BENGALURU: Your banks are getting ‘smarter’ with launch of more digital and fintech solutions.
Faced with competition from new-age fintech firms, and also Covid-19 pandemic forcing them to evolve digitally, both public and private sector are going big on digitally-powered services. Over the past two years, banks as well as fintech firms have been witnessing enormous growth in digital payments, and they are partnering to expand as well as tap new customers.
While banks have built trust among customers, fintech firms bring in new technology so as to reach more users and also innovate new products, features to make any transaction easier and convenient. Apart from tie-ups, a few banks have their own financial subsidiaries that offer various financial solutions to customers.
Recently, BOB Financial Solutions Limited, which is wholly-owned by Bank of Baroda, along with CreditAI Fintech launched a co-branded credit card exclusively for farmers. UCO Bank strengthened its fintech partnership with Fisdom through addition of demat and trading account services so as to deliver a digital wealth management experience to its customers.
Akhil Handa, Chief Digital Officer, Bank of Baroda, told TNIE that the bank continues to invest in not only enhancing its IT backbone but also in creating cutting-edge digital platforms and partnering with leading technology players and fintech start-ups to provide the next generation of products and experience to customers.
The bank has over 40 partnerships with diverse fintech start-ups working across lending, wealth, payments and Blockchain, among others. Through three models - Fintegration, Distribution and Co-creation, the bank collaborates with various fintechs.
Also, in case of chatbots, information augmentation, analytics and other services, banks seek tie-ups with fintech start-ups. “The new tech era is undoubtedly bringing a revolution in how banking works. Although fintech doesn’t have deep pockets as the financial banks, they have better data, connectivity, Artificial Intelligence (AI), and integration of the latest software, making financial inclusion much easier,” says Rachit Chawla, CEO and Founder, Finway FSC.
People no longer have to visit banks for every task, as they get their work done from their smartphones. The AI data of smartphone users make connectivity much more accessible. The partnership with banks would create a synergy, as the capital bandwidth meets the right audience, he adds.
Partnership model boost
The collaboration between banks and fintech companies is also to increase co-lending, extend credit to small businesses and expand merchants acquiring business, among others. Many mid-size banks have partnered with multiple fintechs.
Federal Bank recently partnered with CredAvenue for portfolio management of its securitisation book. Kotak Mahindra Bank joined hands with Pine Labs, which is a unicorn, to expand its PoS (point-of-sale) services.
HDFC Bank works with Paytm to offer co-branded credit cards to millennials, business owners and others. Axis Bank too announced its partnership with BharatPe to expand its merchant acquiring business.
Embedded Finance start-up Falcon has partnered with Visa, National Payments Corporation of India (NPCI), global processors, ICICI Bank, YES Bank, IndusInd Bank and Punjab National Bank, among others. Bank of Baroda has also tied up with over 18 fintech players with over 100 digital integrations, for the purpose of digital analysis of Bank statement, GST and ITR, e-signing, EPFO, Vahaan, Mobile metadata and SMS scrapping, among others. Apart from other banks, SBI also picked up stakes in financial technology platform IBBIC. The equity ownership of IBBIC is aimed at providing distribution ledger technology (DLT) solutions for the financial services sector.
Also, UPI transactions have been up significantly since the beginning of the pandemic. Fintech platform Razorpay, which gives access to all payment modes, has tied-up with many companies. Amitabh Tewary, Chief Innovation Officer, Razorpay, says beyond just cards, UPI already has been making great strides in the country, and this allows people to just scan a QR code and make a payment. Situations that arose out of the pandemic gave a lot of push to contactless payments and this will keep growing.
The future of payments
Bank of Baroda has partnered with NPCI to offer a wearable payment solution to its customers by leveraging the existing NFC (near field communication)-based technology. “Wearable technology is witnessing a tremendous interest and absorption globally, as people are increasingly adopting more convenient and cashless digital transactions. This is an innovative solution, intended to perfectly deliver preventive health actions as well as easier payment transactions,” Akhil Handa says.
He adds that it is anticipated that 10% of the small-ticket payments will be made via wearable devices in the next two years. Apart from these, Neo banking is said to be the next thing in the fintech space. “Neo banking would allow users to resolve their banking queries from the comfort of their homes. It eradicates the traditional banking system, whether getting a loan, doing a simple transition, or resolving any other issues through your smartphones,” says Rachit Chawla.
Instead of competing with fintech firms, it has become necessary for banks to partner with various emerging fintech start-ups for not just introducing new features in the fintech space but also to retain and reach more customers who prefer convenience for all transactions- be it insurance, loans or various payments.