Panelists say banks shouldn’t feel threatened by fintech companies, rather they should feel enabled
Imaging: Ajay Mohanty
It is important for banks and fintech firms to join hands to marry the data and signals that the latter brings with the balance sheets that the former has to make financial services available to the masses, said panelists at the Business Standard BFSI Insight Summit session on Fintech & Banking Tech.
Panelists agreed on the proposition that the ecosystem needs banks as well as bankers, but it also needs these traditional banks to adopt technological advancements faster, which is where the fintechs come in. The expertise fintechs bring to the table in terms of technology and the domain knowledge banks have can be used in a collaborative manner to reach the last mile.
Sajith Sivanandan, managing director and business head, Google Pay, said: “What we need our banks and bankers to do is to partner more deeply with platforms such as ourselves in order to marry the data, signals that we can bring with the balance sheets that they have”.
“Banks, fintechs, payment platforms — all of these coming together is what will result in game changing moves that we want to see in the industry and which will benefit the end user,” said Rahul Gupta, chief executive officer, Avanti Finance.
Banks should not feel threatened by the fintech companies rather they should feel enabled, said Rajesh Mirjankar, MD and CEO, InfrasoftTech. “There is so much out there to sell that everyone will make money,” he added.
Rahul Chari, founder and CTO, PhonePe, felt banks and bankers will be there but how they operate, adopt, and embrace technology is going to determine who among them survives.
Banks have done a fair bit of technology transformation. Be it foreign banks or private banks, they have all been very sensitive to customer needs and adapted accordingly. But the technological landscape now is very different.
“As you see more and more banks learn how to create the new age technology platform, you will see them competing very hard in the new spaces,” said Ramesh Lakshminarayanan, CIO, Group Head IT, HDFC Bank.
However, he agreed that there will be partnerships between banks and fintech firms, but there will also be areas where they will be direct competitors. “In the long run, there will be few banks that will break out but at the same time, there will be 2-3 fintechs, who will be in a position to offer a far better bouquet of services, with some partnerships,” he added.
“Technology has offered us enormous opportunities and potential in the banking sector. And, we are already seeing the impact of technology on how India is going through massive transformation as we speak be it in payments, micro-credit, insurance, wealth management, etc. What has caused this is the entry of non-banking entities (fintechs, big-techs, e-retailers) and their collaboration with banks,” said Vikas Bansal, director, Amazon Pay.
The industry is going through a platform evolution, wherein on top there are the core stack of banks. The middle layer consists of companies that specialise in APIs and are abstracting all the work that banks might be required to do. Then there are players such as Google Pay and Phone Pe, which the user is using. Despite all this, the core remains the bank.
“Until and unless players like us get the licence, the balance sheet, and are allowed to do this, we are not accepting and nor will we accept a single rupee,” said Sivanandan. But what we certainly want to is, partner with the likes of HDFC Bank and other banks and say how can we bring more of what it is you do to more users in the right way and make it easy and friction less, he added.
“Consumers want the best experience, best rates, and in a paperless fashion. So, it’s incumbent on all of us to see how we can offer the best value proposition to that customer,” said Bansal.
Gupta of Avanti Finance felt there has to be an aggregation of capital where banks with their big balance sheets partner with fintechs and take a lit bit more risk in partnering with early-stage entrants, who have built some knowledge, data, analytics, and portfolio quality. “Scalability will be driven by digital platforms and not necessarily by brick and mortar,” he added.
Chari said there has been no disintermediation. “But there is definitely an unbundling and bringing a level of personalisation to the cross sell, which banks so far have not been able to do very successfully”, he said. “Fintechs have taken the approach of trying to dissect the customer base on data, signals, and requirements,” he added.
“The legacy the banks carry is heritage and advantageous and tech will help it take it to the next level,” said Mirjankar.