Bank and fintech partnerships should focus on financial inclusion, say experts

Partnerships between banks and fintech companies are already around for some time now in India and many of these partnerships have been a win-win so far. But they still have a long way to go when it comes to achieving financial inclusion or even serving the personalised needs of their customers. These were some of the thoughts shared by industry leaders at the FinServ Innovation Summit 2023 organised by Mosaic Digital and TechCircle held in Mumbai on April 27.

Padmaja Chunduru, managing director (MD) and chief executive officer (CEO), National Securities Depository Limited (NSDL) said on her keynote address that while customers have a lot of trust on traditional banks and feel safe and secured while interacting with a physical banker even today, fintech companies bring in technology such as artificial intelligence (AI) and data analytics that offer a complete 360-degree view of the customer to serve them faster and more efficiently. “The ultimate goal of the partnership is financial inclusion,” said Chunduru, which means by leveraging their core capabilities banks and fintech together should be able to create innovative tailor-made products to serve specifically to the small businesses, women and other niche segments of the society.

Toward this end, Rajesh Bansal, CEO, RBI Innovation Hub, a wholly owned subsidiary of the Reserve Bank of India (RBI) recommended banks to come up with apps and platforms with user-friendly designs and adaptive menus, to suit customer’s hyper personalised needs. For example, the needs of men and women especially in the rural areas are entirely different, and farmers and small businesses continue to look for simplified lending processes and user-friendly schemes, he noted. These are areas where banks and fintechs can collaborate to bring in robust business models and innovative schemes and services.

Financial services in the current form haven’t evolved their offerings to match the tech-driven pace of change in other industries, believe experts, whether it is, checking accounts, loans, and even corporate advisory can seem undifferentiated. Anubrata Biswas, MD & CEO, Airtel Payments Bank said that in order to remain competitive, banks have to embrace cross-industrial platforms and focus on the customer needs in new ways.

Sivasubramanian Ramann, CMD, SIDBI added that access to finance is a major challenge for MSMEs due to the lack of required CIBIL, collateral, and credit history, resulting in a significant portion of the sector being left unbanked. However, the rise of India’s robust financial service technology ecosystem has the potential to revolutionise the MSME financing landscape, he said.

Likewise, Anantharaman Balakrishnan Director, Google Cloud India said in a session that the key is tapping on to customers’ ‘micro-moments’, which Google defines as a moment “when people reflexively turn to a device (say, a smartphone) to learn, discover, watch or buy something.” Balakrishnan said, “With mobile phones becoming the primary element of peeking into a customer’s journey, the new-age applications have to be built for scale to cater to the unique journey of every customer, what we call the adaptive journey”. This, according to him, should be based on trust; instead of just relying on the brand value.
Experts also said that data analytics can play a “transformative” role for the banking industry. In one of the panel discussions, Balaji Narayanamurthy, President & Head BIU, Axis Bank Limited, said that while data analytics can play a huge role in delivering value to customers, bringing down the cost of servicing, and increasing the revenue for a customer, data analytics-driven personalisation is still in the early days…and that the next frontier for banks would be about offering that experience.
Abhijeet Bhattacharjee, CIO, Utkarsh Small Finance Bank, also believes that for personalisation and user experience-related use cases, banks have a lot to learn from the e-commerce companies to reach the new level. Banks are also using data analytics for risk management and lending, he said.
The event also saw a session on the rise of branch-as-a-service (BaaS), a relatively new concept in the banking industry that allows financial institutions to offer their services to third-party companies through an application programming interface (API). This saves businesses from having to build a banking infrastructure and enables them to provide services such as account opening, payment processing, and loan processing to their customers, much like the concept of open banking.
 (with inputs from Abhijit Ahaskar, Shraddha Goled and Pahi Mehra)