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Not Tech but collaborations to Be the Next Big Thing for Fintech Industry Collaboration is helping traditional services to transform into new avatars of delivery

By Ajay Ramasubramaniam

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Why Collaborations are Crucial for Fintechs?

'Make the pie bigger' is a philosophical line that aptly suits any discussion about collaborations, and when it comes to fintechs in India, a subcontinent that doesn't fit a homogeneous cohort, collaboration is the only way to participate and thrive in India's exponentially growing fintech and digital economy movement.

Government is collaborating with start-ups (BHIM and Uber), start-ups are collaborating with banks (mSwpie), banks are collaborating with accelerators (Axis bank Thought Factory), accelerators are collaborating with BFSI industry players in general (Fintegrate Zone 2018). The circle of collaboration in Fintech has always been a full 360 degrees; but the speed at which digital is seeping into people's lives, collaboration is a cornerstone for Fintech players to innovate and avoid a 'Kodak' moment. Here are some scenarios where collaboration is driving growth and innovation in Fintech.

Collaboration for Better Digital Inclusion

Banks need to look further than the conventional indicators to underwrite credit risk, something they have relied upon for decades. The informal sector is a huge chunk of people who are still not technically 'eligible' for a bank loan; this exclusion is bad for the economy. But tech-savvy start-ups like Flexi loan and India Lends are using technology to underwrite creditworthiness and redefining lending in alternative space. Banks can sure collaborate to have better financial inclusion.

Collaboration for Concentric Expansions

Peer to peer lending (P2P) is one of the hottest area of fintech, and conventional business conglomerates are yet to warm up to the idea as much as start-ups have. With RBI regulating the NBFC space including laying bare the directions and norms for P2P lending, the market is poised to grow up to $5bn by 2023. Other NBFC and BFSI players collaborating with existing start-ups may grow the space and bring in more excitement to the space.

Collaborating with Start-ups for Innovation

ICICI Bank is partnering with Stellar, a blockchain start-up, to build blockchain-enabled payments network. Stellar provides ICICI Bank with an open-source online ledger, or blockchain, designed to oversee the movement of money. ICICI Bank customers in India and abroad can transfer money through a free mobile wallet over Stellar's platform. Such partnerships between banks and fintech start-ups can drive momentum of the national financial inclusion agenda.

Collaboration with the Ecosystem for Building a Better Tomorrow

Banks like Axis and Barclays India have committed to innovations in Fintech by partnering with not just a few, but with entire start-up and tech ecosystem. Axis' 'Thought Factory' and Barclays' 'Rise' program are long-term initiatives to have continuous, seamless, and ongoing dialogue with Fintech start-ups, accelerators and industry experts to internalise the way they innovate.

From Design sprints to Hackathons, the Goliaths are leaving no stone unturned to stay in the game with Davids.

Collaboration for Service Quality

The way customers interact with financial institutions is also changing. The millennials prefer chatbots to actual human interaction. Collaboration also helps to transform traditional services into new avatars of delivery. MetLife is collaborating with Imaginate, a virtual reality and augmented reality software developer based in Hyderabad, to create a unique customer journey for insurance policyholders throughout India. Such a collaboration will allow MetLife customers to immerse themselves in a virtual branch where they can engage with agents digitally to have questions answered and submit claims; similarly, Bajaj Insurance partnered with Amazon Alexa and customers can get all their insurance policy related questions answered with just voice.

All the verticals of finance and banking need collaboration. It is crucial to creating a sustainable foundation for the superstructure of digitisation in finance.

Ajay Ramasubramaniam

Director, Zone Startups India

Ajay Ramasubramanium is Director, Zone Startups India, which is a part of Ryerson Futures Netowork that operates accelerator programs around the World under the brand Zone Startups. We provide hands on strategic and tactical guidance for startups looking to drive market validation and customer acquisition as well as access to investors, corporate partners and advisors.

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