and audit calendar with the banks to ensure that the entire distribution network
works in alignment with the overall mandates given by the banks
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22. Financial Literacy Program
We define Financial Literacy as "Knowledge of basic financial concepts and the skills to translate this
knowledge into improved financial behaviours".
Hence, as an independent channel we not only provide access to financial products and services but
also focus on making customers aware about them through our various financial literacy initiatives.
Our financial literacy programs focuses on teaching the knowledge and skills required to adopt good
money management practices for budgeting, spending, and saving. Participants in these programs
become equipped with the information and tools to make better financial choices, work towards
their financial goals, and enhance their economic well-being.
The FINO program will result in higher financial stability of the customers, reduced financial stress
(vulnerability), better saving habits, and higher usage of formal savings accounts (provided by banks)
through the FINO card. Changes in budgeting and savings behaviour as well as the ability to
effectively use the FINO technology will result in increase household well-being for customers.
Currently FINO is running various financial literacy campaigns with World Bank, International Finance
Corporation (IFC), Microfinance Opportunities, NABARD and UNDP as partners.
FINO Consultancy Services
FINO Consultancy Services (FCS) aims to bridge the divide between formal financial institutions and
the un-banked/under-banked populations across the world by bolstering emerging branchless and
micro-banking channels and entities with technology, public policy, channel management
consultancy and knowledge sharing.
FINO provides its consultancy expertise to National Governments, Central Banks, Commercial and
Cooperative Banks, Microfinance Institutions, Insurance Companies and Not-for-Profits. FCS brings
on board capabilities in the areas of technology architecture, strategy and planning, implementation,
product designing, regulation and policy framework, channel management and capacity building.
FINO as a Consultant provides customised services, working in tandem with each client to deliver
solutions that are best equipped to tackle the challenges present. FCS recognizes the importance of
sustainability for any financial entity, and is actively engaged in developing practical and profitable
business cases, keeping in mind the client’s strategy.
Furthermore, FINO assists in the implementation of these recommendations wherever required,
drawing on its years of practical experience.
FINO as a branchless banking consultant facilitated designing of financial products and delivery
channels to bring more people under the ambit of financial inclusion in association with "Enabling
Financial Innovation and Access" in Nigeria, Africa
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23. Project Specific Analysis
Product Profile
Micro- Insurance
FINO micro insurance is a service that enables insurance companies to reach out to low-income
customers and serve their needs, while maintaining financial viability. The product/service taps into
the existing, proven network of Smart Card holders who can access other financial services from the
same card.
FINO micro insurance acts as the middle layer or delivery channel between the insurance company
and end-customer, providing the geographical coverage, scalable technology platform and
processing capabilities for insurance business. This enables cashless and paperless insurance
processing to effectively reach micro transaction customers.
FINO micro insurance uses technology to cut costs, maximize efficiency and ensure sustainable
delivery of micro insurance services offered by various insurance companies.
This is a product of ICICI Bank which is being offered and sold by FINO. This product has following
features:
Product
Physical
Pricing
Evidence
Marketing
Mix
Process Promotion
People Place
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24. Product: The product in service marketing mix is intangible in nature. Like physical products such as
soap or a detergent, service products cannot be measured. At the same time service products
are heterogeneous, perishable and cannot be owned. The service product thus has to be designed
with care. Generally service blue printing is done to define the service product. Features:
 Duration: 1 year
 Claim: `. 1, 00,000/-(In case of death or 100% Disability) and `. 50,000/-(In case of accident
or 50% Disability).
Pricing: Pricing in case of services is rather more difficult than in case of products. Generally service
pricing involves taking into consideration labour, material cost and overhead costs. By adding a
profit mark up you get your final service pricing. Features:
 Premium of `. 100/- for one year.
Place: Place in case of services determine where the service product is going to be located.
 Sonepat, Haryana.
Promotion: Promotions have become a critical factor in the service marketing mix. Services are
easy to be duplicated and hence it is generally the brand which sets a service apart from its
counterpart. Features:
 Word of mouth.
 Door to door.
People: People are one of the elements of service marketing mix. People define a service. In case of
service marketing, people can make or break an organization.
 Bandhus.
 Office Staff.
Process: Service process is the way in which a service is delivered to the end customer. The process
of a service company in delivering its product is of utmost importance. It is also a critical component
in the service blueprint, wherein before establishing the service, the company defines exactly what
should be the process of the service product reaching the end customer.
Physical Evidence: The last element in the service marketing mix is a very important element. As
said before, services are intangible in nature. However, to create a better customer experience
tangible elements are also delivered with the service. Several times, physical evidence is used as a
differentiator in service marketing.
 Company Office.
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25. Product Life Cycle
Product life-cycle management (or PLCM) is the succession of strategies used by business
management as a product goes through its life-cycle. The condition in which a product is sold
(advertising, saturation) changes over time and must be managed as it moves through its succession
of stages.
Introduction Stage: In this stage, company tries to build product awareness and to develop a
market for it. Its impact on marketing mix is as follows:
 Product Branding and level of quality is established, as well as intellectual properties e.g.
patents & trademarks are obtained.
 Pricing strategy can be low penetration so as to build market share, or may be high
penetration so as to recover development costs.
 Distribution is limited/ selective until consumers show acceptance to the product.
 Promotion is to target at innovators and early adopters.
Growth Stage: In this stage, company tries to build brand preference and increase market share. Its
impact on marketing mix is as follows:
 Product quality which has already been established is maintained and additional features
and services are generally added.
 Pricing is maintained as the firm enjoys increasing demand with little competition.
 Distribution channels are increased as demand increases as consumers accept the product.
 Promotion is targeted at mass audience.
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26. Maturity Stage: In this stage, sales increases at decreasing stage. Competitors come up with similar
products. The main objective in this stage is to defend market share while maximizing profits. Its
impact on marketing mix is as follows:
 Product features may increase for differentiating the product from others.
 Pricing may decrease due to increasing competition.
 Distribution becomes more intensive and intensives may be offered to encourage
preference over competing products.
 Promotion is targeting on product differentiation.
Decline Stage: In this stage, sales of the firm decreases. Now, the firm has several options:
 Product is maintained, possibly by rejuvenating it by adding new features and finding new
users.
 Product is harvested- reducing costs and continuing to offer it, possibly to a niche segment.
 Discontinue the product, liquidating remaining inventory or selling it to another firm which is
willing to continue the product.
Our product micro-insurance is in growth stage as it is started only an year before in FINO.
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27. Competitors Analysis
HCL BFSI (PSB)
There are a variety of financial services which HCL is providing today.
HCL’s offering:
 Enrolment software.
 Single Integrated Handheld smart device with connectivity.
 Server Infrastructure.
 Provide network connectivity & Interface.
 Provide SMS/GPRS Interface.
 Bilingual FI Solution.
 Smart cards & Card personalization.
HCL Info systems bags another prestigious Financial Inclusion project from Punjab and Sind Bank
under its Systems Integration BFSI Practice
 HCL Info systems selected as partner of Punjab & Sind Bank’s Financial Inclusion Project
 Deal to make banking accessible to unbanked villages through technology
 To roll out in more than 1500 villages across the nation
HCL Info systems Ltd., India’s premier Hardware, Services and ICT System Integration Company,
today announced the awarding of an order from Punjab and Sind Bank (PSB) to provide smart card
based solutions in over 1500 villages across the country. The partnership aims to facilitate the
provision of smart card-based technology solutions for financial inclusion, besides engaging and
managing business correspondents deployed in unbanked villages allotted to PSB.
HCL Info systems will be providing end-to-end solutions for PSB’s Financial Inclusion project involving
supply of the Core Banking and enrolment software, DC and DR, customization, installation,
operation, maintenance of Servers and Networking; management and maintenance of hardware &
software, delivery & support for banking & financial services to the Bank. Apart from technological
solution and technical services, it will also involve integration of various technological and functional
components, supporting business correspondents to educate, facilitate and deliver financial services
to the targeted BPL beneficiaries.
The project will enable UID based disbursement for various schemes of the Rural Development
Department. PSB aims to cover over 6 Lac customers over a period of three years.
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28. TCS BaNCS (Indian Bank)
TCS bags Financial Inclusion Solution Project from Indian Bank
Indian Bank has selected TCS for its Financial Inclusion Solution project. The Deal value pegged at
INR 850 million for three years. TCS’ cloud computing services will be used to enable banking
services for rural customers in 5,500 villages.
TCS is deploying its TCS BaNCS Financial Inclusion Gateway solution for executing the bank’s
requirements for this project. The applications will be hosted on cloud computing technologies to
create an easy-to-access, highly-secured environment that provides reliable world-class
infrastructure and application services in a cost-effective and efficient manner.
Financial inclusion is the delivery of banking services at an affordable cost to low-income groups at
places where mainstream banking facilities are unavailable. This solution will help the bank deliver
benefits to the general public and provide an end-to-end, cost-effective solution. Currently, 41% of
the Indian population is unbanked (80 million households). Out of this, 40% is unbanked in the urban
areas and 60% in the rural areas.
Indian Bank has been serving customers for more than a century and is seen as a front-runner in
specialized banking as well as rural development. The bank had deployed TCS BaNCS across 1802
branches to offer finely-tailored products to its corporate and retail customers.
Tata Consultancy Services Ltd has won a project for implementing a smart card-based financial
inclusion solution worth Rs 850 million from Indian Bank.
COROMANDEL INFOTECH India Ltd
Coromandel InfoTech bags the World Bank's Karnataka Health Systems Development and Reform
Project.
Coromandel InfoTech India Limited, an IT initiative of THE INDIA CEMENTS LTD, has been selected as
technology solution partner for the World Bank's initiative "Karnataka's Health Systems
Development Project" to provide technical solution to strengthen governance & improve the
monitoring in the World Bank Operations in India.
In this project, the world Bank and the Karnataka government pilots the beneficiary verification
platform to improve monitoring and evaluation capacity, timeliness and reliability of the field data
collection, electronically verify service delivery and collect the feedback to the services delivered.
Conceptualized by the World Bank, the project aims to create information based IT systems in real
time basis. Coromandel InfoTech will deploy the appropriate technologies to collect and submit the
data to the World Bank. This project will also present a citizen interface to provide basic services to
the participants. Information collected will be uploaded and made available to everyone in the real
time or near real time depending upon the local conditions.
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29. Federal Bank inaugurated Financial Inclusion Project with Coromandel Infotech as Technology
Service Provider - 18th Dec, 2010
Ms.Suma Verma, Regional Director (Kerala & Lakshadweep), RBI Inaugurated the ICT based Financial
Inclusion Project for Federal Bank with Coromandel InfoTech as Technology Service Provider at
Alappuzha on 18 December 2010. Mr.Chalapathy Rao, Head – Microfinance lighted the lamp in the
presence of Mr.Shyam Srinivasan, Managing Director & CEO, Mr.Kalyanaraman, Executive Director
and Mr.Sashi Kumar M, Deputy General Manager of Federal Bank.
BASIX
Financial Inclusion Services (FINS) – are provided to fulfil working capital & investment needs of the
clients – the poor household. It includes savings, credit – short term and long term, insurance for
lives and livelihoods, fund transfers, commodity derivatives, financial orchestration – ranging from
grants to equity for livelihoods.
 Insurance
 Savings
 Microcredit
 Remittances
TAFI
On August 27th, 2007 BASIX launched a project on Technology Assisted Financial Inclusion in a few
low-income neighbourhoods in Delhi and Muzzafarpur, Bihar. This pilot covers an urban and a rural
location, and can potentially be scaled across all BASIX locations. This is being done as the Business
Correspondent of Axis Bank, on the basis of a tripartite agreement between BASIX, Axis Bank and the
technology provider, A Little World.
By December 2007, BASIX had enrolled over 4000 customers for no-frills saving bank accounts. The
account opening of these customers has been done inside slums and villages on the basis of very
basic Know Your Customer (KYC) documents. The customers are being issued biometric
authentication based smart cards. These customers now have access to both savings and withdrawal
services, in addition to other financial services at either a SPOT (Specified Point of Transaction)
within 5 Km. of their homes, or at their doorstep.
The current services being offered include
 savings,
 insurance,
 remittances,
 credit,
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30. And other financial services such as pensions and systematic investment plans (SIP) of mutual funds
will also be offered soon.
The customers include rickshaw pullers, hawkers and vendors, rag pickers, scrap collectors, auto
drivers, illiterate and poor women. The customers include both those directly engaged in low-grade
economic activities, and those who have a need to save, regardless of any direct income earning
activity.
The technology used is Near Field Communications, and transactions are done with a kit comprising
a mobile phone, a fingerprint scanner and a printer. Transactions can be done both online (instant
server updation) or offline, for remote areas where there is no signal. The field operators carrying
the transaction-kit is the human equivalent of an ATM Machine, with mobility added. The
technology allows for effective risk-management and fraud control.
BASIX plans to maximize the impact of the BC framework by combining a suite of financial and non-
financial services, to enable sustainable strides towards greater inclusion and stronger livelihoods.
This requires offering multiple services and high operational efficiency, while managing technology
well, which we are working towards.
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31. On Site Project Report
Current Strategy
There is no written strategy as such. However, what I’ve observed is mentioned below:
 Promotion - Word of mouth Strategy, Door- to –Door Strategy.
 Place – At the time of pension disbursement.
Promotion – Word of Mouth
Word-of-mouth marketing (WOMM), also called word of mouth advertising, is an unpaid form of
promotion—oral or written —in which satisfied customers tell other people how much they like a
business, product, service, or event. Word-of-mouth is one of the most credible forms of advertising
because people who don't stand to gain personally by promoting something put their reputations on
the line every time they make a recommendation.
As, target consumers are not financially literate and do not understand the benefits of the product
by advertisement or any other means. This is the best method of promotion. They basically apply it
at the time of pension disbursement. While the pension is being distributed among the people, we
go there with our “Bandhu” who is a resident of the village, so that people can rely on him and we
can connect better with our target consumer.
“Bandhu” asks the consumers to do insurance and tells him the benefits, as soon as one consumer
buys our product, we ask him to tell the benefit to others as well. Now, other people come and ask
for the product from “Bandhu” who is the person of their village and they already know. This makes
the promotion of our product and the sale increases.
Promotion- Door to Door
Door-to-door is a sales technique in which a salesperson walks from the door of one house to the
door of another trying to sell a product or service to the general public. A variant of this involves cold
calling first, when another sales representative attempts to gain agreement that a salesperson
should visit. Door-to-door selling is usually conducted in the afternoon hours, when the majority of
people are at home.
As, all people are not covered while pension is distributed, so they go for door to door selling
technique. The person who goes door to door is our “Bandhu” who is a person from village and
people already know him. He explains the benefits to the person and hence sells our product.
However, here also he carries the references of people who already brought our product so that
people can rely on it.
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32. Work Performed
During SIP period, I’ve visited following villages along with “Bandhu” and their “Business
Coordinators”. The villages visited are mentioned below:
 Bhawad
 3Puthi
 Ashraf Matindu
 Kundal
 Rampur
 Teha
 Sanpera
These were the villages with high customer enrolments and transactions i.e. people already knew
about our services. So, we need to sell our product to them.
 Gopalpur
 Asadpur
 Baroli
 Makinpur
 Bajna Khurd
 Pugthala
 Kailana
These were the villages with low customer enrolments so, we added new people in our network as
customers by consulting them and telling them about financial services offered by us. Here, we
made their bio-metric cards and asked them to do transactions regularly.
While visiting to villages we did insurance of people using the strategies mentioned above. Here, I
personally talked to several people in every village to understand them better. While talking to
villagers, we figured out various facts which are mentioned below:
Findings
 “Bandhu” is an important person for the sale of insurance product as he should be reliable
and known to the target consumers.
 “Bandhu” is an important person while doing financial inclusion i.e. customer enrolments
and transactions of customers.
 Rural people are not financially literate; they are purchasing the product only on the basis of
reference and relations.
 Rural people do not believe on outsiders easily, though there are certain barriers e.g. area
difference, language difference and they can believe on a person from their village instantly.
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33. Recommendations
Financial Literacy Program
 As, we have figured out that rural people are not financially literate.
 We should held camps wherein we can teach them about financial products. This will help
them in becoming financially independent.
 During these camps we should promote our firm in form of print media e.g. “Flex”,
“Pamphlets (In Hindi, people depicting rural people)”.
 During these camps we should teach them about how to manage their finance and benefits
of using banks and other services for investing their money.
 We can make them not only financially aware however; we can also tell them the benefits of
micro-insurance which can benefit them and their family.
 We can promote and do insurance at the time of crop harvesting. This is a time when people
have money and are ready to spend it.
 “Bandhus” should have proper uniform with company logo which will help in branding for
the firm in minds of consumers.
 “Bandhus” should get an ID card which they should wear all the time, this will create an
impact on consumer’s mind and they’ll rely on company.
 There should be one office (a room) in every region for every “Bandhu”. By this, people will
be having one stop/place for getting in touch with company. These factors position company
as reliable in minds of consumers.
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34. Learning from SIP
Followings are the learning from SIP:
 Product should match the consumer’s need.
 Promotion is not only about sales. As we are achieving sales, however, consumers are not
aware about product’s benefits and services.
 Promotion not only means advertisements and all. It can be done from various other
methods e.g. print media (flex, pamphlets).
 It’s important that consumers should be aware of the product details and its benefits. If
consumers are educated then, sales can automatically increase.
 It’s important to have a position in consumer’s mind so that they can relate to us in a better
way and can refer others about our product.
 Promotion for a company may get product specific, but it is only which helps in building
brand.
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35. References
 http://birdindia.org.in/doc/Reoprt%20on%20Microinsurance%20in%20India%20_Final.pdf
 http://www.icrier.org/pdf/wp162.pdf
 http://www.microfinanceindia.org/roundtable-report/Client-Education-and-Microinsurance-
Roundtable-Report-revised.pdf
 http://www.marketing91.com/service-marketing-mix/
 http://en.wikipedia.org/wiki/Marketing_mix
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