Learning To Live With FinTech

It Takes Two To Tango, And Banks And Fintechs Are Increasingly Realising This. While Such Tie-ups Help The Former Slash Operational Costs, For The Latter, It Promises Access To A Wider Universe. In The End, It's A Win-win For Both.

- Raghu Mohan

WILLIE SUTTON, who was into robbing banks in the U.S., reportedly quipped:“... Because that's where the money is. He denied this in his book, 'Where the money was' (1976), but did say on-record, “You cannot rob a bank on charm and personality.” Early on, Sutton's worldview guided fintechs in a big way — ranged against banks as they were – but the protagonists have since smoked the peace pipe and decided to tango.

This change of heart is on the growing realization by fintechs - and private equity (PE) players which back them – that they have to ride on the customer base of legacy regulated entities - be it banks, non-banking financial companies (NBFCs), or shadow banks. It's the only way fintechs and PEs can unlock value in the run-up to an eventual listing. This and the fact that fintechs are now on the radar of the Reserve Bank of India (RBI) which set up a dedicated department for them in January this year. The move is seen by central bank watchers as the first step towards “mainstreaming fintechs” given their growing collaboration with legacy regulated entities. Banks, on the other hand, have been more than keen to shake hands. Having taken the bashing from the technologically superior and vastly more nimble fintechs, banks have finally overcome the Ostrich Syndrome and acknowledged the presence of new business models.

IN THE NEW WORLD