FINCA gears up for digital disbursement solutions

Microfinance bank is looking to increase financial inclusion and create stronger foothold in rural localities

LAHORE: FINCA Microfinance Bank is gearing up to introduce digital disbursement solutions in rural and semi-rural areas in a bid to reduce cost of delivery and increase digital literacy.

The bank will use gadgets to get all necessarily details of the client via biometric verifications, thereby reducing the loan-processing time to within 48 hours. Apart from gadgets, the bank’s newly launched mobile wallet, SimSim appears to be the management’s hope to increase foothold in rural localities.

“I believe that the introduction of digital financial services in Pakistan can help us reach the untapped market, which is huge,” said FINCA Impact Finance Global President and CEO Andree Simon, while talking with a group of journalists. She further said that so far developments in Pakistan’s microfinance sector are positive and their bank operations here are expanding but financial inclusion remains an issue.

“Financial inclusion in Pakistan is slow, in fact it is dependent on physical verifications on ground for a very long time,” she said, adding, “This increases the time of verification, as the officer has to meet the clientele physically, which turns it into an expensive delivery model.

“With digital finance, the delivery cost can reduce significantly as we have already done in other countries and reduce direct expenses up to 90%.”

Talking about mobile wallet, she said that with this product, we have the ability to reach villages without physical presence; this will help in educating the public how to better use the mobile phone for financial inclusions.

“Access to technology in Pakistan is uneven and in reality people in rural areas are not that literate. Using traditional mobile phone is time consuming and as the cost of smart phones will came down, people have more choices and we have more room to educate people,” said Simon.

FINCA started its operations in Pakistan in May 2013. It has successfully managed to post a year-on-year growth of 63% in 2015 and 86% in 2016 with a profit-after-tax of Rs631 million. Since 2013, it disbursed around 430,000 loans with a total disbursement of around Rs37 billion till date.

Since around 60% of loan disbursements bank made are for agriculture and livestock loans, the bank management is looking to focus on this key sector as it borrow six times more from the informal sector than the actual disbursement of Rs700 billion from formal channels.

“We are in active discussions to introduce new and diversified product lines and we are also looking to explore agriculture loans since this sector offers a huge opportunity.”

Pakistan is a very unique country, its business environment is very strong, it has a talented workforce and its population density is high, which again is an opportunity.

“Financial inclusion, however, what we dream of is not at that level and majority of the people don’t have a bank account, which is an issue.”

She expressed hope to bridge this gap through digital financial inclusion in coming years.

Published in The Express Tribune, July 30^th, 2017.

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