‘Evolve your technological capabilities or perish’. This was the crux of banking veteran KV Kamath’s speech at the Global Fintech Festival last week for lenders who did not update their technological prowess and subsequently risked losing market share to agile fintechs.
Kamath’s comment hold substance as a recent report by venture capital firm Elevation Capital and McKinsey & Company said a whopping 70% of overall digital payment transactions currently are being captured by fintechs and 50% of active broking accounts on NSE are held by fintechs.
On their part, fintechs have captured material share in categories such as payment gateways, small ticket personal loans or Buy Now, Pay Later (BNPL) market and are also rapidly growing their market share in other areas such as card issuing business and wealth & insurance distribution segment
Accordingly, banks—at least the mid and large sized ones—have become acutely aware of the challenges that fintechs pose to their market share in the payments and lending space, and thus have pro-actively shored up their fintech partnerships.
“The evolution of bank and fintech partnership is such that it has become a matter of collaboration rather than competition. The regulated entity has a set of roles and responsibilities which is very clear from the regulator’s perspective and internally formed policies,” says Shalini Warrier, ED at Federal Bank.