Industry stalwarts discuss the role of banking amid the current fintech revolution at TechSparks 2021
At TechSparks 2021, a panel of experts from banks and the fintech industry came together to discuss collaboration, financial inclusion, and what the future beholds.
Wednesday October 27, 2021,
4 min Read
With the ever-changing technology and the rise of fintech startups post COVID-19, traditional banking is at an inflection point. A FICCI-BCG report suggests that the fintech industry in India is expected to grow up to $150 billion by 2025.
However, irrespective of the disruption, banks remain profitable and a widely-used financial service in the country. They have swiftly adapted to the growing acceptance of tech in its space.
To delve deeper into the subject, a panel of experts from both banks and fintech companies came together at TechSparks2021, YourStory's flagship startup-tech event, in a session titled ‘Reimagining banking in the new age’.
Banking and fintech collaboration
Ajay Rajan, Country Head, Transaction Banking Group at YES Bank strongly affirmed that traditional banks have and will continue to play a critical role in shaping the challenger ecosystem.
He said, “Banks have helped reshape the digital payment ecosystem. The classic example is PhonePe and YES Bank’s partnership. The outcome of this partnership is such that close to 46 percent of its UPI transactions are managed within our counters.”
Ajay further spoke about the role and involvement of banks and their collaboration with fintech companies. He said banks have been providing sandboxes to startups and fintech companies to ideate and experiment on various use cases. Similarly, fintechs have been helping banks with technology to automate. He reiterated that collaboration, not the competition, will drive the future for both banks and fintechs.
Financial inclusion is key
Sahil Kini, Co-founder and CEO,– a Bengaluru-based startup that offers API infrastructure for financial services – said that it is important to increase the penetration of formal financial services in India.
“Traditionally, people had to visit the physical bank branch to get access to financial services. The scenario changed and consumers now avail these services digitally that led to a reduction in the cost of distribution. The next logical evolution of this change is that these services will find themselves embedded in different products and services,” explained Sahil.
He pointed out that the digital revolution led to a clear increase in the penetration of financial services, which is a win-win for all the parties involved; banks get to increase their customer base and the third-party apps gain engagement and monetisation.
Changing customer behaviour/needs
Taking the conversation forward, Rakesh Bhatt, CEO, Bajaj Finserv Markets emphasises that recognition of customer needs is slowly dawning on banks, NBFCs, and fintechs. “Fintechs are agile to sense the needs of the customers. However, banks and NBFCs are not that agile to cope up. So, there is a clear gap,” says Rakesh.
He believes that three factors led to the change in customer behaviour:
- Digital infrastructure
- Banks and NBFCs leveraged the new age digital infrastructure
- Increased adoption of payment and ecommerce ecosystem.
“The customer’s means to achieve ends has dramatically changed. And in this battle between banks, NBFCs and fintechs, the customer is going to be a clear winner,” says Rakesh.
Gaurav Yadava, Country Director - India and South Asia, Western Union brings a fresh perspective from the standpoint of the cross-border payment ecosystem, which he said was complex.
He explained the innovation happening at Western Union: “The regulators are open to allowing home delivery of money transfers. Western Union delivered the money to real-estate labour in Singapore during the pandemic. The next level of innovation is digitising the journey for partners and agents. And lastly, the focus is on collaboration to expand to various use-cases.”
Rethinking the future
Concluding the talk, Ajay asserted that the future of banking was set to change.
“In the past, banks were focused on designing from a product perspective. However, that has now changed to consumer POV. Trends like open banking are dominating globally and have had a significant impact on India as well. In this revolution, consumers are sure to benefit and although this is no war amidst all the competition India will win and our country will witness a financial revolution,” he signed off.
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