New age fintech companies must understand that customer interests are paramount and should ensure that the propositions they offer are distinctive in nature and stand out from what is already available in the marketplace, Axis Bank MD & CEO Amitabh Chaudhry said at the Global Fintech Festival here on Wednesday.
Chaudhry said fintechs must ensure that partnership with banks do not become a collaboration where one party wins at the cost of others. “Ultimately it is a three-legged stool and all three need to balance each other which is the customer, fintech and the bank. Second, it has to be a win-win collaboration where one plus one has to be more than two and it cannot be something where someone wins at the cost of others,” he said.
The MD stressed that fintechs need to proactively react to regulations and step towards complying with the same as regulators can come down heavily and may even shut their shops in case of non-compliance. Fintechs can take guidance from banks if they choose but they have to be compliant with regulations, he said.
“If you don’t (comply with norms), someday you will get stopped in the tracks and you might not even get time to refigure your model. You will be stopped. Now, people obviously try to ensure that somehow we can move around with regulations. My experience is that inherently they catch up with you much faster than anticipated,” the MD said.
Further, fintechs should also have a larger sense of vision wherein they understand what kind of business do they want build over a long term. While fintechs’ priorities may change according to market demands, they need to have a long-term vision for forming bank partnerships.
On the Reserve Bank of India (RBI) allowing banks to offer pre-sanctioned credit lines on Unified Payments Interface, Chaudhry said while the proposition is sound, it is still evolving.
Banks need to first understand how to conduct underwriting of this product, what would be the collection mechanism on the back end, what sort of customers will be allowed to get a pre-sanctioned credit line on UPI and in case the customer is eligible, do they really need credit from UPI at a time when there are multiple other credit-based products.
”Rather than getting too excited, right now our focus is let us ensure that we are standing in the river with the flow and understanding and appreciating how is the water flowing, what is the speed, what are some of the trends because I do believe tsunami and earthquake will come one day and then you cannot say I want to get out of water. Then you have to be standing in the river to take advantage,” he said.