How Banks Can Partner With Lending Startups: The Construct

What makes the Indian lending market attractive, compared to many other economies, is the sheer size of the pie that players can potentially target – and the under-explored SME and microlending market. Just the SME lending market is worth $300 million from the overall $1 trillion Indian lending market.

Banks recognize this high potential opportunity but they have to change and add a lot to their existing systems and processes to be truly innovative and take their lending potential to prospective buyers. The most effective way to rapidly build these innovative services and processes – at business and technology level – is to partner with startups that have either build or are building such innovative lending solutions. These solutions can either be the new lending models like alternative credit or invoice discount to name a few, or sheer technology solutions like a small SDK which enables cross-selling lending products through mobile banking.

Kotak Bank has taken a lead in inviting lending startups to join hands to quickly build and launch digital lending solutions. In production stage, as is the latest practice, this would be done through APIs.

Announced March 2, 2017, The Kotak Digital Lending Challenge is a structured platform for new FinTechs and Startups to engage on a one-to-one basis with the bank, with the intention of assimilating select innovative and new age solutions into their current lending segment.

Who Can Apply

Kotak Bank seeks technology and business solutions from both startups and mature FinTech companies. The additional focus is to identify FinTechs in the area of process automation in the digital lending space.

Digital Lending	Financial Models	Business Models
Consumer loan(Home loan, car loan, personal loan, credit cards ) SME (Secured, unsecured) Microfinance Agri Tractor Commercial vehicle segments	Balance sheetMarketplace Invoice trading-invoice discounting Any other innovative models	White labelReference mode Alternative Credit Any other innovative models

This challenge is open to entries from all over the world.

Why this challenge is an effective platform

This challenge is Kotak Bank’s focused search for FinTechs in the digital lending space not just to recognize the top three or four, but to partner with them to build actual solutions for Kotak. During the selection process, the shortlisted companies will have one-to-one dedicated meetings with the Digital Banking Innovation Committee and other key stakeholders in lending. Each shortlisted company will be evaluated individually on the merits and benefits of its solution and not in comparison with other companies. The bank will work with the selected companies on pre-identified use cases and build-integrate solutions in Kotak’s existing banking systems.

Appeared in LTP