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Over the last few years, India has attempted to bridge the financial access gap through digital penetration and an array of steps taken by both the public and private sectors. RBI’s Financial Inclusion Index jumped 13 points—from 43.4 in March 2017 to 56.4 in March 2022—reflecting the increase in access, usage and quality of financial services. 

However, a lot of ground still needs to be covered as only 11.5% of rural households have net financial savings as per the index and less than 10% of rural Indians have life insurance, a PwC report shows. 

Enter Finhaat, which has created a financial product delivery platform for the emerging middle-class and lower-income population primarily based in rural areas, and Tier III and IV cities.

Founded in October 2021 by Institute of Rural Management alums Sandeep Katiyar, Vinod Singh, and Navneet Srivastava, Finhaat’s assisted financial product delivery platform focuses on ensuring financial services, specifically insurance, reach these underpenetrated areas.

“We feel that in the high-income segment, there are enough service providers. Whether you look at banks, boutique investment firms or wealth management, there is a lot of focus and this [rural] is a segment in which we can add much more value,” CEO Vinod Singh tells YourStory.

The startup connects big financial product companies with local agents and institutions such as MFIs, NBFCs, non-profits, and other grassroots-level organisations. These agents and organisations enable last-mile delivery to end customers and provide after-sales support through the Mumbai-headquartered startup’s platform.

It also has branch offices in Delhi and Bihar.

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Penetrating rural India

The founders come with more than 50 years of combined experience in banking, insurance, wealth management, and rural marketing, and shared a vision to equip ordinary Indian households and small businesses living beyond metros to manage their financial health. The goal was to find a solution that’s scalable, sustainable, and efficient. 

Finhaat co-founder Sandeep Katiyar says that rural distribution of financial products—specifically, insurance—has three key challenges. Firstly, products built for urban areas are often introduced to rural areas at different price points with reduced benefits. Secondly, these products lack post-sales support for the rural population, and lastly, there is a lack of trusted one-stop solutions.

The startup brings together financial product providers and the distribution channel (partner institutions) and to cater to the specific needs of the underserved population through an assisted digital model. Its tech platform lists multiple insurers and products for its institutional partners.

At present, the startup offers insurance products through its broking platform, Finhaat Insurance Broking. It offers products across parametric (concerning natural disasters and climate change), health, life, and motor categories, keeping affordability and specific requirements of the segment in mind.

It digitises the sales and post-sales support throughout the product life cycle (from onboarding to accessing benefits). It handles distribution through tie-ups with institutions that have a presence in these areas and utilises their digital platforms to provide assistance.

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Business model and revenue

The company raised a seed round of an undisclosed amount from family and friends in November 2022. The three co-founders invested an additional Rs 1 crore each in the startup.

While Finhaat didn’t disclose its revenue, it earns from charging brokerage from the financial product companies (largely insurance companies). 

“We have the expertise in rural management, and these financial product companies are unable to reach that demographic due to a lack of proper infrastructure and resources. So, they are working with us in partnership,” states Katiyar. 

It acts as the management and sales partner of these product companies, enabling distribution and providing customer support at their end.

“Finhaat’s products are the cheapest you will find in the market because we are able to price products lower by achieving large volumes and geographical diversification of risks. This allows us to use statistical assumptions and price products efficiently,” Singh adds.

Finhaat’s 64-member team works with the institutional partners to train their teams on the ground for their sales efforts as well as support onboarding and post-sales queries. It also syncs with the insurance companies to ensure customised products being offered are relevant to the target segment.

“We have a presence across more than 5,000 touch points—from institutions and their branches to individual salespeople,” says Katiyar.

The company has so far sold over 18 lakh policies across 60% of India’s pincodes.

Operating in insurtech

Finhaat operates in India’s growing insurtech industry alongside players like Bima Plan, Zoppers, and Turtlemint. This growth can be measured through capital inflow. In 2021, the sector received $17.8 billion in funding and saw the emergence of 22 unicorns. 

“Most of the competitors are working in urban space or Tier I, II cities whereas Finhaat is working predominantly in Tier III, IV cities and rural areas,” explains Singh.

It differentiates itself with its tech-enabled service platform, especially for claims, to target the lower-income segment.

“At the time of claims, we have a complete digital journey for, let’s say, health or life products where you can put the claim irrespective of the insurance company on the backend,” he adds. 

Finhaat has also tied up with 50 local institutions such as microfinance institutions, MFIs, NBFCs, NGOs, and other grassroots organisations for support. It has institutional tie-ups for villages where representatives can work as part of that ecosystem in the local language, understanding local issues.

Going ahead, the startup wants to stay focused on the insurance sector as well as set up the savings vertical.

“In the future, we would like to raise funds from VC firms that have a network that can benefit us,” Singh notes, adding that the company would look at investors who have already funded agricultural and rural-focused startups.