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Will Findi's share price rise by aiding the unbanked in India?

Melbourne-headquartered fintech company Findi is seeking opportunities in the growth of India's financial sector.

Source: Bloomberg

The share price of ASX-listed fintech company Findi (ASX: FND) could receive a boost from rapid growth in India's banking market, as the South Asian giant's economic clout continues to rapidly increase.

As an India-focused fintech company, Findi stands to benefit from booming demand for financial services from the country's vast population of unbanked and underbanked citizens.

Findi one of India's top ATM operators

While listed on the ASX with a registered office in Melbourne, the mainstay of Findi's operations lies in India, where its stated mission is to improve financial inclusiveness.

Findi has historically focused on teller machine services, establishing a firm toehold in the Indian financial sector by becoming one of the country's largest non-bank ATM operators.

TSI International, Findi's fully invested digital payments company in India, lays claim to a network of more than 20,000 ATMs around the country, with a presence in every one of its territories and states.

In addition to its ATM network, Findi also has a sizeable presence in the Indian e-commerce and payments sector.

Nicholas Smedley, Findi's non-executive chairman, recently told Stockhead that TSI International also has around 16,000 'digital merchants' in India, that are responsible for facilitating last-mile cash payments for the fast-expanding rural e-commerce sector.

ATM operations set for strong growth

Findi's ATM operations are split between those operated for third parties, and those owned by the company itself. Out of the 20,500 ATMs it runs in India, 12,000 are for third parties, with the remaining 8,000 owned by Findi.

ATM clients include the State Bank of India (SBI), India's largest bank, which has worked with Findi since 2016 via a third-party outsourcing contract.

Findi recently entered a new 10-year contract with SBI to provide another 4,219 ATMs for the banking giant, for a roughly 20% increase in Findi's nationwide unit numbers.

The company expects the contract to net it revenue of $550m - $620m throughout its decade-long lifetime, alongside EBITDA of $250m - $280m.

India's unbanked population still huge

The presence Findi has established in nationwide ATMs and rural e-commerce in India puts it in a strong position to capitalise upon the rapid growth in financial services demand from India's vast population of unbanked households.

The Times of India reports that 11% of India's adults remain unbanked, with estimates of the country's unbanked and underbanked population running to as high as 350 million. This massive demographic faces major challenges when it comes to accessing basic financial services and improving their material quality of life.

The shortcomings in the Indian banking sector could create major opportunities for the country's fintech companies, however, if they can bring financial inclusion to unbanked individuals by means of digital technology.

The scope of Findi's ATM network could prove especially advantageous, given that one of the biggest barriers to financial inclusion for rural communities is the distance of brick-and-mortar banking facilities.

India's ATM market is distinct from that of other countries, with the machines playing a more prominent role for financial services consumers, and often possessing their own dedicated air-conditioned premises.

Findi is currently in the process of applying for a white-label ATM license, which will enable it to operate the 8,000 it owns itself under its own label, instead of the labels of other banks or financial institutions.

The company expects a white label license to raise its profile and confer key strategic advantages, providing additional annual revenue of around $25m - $28m, for annual EBITDA of $7m - $9m.

Findi's share price currently stands at just over $1.01, for an increase of nearly 120% over the past six months.

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