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Over the past couple of years, fintech in the country has grown at a pace helping expand financial services to the masses and making India a benchmark for a lot of global markets. India is labelled as Asias top fintech hub with a fintech adoption rate of 87% over the global average of 64%as explained by RBI Governor Mr Shaktikanta Das.

This present-day enthusiasm shared by Indian financial institutions about the fintech industry is well connected to a natural evolution of the banking sector in India. For the better part of the last decade, traditional financial institutions that gradually realised the potential of fintech companies, redefined their time-tested strategies of conducting business. And the biggest enabler is the tech or technology of fintech that is motivating traditional financial institutions to rethink their perspective and forge a partnership for the future.

Embracing the new approach Over the past 75 years of Indias Independence, a majority of the countrys financial institutions have made significant strides to increase the pace of their customer operations and this has been further accelerated with the entry of the fintechs in this area.

Leveraging on strengths of each other, while the traditional financial institutions have garnered immense inherent trust of their customers riding on their vintage and distribution, the new-age fintechs bring agile data mining capabilities to help them stay connected and relevant to their customers. The combined capabilities can now process historical data on customer behaviour thus slowly improving processes, bandwidth, reducing errors, creating value-added services as per needs of todays customers across income levels.

Erasing Customer fear and bringing confidence The partnership also helps new-age fintech companies, with their wide catalogue of financial products, designed to meet the needs of modern customers, gain adaptation faster. And a significant contributor to this phenomenon is the Indian consumers affinity to bank only on trust. This partnership has helped the fintechs to pinpoint the customer pain points and devise solutions to bridge past process gaps, thus making the end customer happier and showcasing the same bank as much more customer-friendly. And through the ease of availability of these services on banks mobile application, the end consumer is much less inhibited by the traditional way of transacting cash & is welcoming the digitised process with increased confidence. The ease and effortless usage have helped more and more customers who didnt adopt the banking system in the past to happily use it today. And SME/Kiranas/farmers largely fall in this segment in the new Bharat.

Technology as the enabler

A partnership between financial institutions and fintech institutions visible today is built on the shared agenda of better addressing the problems of the end customers and steered by their common vision of increasing financial inclusion using technology as a great enabler.

Over the past couple of years, the popularity of PaaS has grown exponentially among banks and financial institutions mainly because they offer scalability, ready availability and cost-benefit to the banks. Due to this, not only are banks better able to leverage advanced capabilities, but also meet customer expectations leading to more profitability and retention.

Big data, artificial intelligence and technology, powered by fintechs, generally have been accelerating change in payments, lending, insurance and wealth management.

Opportunities ahead While the bank fintech partnership spans across the entire spectrum of financial services, the merchant payments space off late has seen increased activity. The new approach combines integrated omni channel payment solutions with value added adjacencies leveraging payments data to deliver relevant and easy to use offerings for MSME/SME.

One platform solving all things as payments, business growth and working capital delivered by combining the best of capabilities from the bank (payment rails, distribution, underwriting) and the fintech (ease of use, data mining and agility) for a particular segment as MSME.

Redefining the way banks operate

By leveraging the PaaS model and forging equal opportunity partnerships, not only can banks better understand the exact needs of the modern customer, but also positively impact their bottom line. However, it is important to reiterate that for this partnership to truly realize its ultimate potential, banks and fintechs need to work together, as the partnership between trust and technology is at the heart of its success.

Views expressed above are the author's own.

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No longer Fintech v/s bank: It is Fintech with banks - Times of India