Speaking at Inc42’s Fintech Summit 2022, fintech founders said collaboration between banks and fintech players can make credit available to a large number of customers
Oxyzo Financial CEO Ruchi Kalra said that the collaboration of various entities would further drive digital adoption in the fintech space in the SMB segment
Lendingkart’s Harshvardhan Lunia said that the rise in digitisation due to the pandemic has led to a big increase in collaborations in the fintech world
Collaboration between banks and fintech players has the potential to transform lending for small and medium businesses (SMBs) in the country and help provide credit to the underserved customers, according to founders of fintech startups.
Speaking at Inc42’s Fintech Summit 2022, Indifi cofounder and CEO Alok Mittal said that 75% of MSME lending in the country is still done by public sector banks, which have very limited partnerships with fintech players.
“I think those partnerships materialising can change the landscape of MSME lending in the country and make credit available to many more customers than we have ever dreamt of,” he added.
Echoing similar sentiment, Oxyzo Financial CEO Ruchi Kalra said that the collaboration of various entities would further drive digital adoption in the fintech space in the SMB segment.
Collaborations between various individual fintech companies will lead to the emergence of more holistic financial services tech-enabled companies, which will be a combination of lending, insurance, and wealth, she said.
“So, I think the lines will get blurred in terms of saying a fintech lender, fintech payments. So, that would lead to the emergence of four or five very large financial services entities and a lot more collaboration between different fintechs to actually emerge in terms of a combined offering for the customers,” added Kalra.
With lending becoming more digitised in the post-Covid era, SMB lending has also witnessed a visible shift towards digitisation. This has also led to more collaborations between players in the fintech segment.
Lendingkart CEO and founder Harshvardhan Lunia said that unlike in the pre-pandemic era, collaboration is a buzzword now.
Going forward private smaller lending platforms can build on their strengths, tech data and product-lead systems, and collaborate with large institutions to solve the underserved needs of customers, he added.
Talking about digitisation, Hardika Shah, founder & CEO of Kinara Capital said that fintech players serving micro-enterprises have been trying to move their customers to digital platforms for the last 5-7 years. However, the situation will reverse over the next few years with the customers seeking more digital products and services, she said.
“The fintechs have been trying to move customer base in the micro enterprises up the digital curve. I see that in the next five years, our customers are going to push us, they will become more demanding of whether it’s product or service or experience, and we will have to transform instead of us pushing them to transform,” said Shah.
The digital lending market in India is poised to grow to over $600 Bn in size by 2025. However, many of the fintechs have come under the lens of the Reserve Bank of India (RBI) recently. Earlier this month, the RBI tightened the noose around the non-bank prepaid payment instrument (PPIs) issuers, barring them from loading such PPIs with credit lines.
In its Financial Stability Report, the central bank said that the advent of fintech has exposed the banking system to new risks which extend beyond prudential issues and often intersect with other public policy objectives relating to safeguarding of data privacy, cyber security, consumer protection, among others.