The fintech entrepreneur powering 30,000 livelihoods, 52 million unbanked Indians

A line can mean different things to different people. For a leader, it is the promise of a better tomorrow; for a stand-up comedian, punchline that draws a laugh, and for the poet, a small part of the soul.

But for the FIA Seema Prem, one line from 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 USA, she was surprised to find out that half the world’s population did not have access to banking services.

“I read this article, and one line struck me, which is that half the world is unbanked. And of that, 800 million are in South Asia,” says Seema 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 widening gap between the haves and have-nots and eager to work towards a more equal India. That line in the article showed her just what she needed to do.

Seema went on to enter the MIT $100K Entrepreneurship Competition with an idea that combined her experience working at a mobile service provider with the efficiency of financial technology.

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

She originally founded FIA – which stands for Fearlessness, Inclusivity and Agility – 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 banking locations across India staffed by micro-entrepreneurs who are appointed after rigorous vetting.

But Seema was taking no chances, especially since the FIA ​​operates in regions with low literacy. “I think early on one of the biggest challenges was risk. So we realized that risk had to be a big focus, because we work in an environment with very little literacy and very low-resource environments.”

And this is where the technology part of fintech stepped in. “So we realized we had to get into predictive systems very, very early, and look at innovation around technology.”

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

“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-skill environments very low.”

A series of lucky events

And in what turned out to be a series of fortunate events, FIA signed up the State Bank of India (SBI) as its first client, focused on the remotest corners of the country, and qualified for grants from international organizations.

Let us first look at the agreement with SBI. In 2006, the Reserve Bank of India came up with a policy to deepen financial inclusion by allowing banks to tie up with private players to set up retail outlets on their behalf. These “ATM branches” – equipped with a laptop computer, a biometric device and a printer – are operated by a bank mitra, also known as a business correspondent. The FIA’s agreement to do it for SBI gave it scope that others could only dream of.

Second, the focus on the farthest corners of the country meant a large, untapped market and negligible competition. This move to operate in interior India was not by choice but at the insistence of customers. “Our customers told us ‘go to the countryside and we’ll give you the profitable city 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 weren’t beaten. There is no competition. And that gave us the scale to remain sustainable year after year.”

FIA has been profitable from its first year of operation and has done so without getting any investor money – either feat is rare in its own right, but the combination of no fundraising plus early profits is almost unheard of in the fintech sector. FIA’s profit rose 35% to Rs 15.07 crore on revenue of Rs 120.1 crore in fiscal 2021.

The grants that the FIA ​​received from international institutions helped – it could continue to grow without raising funds from investors. “Obviously, the early stages were tough, and grants from the World Bank and the Millennium Alliance Consortium…helped us stay steady and profitable since the start. If it wasn’t for the grants, we definitely would have looked for funding early on because we were growing fast .”

Uninterrupted growth

Today, FIA has touched the lives of more than 52 million Indians through its services, is present in 712 of the 773 districts of the country, and has provided livelihood to over 30,000 – and all this by being profitable.

Even Seema’s most aggressive growth plans had not prepared her for the kind of growth that FIA was seeing. “When I was building the Excel models, we used to say if an agent has an average of about 500 customers, that was awesome….And eventually we end up with agents that have as high as 25,000 to 50,000 customers . So they’re four times (the size of) some of the rural bank branches from a customer base standpoint.”

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

“Now suddenly, back in Burdwan, he’s earning Rs 25,000 to Rs 30,000 a month. At the same time, you know, delivering a service,” says Seema. “The job satisfaction I see in him and the pride with which he talks about the job, it’s phenomenal.”

The FIA ​​is also keen on more women becoming its agents. “Because having a woman running the center means you want more inclusion,” she says.

It is agents like Manas that the FIA ​​will rely on to succeed as it takes its first steps towards becoming a neobank – a kind of digital bank. “The advantage we see for FIA when we start lending is that we already have the customer base, and our agents have strong customer connections,” Seema points out. “Much of the lender’s time is spent on collection, but our mechanism is already in place, because transactions happen at our centers.”

However, the idea to expand to neobanking came from the customers. During one of her visits, Seema noticed that petty cash lured the villagers with bogus schemes that yielded fantastic returns. “And that’s when we realized that with the business correspondent model, we only offer 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 to plan for their retirement. That’s when we said we want to create the neobank.”

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