Pakistani fintech Finja targets the unbanked with new mobile wallet


16 September 2016

Finja is a new entrant to Pakistan’s financial technology (fintech) scene and aims to bring innovative banking services to the country’s digitally savvy population. The fintech recently received US$1 million in seed funding from a Swedish venture capital fund, which it is using to launch a fee-free mobile wallet in partnership with a local microfinance bank. Ex-banker Qasif Shahid, co-founder and CEO of Finja, sheds some light on the journey his company is embarking on as it seeks to bring mobile banking services to around 30 million customers.

Please tell us more about Finja and explain what is so unique about your venture.

Finja is a fintech company based in Lahore. We are focused on making headway by collaborating with companies already established in the banking industry. This is a unique approach in Pakistan. It means that we are not trying to build anything from the ground up, but instead analyse what is already available in the market in terms of the incumbent infrastructure or partnership opportunities, and build on top of it. This can be illustrated by the partnership we have formed with Finca Microfinance Bank; we have built on their existing framework, looked at the current branchless banking framework and taken on the role of being their super-agent.

What is the state of the mobile banking industry in Pakistan and how does it compare to what’s going on in the rest of the world?

Pakistan houses the world’s fifth largest population, with 85 million citizens who remain unbanked. The opportunity to develop mobile wallets in Pakistan is bigger than in other developed countries, as the population size provides a large number of people to target, plus unbanked individuals comprise an essential segment of this target market. Here, people missed the age of computers, conventional internet, the TV and landlines, and therefore the transition to smartphones will take place much faster. We believe that this will also result in faster mobile wallet uptake. 

We understand that you are working with a microfinance bank in Pakistan, Finca Microfinance Bank, to launch a mobile wallet? Can you share some details and explain how it will be different from other available products in the market?

Finja and Finca co-own the brand name for the mobile wallets and are partners in revenue share, which means that every time the mobile wallet is sold, both Finja and Finca make money. Our super-agent status allows us to sign contracts and onboard customers by carrying out KYCs on behalf of the bank.

This partnership between a fintech and a microfinance bank to offer joint services to customers is unique in Pakistan. Microfinance banks operate differently to commercial banks; their core consists of micro products. Fintechs, on the other hand are extremely agile; they can go out and create propositions, new services (such as payments) and offer improved functionality quite quickly.

We understand that you recently received funding from a Swedish venture capital firm – the first time a fintech has received an investment of this kind. How will this impact the evolution of the fintech industry in the country?

Fintechs in Pakistan, such as Innov8 (a mature company), have received different kinds of funding before, but Finja is the first fintech to receive such a substantial amount of seed funding from an international venture capital firm. In that sense, we are the forerunners for seed funding in Pakistan. Finja’s performance will positively impact the growth of the fintech industry and subsequent international funding in Pakistan.

How do you aim to win over existing and new customers?

We believe that in order to scale and grow quickly, you need to outsmart at least one of three key areas in the market. These include process, price and functionality. Finja aims to outsmart all three verticals. The first – process – will be achieved by removing the friction while onboarding customers. In price (we will create advantage) by demonetising services and removing all switching costs. This will encourage customers to join. We are compatible with all handsets, telcos and banks (money from any bank account can be transferred to this mobile wallet). Lastly, our back-end and customer-facing processes will combine to ensure extremely efficient functionality.

What is your target market and how do you intend to grow market share?

The only segment Finja is aiming to target is that of ‘digital explorers.’ These customers own smartphones and use them to connect to the internet, download apps, access social media, and so on. There are currently around 30 million such explorers in Pakistan, and we aim to develop our mobile wallets for these people. With smartphone penetration standing at 16.6% in Pakistan currently (expected to rise to 51% by 2020, which equates to 80 million smartphone users), we believe this will keep growing and therefore, this is the only segment we will be targeting.

Do you have plans to grow outside of Pakistan?

At the moment, we are focusing on growing and testing our mobile wallet in Pakistan. Here, we are culturally anchored and well versed with the terrain. However, in the future, partnering with microfinance banks globally is an option. Microfinance banks all over the world largely have outdated business models and are not built to scale; we would certainly be interested in forming more Finja-microfinance bank partnerships.

You have wide ranging experience working as a practitioner and banker, driving digitisation of banking services inside and outside the country. Are banks in Pakistan ready to adopt the inevitable wave towards digitisation and how are they responding to it?

Mainstream journalism has sensationalised the war between fintechs and banks. However, the real fight is between big banks and small banks. Small bank-fintech partnerships are much easier to form as it is a relationship between two equals. In such relationships, fintechs have as much decision-making power as the bank. Big banks, on the other hand, are making high revenues that are reliant on the current status quo, so they’re not as eager to form partnerships. Our partnership with Finca will force banks to take notice of such partnerships once they start disrupting the market.

Finja, along with the turnaround CEO for Finca, Mudassar Aqil, is attempting to prepare the market, which is ready for digitisation but not yet prepared for fintech-bank partnerships.

What is the state of the fintech ecosystem in Pakistan and what potential does it offer?

The fintech ecosystem is developing in Pakistan, as witnessed by a total of 13 incubators and accelerators in the country.  The start-up ecosystem in Pakistan will also continue to grow, as many powerful players look to start their own incubators, for example Telenor has already started its Velocity incubator. 

The opportunity for fintechs in emerging markets, such as Pakistan, is much greater than in developed markets as user needs remain unmet in these parts. 85% of the population in Pakistan does not have a banking account, allowing fintechs to tap into this market segment.

Keywords : Fintech , Digital/Mobile channels , Digital payments/Wallet

Geography : Pakistan