Finhaat: Bridging the Gap in Rural India's Access to Financial Services and Insurance

India has made significant progress in expanding financial access through digital initiatives and collaborative efforts from public and private sectors. The RBI's Financial Inclusion Index has witnessed a notable increase, rising by 13 points from March 2017 to March 2022. This upswing reflects improvements in financial service access, usage, and quality. However, challenges persist, with only 11.5% of rural households having net financial savings, and less than 10% of rural Indians having life insurance, as highlighted in a PwC report.

In response to these challenges, Finhaat has emerged as a significant player. Founded in October 2021 by Institute of Rural Management alumni Sandeep Katiyar, Vinod Singh, and Navneet Srivastava, Finhaat operates as a financial product delivery platform, primarily targeting the emerging middle-class and lower-income population residing in rural areas, Tier III, and Tier IV cities. Based in Mumbai, this innovative startup focuses on ensuring that financial services, particularly insurance, reach underpenetrated areas.

CEO Vinod Singh emphasized their mission, stating, "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."

Finhaat acts as the connecting link between major financial product companies and local agents and institutions, such as MFIs, NBFCs, non-profits, and grassroots-level organizations. These agents and organizations play a vital role in enabling last-mile delivery to end customers and providing essential after-sales support. The startup currently has branch offices in Delhi and Bihar in addition to its Mumbai headquarters.

Addressing key challenges associated with the rural distribution of financial products, Finhaat endeavors to offer products that cater specifically to this demographic. Singh identified three main challenges: products introduced in rural areas often come with different price points and reduced benefits, they lack post-sales support, and there's a lack of trusted one-stop solutions.

Finhaat tackles these challenges by bridging the gap between financial product providers and the distribution network through an assisted digital model. This approach allows the startup to offer tailored insurance products across various categories, including parametric, health, life, and motor, keeping affordability and regional needs in mind. The entire product lifecycle, from onboarding to accessing benefits, is digitized, simplifying the process for rural customers.

While Finhaat hasn't disclosed its revenue, the startup generates income by charging brokerage fees to financial product companies, mostly insurance providers. The startup has successfully sold over 18 lakh policies across 60% of India's pincodes, primarily serving Tier III, IV cities, and rural areas.

Looking forward, Finhaat's focus remains on the insurance sector, with plans to introduce a savings vertical. The startup is open to raising funds from venture capital firms that possess a network benefiting rural-focused startups, aligning with its vision to provide essential financial services to underserved populations.

Amid the burgeoning insurtech industry in India, Finhaat stands out with its tech-driven service platform and commitment to addressing the unique needs of rural and lower-income segments.