Why Finja lends to the kiryana store the banks won't touch

Two bankers who decided not to be bankers for life

The episode opens with Muzamil welcoming two guests at once — Umer Munawar, co-founder and COO of Finja, and Zain Bhatti, the company’s head of product. The framing is deliberate. Finja is a banking-industry veteran’s bet against the banking industry, and the founders’ biographies carry that contradiction inside them.

Umer walks through the path first. LGS, ACCA in two years, then a CFA he started before realising he had made a mistake. “I got all the knowledge, I got all the skills, to do things, but I didn’t learn a single part of the application of those things,” he says. The standard exit — three years at PWC or KPMG for six or seven thousand rupees a month auditing other people’s paperwork — did not interest him. He finished a Bachelor’s by research through Oxford Brookes, did a Master’s in finance at UNSW in Australia, worked two years in investment banking, then came back to Pakistan with one decision already made: fintech was the space.

He met his two co-founders, Qasif and Monis, in the course of meeting almost the whole banking industry in Pakistan trying to set something up. Qasif resigned from MCB a month after their conversation. Monis had already brought what he describes as one of the first international VC investments into Pakistan, into Rozee.pk, back in 2008. The three of them raised Finja’s first round — Umer’s phrase, which he repeats — “on the back of a napkin” from an international VC called Stock Emerging Finance. The year was 2016, the licence they could partner under was branchless banking, and the bank that gave them access was Finca Microfinance Bank. “They are the reason Finja exists,” Umer says. “One of the reasons.”

The name itself was decided on a five-minute conference call. Financial ninjas, cut down and theatrically rearranged into Finja. The sharp edges in the logo, Umer points out, are not decorative.

Zain’s route in is different and worth lingering on because it is the country’s electronic-payments history in miniature. Eton, LGS, an undergrad in economics from Lahore School of Economics, then two and a half years working with his brother in the garment export business — until two large shipments came back with the dye two shades off and the family had to close the shop down. He took a job at a Lahore company called Innovate in 2006. Innovate, he explains, was building mobile point-of-sale products at a time when the State Bank of Pakistan had no regulations for mobile banking at all. Innovate partnered with Mobilink on a product called Genie, the advertising caught the regulator’s eye, and the draft regulations finally came in 2008. That was the chain of events that took him to Karachi, where he met Qasif at MCB, helped launch MCB Mobile, did a stint consulting for the Gates Foundation on UBL Omni and Khushhali Bank, then moved to Bank Alfalah, where he launched the bank’s internet banking and a product called Alfa. By the time Qasif called him about Finja, Zain had been a banker long enough to know he did not want to be one for life. “Saari umar banking nahi karni,” he tells Muzamil. He had bounced back from a bad bet in textiles once. He could do it again.

The MCB Mobile moment

Buried inside Zain’s resume is the moment the conversation slows down for. He had been at MCB for a while when the bank launched MCB Mobile. His first salary on the new product changed his view of the whole industry. The cheque he used to receive as a salary became a direct deposit. Within three or four minutes of payday, his rent had gone to his landlord, his mother’s transfer had gone to Lahore, and everything he needed to do with his money was done. Then he looked downstairs.

“Half the people in the branch were there because, jee Sui Gas ka bill hai,” he says. People queuing for an hour to pay a recurring monthly bill. He could see what he had just done in four minutes, and he could see the country that was not doing it. “Yaar, this is a service that I’m doing,” he tells Muzamil. That was the realisation that committed him to the space — not the technology, the gap between the technology and the people who still did not have access to it.

Muzamil sharpens the point. Between any thousand people in Pakistan, he says, the chunk actively using digital services is maybe five. The other 900-and-something are the market. Zain agrees. Access to formal financial services, he says, is what he had with MCB Mobile. Exclusion is the person who cannot even tell you to deposit his salary into a bank account. The State Bank’s role, in his telling, has been to take at least that first problem off the table — anyone in Pakistan can now open a bank account with a thumbprint. Whether the country has actually felt it is a different question.

”We were overregulated. Then I changed my mind.”

The conversation turns to regulation, and Zain says something that cuts against what Muzamil expects. He used to believe Pakistan was overregulated. He no longer does. “Overregulation is a consequence of, you know, bankers not taking the risk,” he says. When commercial organisations refuse to take commercial risk, the regulator’s job is to make regulations, and the easy thing for the bankers is to hide behind those regulations and tell the customer that the State Bank will not allow it. The story of Pakistan’s financial services, in his reading, is not the regulator’s failure. It is the failure of commercial nerve, dressed up as compliance.

Muzamil’s counterpoint sits naturally next to it. In the United States, he says, regulation tends to arrive after a Catch Me If You Can — a white-collar criminal who forced the system to evolve. In Pakistan, the regulations keep arriving without the criminal to chase. The system gets stricter against a problem it does not actually have, and the problem it does have — entire sectors of the economy operating in cash, outside any formal record — is the one the strictness cannot reach.

What Finja actually is

When Muzamil asks Umer to simplify Finja for a viewer, the answer is short. “We are a lending platform that wants to give access to credit to MSMEs, different supply chains, and employees of the companies.” The framing is what matters. Pakistan, he says, is the fifth largest market in the world and the most underserved in terms of credit. A bank account is not the urgent need — money can be kept in a drawer. “Why do you need a bank account to store money? Ghar mein bhi locker hai.” What people need is a financial identity, and then access to credit.

The Finja lending book runs in two segments. Salaried professionals get an earned-wage facility — the salary advance product that powered most of the company’s lending before COVID. Businesses, primarily kiryana stores and MSMEs, get inventory credit. Muzamil offers his own evidence on why this market exists. He tells a story about pitching his books business — three years profitable, an online catalogue selling to a specific demographic of young women — to a banker who eventually rejected the loan because the banker did not personally like reading books. “Reasoning kya kya bayaaz wo nahi ho sakta,” Muzamil says. The risk appetite does not exist in the banks. Even where it could exist, the data they ask for is not the data this market generates.

Umer’s answer to that gap is the core technical claim of the company. “You need alternate datasets to evaluate businesses,” he says. “Traditional datasets can’t work in this country because inherently a cash economy.” The kiryana owner may be a ninth-grade pass who has never written debit-credit in his life, but he leaves a footprint inside Unilever, P&G, Nestle. The FMCG distributor knows what he bought. The utility company knows what he uses. The methodology Finja built turns that footprint into a credit score. “He is a wonderful entrepreneur. What does he lack? He lacks education but he is leaving such a huge data footprint in doing that business. You need to evaluate that data footprint.”

Co-lending: the trick that makes the model scale

Muzamil presses Umer on where the lending capital actually comes from. Finja is not a deposit-taking bank. Where is the balance sheet that supports the loans?

This is where Umer reveals the structural move. Finja lends to a borrower four times out of its own equity. Each repayment is data — proof that this kind of business, with this kind of footprint, pays back. The fifth loan to that same borrower is funded by a partner bank. “We co-lend with them,” he says. “Banks who have never taken view in this ecosystem.” Finja takes the early risk that the banks will not. The banks ride in on the proven track record. The kiryana store, who would not have qualified for a bank loan on day one, now has one. Finja, in effect, is becoming a credit-rating agency by doing the underwriting itself first.

The product, Muzamil notes, has the same conceptual shape that he was failing to communicate to his book-business banker. Inventory secures the loan. “You can’t run away with them. You can’t go to The Bahamas with the with the, like, books.” Umer agrees, and adds the structural detail that matters most for a Pakistani audience: after the COVID pivot, the product became fully Shariah-compliant. Finja does not give the borrower cash. It buys the stock — say a thousand rupees of Unilever inventory — and tells the shopkeeper that the price he owes back is fixed. One hundred and one rupees if he pays in seven days. One hundred and two rupees at thirty days. The loan cycle averages around twenty-two days. The price is locked at origination, which is what makes it permissible. The fee, in practice, is a margin on the trade, not interest on a debt.

The COVID pivot

The pivot itself is one of the conversation’s sharpest stretches. Before March 2020, most of Finja’s lending was salary advance — 40 percent of a payroll-customer employee’s salary, available on demand. When the pandemic hit, the algorithm did not know who was about to be laid off. The salary advance product, Zain says, could not continue safely. Six members of the management team — not just the three founders — locked themselves in a conference room for a day. Either they would shut down operations or they would pivot.

The pilot they had been running on the side became the bet. Kiryana stores needed credit precisely when people were stocking pantries with cooking oil and avoiding the hypermarkets. The hyperlocal supply chain was the lifeline, and the lifeline was running out of inventory because the shopkeeper did not have the cash to restock. Finja stepped in there. The product-based, Shariah-compliant model was built into a scalable lending product on the back of that decision. “We made a conscious decision that the supply chain needs to keep on running,” Umer says.

It is one of the cleaner pivot stories in Pakistani startup history because it did not require inventing a new market. The market had been there. The crisis just made it the only one that mattered.

Three licences, and what each one means

Late in the conversation Umer slows down to walk through Finja’s three regulatory licences, and the section is worth reading carefully because most coverage of Pakistani fintech blurs them.

The EMI — eMoney institution — licence allows a non-bank to store value in a wallet. Take a deposit, hold it, let the customer pay bills or send money out of it. Before that licence existed, only banks could take a deposit. Finja’s EMI licence is in pilot. NayaPay, Umer mentions, has just gone commercial on its EMI; Finja’s commercial approval is days away. Sadapay is in the same pilot phase.

The NBFC licence is the one that lets Finja lend — but only from its own equity, not from customer deposits. This is the structural reason a bank multiplies money and a fintech does not. “We can’t take deposit from you and use your deposit to lend,” Zain clarifies. “We lend from our equity.” The EMI is a payments licence. The NBFC is a credit licence. Most countries collapse this distinction inside a bank. Pakistan, by separating them, makes it possible for a tech company to do one without becoming the other.

The third licence is newer and rarer: the SECP’s peer-to-peer lending sandbox. Finja Invest, Umer explains, lets an individual put capital into the kiryana-lending book and earn up to a 20 percent annualised return — against a savings account paying five or six. The pilot is capped at a hundred lenders, and the SECP is drafting the full regulations now. The model is the same co-lending logic, just pushed one node further out: instead of bringing a bank in alongside Finja’s equity, it brings a retail lender.

The talent question, and the funding moment

Towards the end of the conversation, Muzamil widens the lens to the Pakistani startup ecosystem at large. Airlift had just raised $85 million. Bazaar had just announced around $30 million. The prime minister was tweeting about it. He asks the two founders how they read the moment.

Umer’s answer is generational. In 2016, he says, Finja brought one of the first international VC investments into a Pakistani fintech. Monis had brought the first one into Rozee.pk back in 2008. For a decade, that money trickle was so thin that most fundable people in Pakistan still needed the right family or the right connections to start a business. What has changed, in his view, is that the VCs entering the market now will become its evangelists. They will go back to their networks and tell other VCs that Pakistan is the fifth largest market in the world and they are missing the boat. Once that loop closes, the funding stops being a function of who your father knows.

Zain adds the human side. Graduating students, he says, no longer aspire to join HBL. They aspire to start companies, or to join one. Talent that left the country is starting to come back. The data-engineering team at Finja, he and Umer both stress, was built in-house and slowly — Muzamil’s broader frustration with Pakistani fintech, that the bigger players are effectively marketing wrappers around procured tech stacks, is the gap Finja’s founders are most insistent that they do not want to fall into. “We are tech companies,” Umer says. “We’ve built tech, we run tech, and we replace that built tech to run businesses.” The youngest member of Finja’s management committee, Rubab, leads the data science function. She is in her late twenties. Most of the company’s product heads, Umer mentions almost in passing, are women.

By the end of the conversation, the two arguments that Muzamil and the founders have been circling have started to fit together. The country is overregulated because the banks under-risk. The kiryana store cannot access credit because the banks cannot read his data. The fintech that can read that data and is willing to take the first loss is the unlock — not as a replacement for the banks, but as a wedge that brings them in behind. And the international capital arriving in 2021 is the thing that lets the wedge scale. “It’s our responsibility as founders,” Umer says near the end, “to utilise that money not frivolously, in a very, very good manner, that it gives the required return to all the VCs who are coming in.” The line is not modest. It is the discipline the next decade will be measured against.