By Dipali Padia, President – Banking Alliance and Partnerships at Neokred
In an era when ‘Fintech’ didn’t exist or was unnoticeable, banks with their limited bandwidth and infrastructure were catering to the need of the financial sector; however, the
demands weren’t fulfilled as expected either because of their internal compliance and
standard policies which were stringent or the integration support required by the
institutions weren’t timely addressed as banks generally do not provide dedicated technical
resources. India’s financial sector generates a good portion of its revenue from loans and
mortgages, the stronger it is, the healthier the economy. To make the economy stronger
and generate more revenue it was crucial for the banks to redefine their proposition to India’s financial sector by collaborating with Fintech’s who with their expertise in the technology and strategy sector could open more avenues for them in customer acquisition and retention which can be B2B or B2B2C.
In India, consumers are often hesitant to seek assistance from traditional financial services/banks because they either lack confidence or get limited support from their dedicated relationship manager, a flowchart is not available about their financial growth, nothing concrete is available on the internet for their reference or understanding. There was a grey area between the consumers and the institute/bank which needed immediate attention.
Banks have the APIs (application program interfaces) for all their products and
services and if they outsourced their technology, services, operations, SLA (service level
agreement), etc., to the fintech/Technology Service Partner (TSP) the bank’s operational
costs would drastically reduce. On the other hand, TSP gets an opportunity to partner with
the bank, learn and abide by the regulatory guidelines, create customer-focused solutions,
prioritise 24/7 access (in form of chatbot/AI-based) customer support and many more.
Bank can not only outsource its technology to the Fintech’s that act as a TSP but can also
utilise its open development and Software-as-a-Service (SaaS) solutions to other third
parties (prospective fintech) who can easily integrate and develop value-added solutions
and features of the bank on its platforms and create more avenues for the banks in
customer acquisition and cross-selling. By doing this bit, banks can tie up with multiple
fintech at minimal cost against higher revenue. Fintech’s innovative solutions and go-to-
the market strategy helps the bank to reach the untouched territory and also provides customer behavioral insights and data analysis to identify customer needs, context, and credit appetite, all in near real-time.
Earlier, onboarding the customer for any banking or financial inclusion products wasn’t easy as it involved a huge amount of manpower, manual data entry, physical verification of
customers’ POI (proof of identity) & POA (proof of address), and increased TAT (turnaround time) for onboarding. Now, Fintech provides an online platform for customers to fill out the KYC (know your customer) forms, upload their POI, POA, and other relevant document and Fintech’s fetch and validate the customer data by integrating the APIs with various banks, and governing bodies, bureaus and completes the onboarding process in under a few minutes.
The ease of online KYC also gives an opportunity to the customer to upload their data on
CKYC (Centralised Know Your Customer) stores all the personal details of the customer.
CKYC is managed by the Central Registry of Securitisation Asset Reconstruction and
Securities Interest of India (CERSAI). With the launch of CKYC, the customer isn’t required to go through the same repetitive process while transacting with any other financial
institution. With this the entire onboarding process, verification, validation, and due diligence is now enabled digitally in minutes. Once the customer is onboarded to avail of the said loan with the help of AI (artificial intelligence), he/she now gets several other options to avail of other products parallelly.
Such ease of technology, upselling and cross-selling has certainly redefined India’s financial
sector with banks collaborating with Fintech’s.