Relationship of Indian Banks and FinTech Startups Strengthening in 2017
The digital revolution currently underway in financial services –colloquially called FinTech – has raised some questions on the nimbleness and relevance of the banking fraternity in India. There have been apprehensions about banks being able to create faster, cheaper and better services to become an omnipresent part of their customer’s daily lives. The thematic discussions around this have revolved around banks’ operational inefficiencies, slow response time and high costs. More complexity has been added due to the rigors of heavy regulations and strict security compliances. On the flip side, there have been questions about the ability of FinTech companies to penetrate an industry where customers are wary of new incumbents where government oversight is not much. They might offer superior service but lack the scale and brand and distribution channels to challenge the banking behemoths.
Acknowledging this digital development, banks have realized the need to embrace openness to innovation and collaboration. Instead of watching new FinTech startups disrupt their business model, banks are creating new structures to adapt and collaborate to meet new age challenges. There have been different ways in which they have moved in this direction – creating their own FinTech projects, investment in external FinTech firms and partnerships with new FinTech firms. Several banks in India and abroad are now willing to work with FinTech startups and similarly, FinTech firms have rallied to support them. For financial services companies often weighed down by old legacy systems, partnerships with FinTech firms is increasingly becoming a more efficient way of plugging gaps in their business models.
One of the banks which is among the early leaders in digital development is HDFC. Known as one of the pioneers in Indian banking industry, HDFC has always been at the forefront of innovation. Its successful Digital Innovation Summit initiative has lowered the entry barrier for various startups operating in the FinTech space by recognizing their work and giving them a platform. This initiative brings together Indian FinTech startups and encourages their innovation by giving them a stage to present their ideas and products directly to HDFC Bank’s leadership team. Through this initiative, HDFC bank has created a win-win situation where both the bank and the FinTech startup stand a chance to gain momentum by leveraging one another’s strength. By evaluating and understanding the ideas and unique product offerings of these players, HDFC bank has the chance to accelerate its digital transformation by engaging with the most exciting startups (the winners) and leverage their technology and product to enhance its customer experience. On the other hand, the startups have a great opportunity in the form of association with one of the largest banks in India, which gives them just the right platform, scale and customer reach that is essential for them to boost their business.
Last year winners Senseforth Technologies, Tagnpin Marketing, Net Vigil Software, Bugclipper technologies and Tapits Technologies have all worked on pilot projects with HDFC Bank.
The second iteration of the event is underway and applications are invited till January 22. Entries are invited from FinTech startups from the following industry segments: Payments, Mobile Innovation, Customer Service & Experience, Analytics, Social, Cloud Solutions, Cybersecurity, Marketing & Communications, Blockchain and Operational Efficiency.
This is a great initiative to be able to work with the bank for FinTech startups to gain experience in scaling up and attain a greater service level. Opportunities such as HDFC Digital Innovation Summit are win-win situations for both banks and startups.
First appeared at LTP