A rating system to measure the products, services and security of fintech companies can help the larger financial industry, A.K. Purwar, Chairman, IIFL Finance and Former Chairman, SBI, said.
Speaking at a panel discussion during the BT Banking & Economy Summit 2023, the industry veteran said the lack of an agency that rates the quality of fintech firms makes it extremely difficult for banks to select the right fintech partners.
“I have chaired the largest bank in the country, today I’m chairing one of the largest NBFCs in the country and also I chair one of the fintech companies. The greatest problem we find vis-a-vis with the fintech companies and these institutions is that despite the excellent work they do, there is hardly any agency which rates the quality of their products, services and security. There is no rating system and therefore, it creates huge amount of complication on the part of the banks on how and whom to outsource,” he said.
“If fintech companies can work out some sort of a rating system, it would be a great help to the banking system as well as to the entire financial industry,” he added.
He also recounted the resistance to computerisation in its early days and how banks have embraced the digital revolution to expand the scope of technology intervention into many areas including mutual funds and insurance. He further said the fears of computerisation eating up jobs have been dispelled over the years and that it has created new kinds of jobs. He said with the advances in automation and innovation, the world will see a very different kind of financial services environment in the next 5-10 years.
Pralay Mondal, MD and CEO of CSB Bank said the era of competition between fintechs and banks has long gone that today there is complete clarity that for the good of the consumer and good of the country, fintechs and banks have to join hands together.
“Fintechs gets a lot of customers in to the banking and credit ecosystem. It is a great partnership that is evolving, people have understood what the competitive edges are and it (the relationship) today is not just partnerships, its revenue share, long-term co-opting and co-owning customers,” Mondal said.
Speaking on the panel, A.P. Hota, Independent Director, Federal Bank and Former MD and CEO, NPCI said India has the best retail payment system in the world and that there is much more to do in digital payments because the country has a lot more use cases for growth. “UPI is generating around 8 billion transactions a month, but the dream is a billion a day, it is possible. A lot of works has to be done. UPI should not be taken just as a payment product. UPI has triggered all adjacent financial services,” he said.
Hota asked fintech firms and banks in the country to build the next disruptive product by leveraging the capabilities of artificial intelligence and machine learning.
Copyright©2023 Living Media India Limited. For reprint rights: Syndications Today