There are a host of Fin-tech start-ups that are emerging in the Indian Finance Industry. This emergence has the capability to change the face of Indian Banking industry forever. Initially, the new payment banks, lending platforms and other financial service providers may eat into the revenue of banks but fast forward to 2020 there are chances that a lot of these fin-tech start-ups would get co-opted by the banks and this would mean that competition gets replaced with co-operation.
The reason for this change is easy to understand. The banks have customers and the fin-tech start-ups have state of the art technology to support the services provided to these customers. So the need of one for the other, with only a few speculations may lead to an environment of co-existence and co-operation.
The doubts that get raised however are related to new innovations. Provided this innovation driven fin-tech industry comes up with path breaking products, they may give a hard-time to the banks. But here comes into picture, the role of the central bank of India, that is the Reserve Bank of India (RBI). Because these new fin-tech companies come under the purview of RBI, they will be regulated under the norms of the RBI. So coming out with path breaking products looks less likely. This is going to create an issue of customer acquisition for mew companies and this makes co-operation between banks and these companies more likely over competition between the two.
One more thing that needs attention while discussing this topic is the capability of the PSUâ€™s to get these fin-tech start-ups on board. If the norms by RBI get loosened up it would be a possibility, but if not then the banks would have to fight battles with these new companies with their own might. And the strength of the banks has always been the element of trust they get for being a public sector unit. This trust has always helped them acquire customers and can acts their shield against the innovative fin-tech companies that are coming up. Such problems may raise their faces in front of big banks, but again the name and the brand value may bail them out.
In all we can say that there has to be a point of equilibrium between the extent of customer acquisition and the extent of innovation. The sooner we reach this point of equilibrium; the sooner will be we able to reach a point in time where the Indian banking industry comes out as a powerful banking industry. So what looks clear for now is that both, the banking industry and the fin-tech companies are here to provide good opportunities to its customers and are going to be instrumental in the improvement of the Indian Banking Industry.