Ever since the news broke about a Pakistani startup getting a million dollars as seed money from an international investment company, Finja, as the company is called, has been in the spotlight. But for all the interviews they’ve given, and the stories that have been written on them, nobody’s quite sure about what the company is setting out to do.
But Qasif Shahid, one of the founders of Finja, isn’t quite ready to speak to speak about that yet. Instead, he feels that it’s important to first know what a fintech is because that’s what Finja is: a Fintech.
Academically speaking, financial technology aka fintech is, quite simply, financial technology, designed to make financial services more efficient. This technology works on already existing platforms, which in the case of handheld phones and devices, is either the android and/or apple platform. This is the first clue about what Finja is going to set out to do. “These platforms are not geared for innovation, all that comes from the applications that operate on them,” says Shahid. “In the same vein, banks are platforms, they can’t innovate to save their lives and have millions of unsatisfied customers, and that’s where fintechs come in, and innovate.”
This means that emerging countries like Pakistan, where large swathes of the population remain outside the fold of financial services, are perfect for fintechs. But there is a limited window of opportunity. According to Shahid, all the world’s leading fintech companies are now “sharpening their knives to target these emerging markets, and if the local boys and girls don’t move now, it’ll all have passed in the next three years.”
While all this sounds terribly exciting, there is still the small matter of understanding, precisely, what Finja does.
In a nutshell, it’s digitizing financial services through the Smartphone. Shahid explains: “traditional banking is a mix of analog and digital, and hence it has limitations going down the food chain – when you create a truly digital experience, it can easily go down to the grassroots through that Smartphone which more and more people are carrying in their pocket.”
In early 2016, data released by the Pakistan Telecommunications Authority (PTA) revealed that over 128 million Pakistanis were using cell phones. Out of this, nearly 25 million were customers using 3G/4G data services. Another important statistic was a 6.6% increase in the 3G/4G customer base between December and January. Clearly, more and more cell phone users are turning to data. But are they literate enough to use the smartphone for finance?
The people at Finja seem to think so. In fact, they now harbor their own definition of literate. “It’s no longer the person who can sign his name or count to ten, it’s who can operate a device, load value in it and go online” says Shahid. Once online, they need an intuitive application that is easy to use, and viola, the world is your oyster.
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But with all such endeavors, there are inherent risks involved. There is the state regulator to deal with. Banks that operate like cartels. A population that is averse to new technologies.
“By and large, Finja has bypassed these risks because they’re associated with a well respected microfinance bank,” says Ammar Naveed, Head of Branchless Banking at Al-Falah Bank. “The key is going to be how the majority of Pakistanis, outside the upper middle class, react and respond to such services.”
Finja has a plan for this too. The application is going to have two separate modules. One for the uppers, and one for the others. And here, the application’s intuitiveness will be essential, if it’s to be accepted by the rural majority of this country. Secondly, the startup is hoping to use a top down approach to get this lot on-board: “if we approach a villager and ask him to use our wallet, it’s a dead end, but if his landlord says so, he just might agree,” says Shahid.
The question though is, what is Finja going to provide? Are they going out to fulfill an unmet need, in which case, the world will really be their oyster, or more likely, are they offering a different way from point A to B?
To Naveed, it’s always challenging to change the process of a need that’s already being met, even if it’s inefficient, a mix of digital and analog, or downright painstaking.
“With easy paisa, we created a personal relationship with the agent – one could go there, make the transfer in one call, and maybe drink a cola as well,” says Naveed. This “cola” humanized the transaction, and made it real. Finja on the other hand, wants to create a fully digital experience, banking on the digital literacy of the consumer. The question really is, will the functional digital literacy, as described by Finja as being the ability to comfortably use a Smartphone, lead to a behavior change in how they go about doing their transactions?
“That remains to be seen,” says Naveed. “It will all depend on where the push to use the platform comes from.”
What’s all this going to cost the consumer then?
Instead of directly answering the question, the people at Finja point to other mass successes, like Whatsapp, Skype, Facebook etc, that provide a service, but at zero cost to the end user. Likewise, with Finja, the relationship between them and the consumer, will be “on the house”.
The argument to bring new people on-board becomes that much more convincing when it’s not costing you anything. Still, the fact remains, that a truly digital financial experience is right up the alley of Pakistan’s upper class. They are bound to lap it up, as Finja will provide much needed efficiency, cross platform integration and the convenience of a smartphone. But things will be much slower with the others, the majority of Pakistanis that continue to use traditional forms of banking. Long formed habits don’t break overnight, permanent change takes time, and the people at Finja understand this.
“We’re in it for the long haul,” says Qasif.