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Article- Fintech & Banks: Co-Creating Value for Customers

March, 2017

CFO Insights on Financial Services

Alok Mittal, Co-Founder & CEO, Indifi Technologies, believes that evolution of Fintech is at an inflection point and now has a bearing on customer interface and strategy of financial institutions.

Fintech (Financial Technology) is the buzzword which connotes an enabler and a disruptor in the same breath. The space of financial technology companies is so wide that it promises to change the current paradigm in almost all areas of banking – be it deposits, lending, wealth management, forex or treasury management. Many of the enabling technologies around Fintech are relevant for incumbent banks as well as for new companies alike – these would include classical enterprise technology stack in context of banks – right from core banking systems to new models of CRM, and to innovations aligned to what is now referred to as India Stack (Aadhar, e-Sign, e-KYC, UPI).

Banks and Financial Institutions have been a lead adopter of technology through decades. Why is this surge of technology then different from the previous waves? Does the new set of technologies enable fundamentally different capabilities than the gradual evolution of technology we have seen in the past? Above all, what does this mean for incumbent banks, as they see a slew of specialist Fintech companies spring by – is this a threat or an opportunity to cooperate?

The Impending Paradigm Shift

The set of technologies appearing on the horizon signify a departure from the nature of technologies that have been experienced in the past. Historically, technology deployment by banks has mostly been in the back office and middle office – be it mainframes or CRM – with possible exception of ATMs and Internet Banking. Needless to say, these technologies led to improvement in customer experience as well. However, the primary rationale for adoption was to introduce more efficiency and scale in the banking system. Most of these technology innovations did not change the worldview of customers in how they related to their banks. Banks continued to be places where consumers go to deposit money, take loans, transfer funds and the like. That is about to change.

The recent wave of financial technologies enable a fundamental shift in how customers will think about banking – or better still, stop thinking about banking. This shift is primarily being enabled by a decade of accumulated gains in making the banking infrastructure streamlined. However, it will be driven through the biggest customer-interface innovation of our times – the mobile phone. For the first time, customers have anytime anywhere interactive access to services.

What is more is that the underlying user experience paradigm on the mobile device breaks through the barriers of monolithic service providers. It is creating a host of opportunities to rethink banking and make it pervasive to a point where customers will not think about their banks the way they do today. There is a cycle of unbundling of banking services, and re-bundling them with other non-banking services, which leads to a completely different user  

experience – that, in my mind, is the real disruption that current generation of Fintech companies will cause. Let us consider a few examples:

WB21 is an online-only bank that unbundles the foreign exchange remittance service that is conventionally provided by large banks. However, WB21 creates a seamless customer experience, and a pricing value proposition, which allows a customer to get the best forex service without ever leaving their desk or talking to a customer service representative. Sure, it rides on decades of investments in financial infrastructure – but it teases out perhaps the most profitable franchise on basis of a disruptively superior customer experience. Similar examples are beginning to appear in other banking services such as wealth management.

Go and ask a hundred people what PayTM is – and none of them is likely to say that it’s their bank! PayTM unbundles a select set of banking services (the consumer liabilities side of business), and bundles it with non-banking services from mobile top-ups to ecommerce, to create a completely new customer proposition. Similarly, services like MoneyView take the investment side of business, and seamlessly combine it with a spend management utility to create a new savings and investment product. Such unbundling and re-bundling of services lies at the heart of Fintech companies, and are likely to change how consumer perceive banking.

Alternate lenders such as Indifi enable credit in the customers’ business context. In many cases, the customer may not even think about taking a loan, but the offering is available in an integrated manner with their sales and purchases during usual course of business. Rich data analytics help address current limitations of credit algorithms. Such integration between business processes and financial services will address both access and usage gaps.

Competition or Cooperation

Fintech companies are adopting a wide variety of business models in going to market. Some, like new-age NBFCs and Payment Banks, look to control the entire value chain right from customer experience to the balance sheet. Others, such as marketplace platforms, attempt to combine the best capabilities through a partnership model.

In this equation, the key capabilities that Fintech companies bring to the table center around their ability to reimagine the customer experience (which is essentially driven through diversity of ideas and approaches), and deliver it through compelling usage experiences. These companies also bring an unwavering focus on customer experience as the organizational DNA – something that, generally speaking, is not associated with banking.

However, most of these startups lack the capabilities that have been built in the banking system over decades. These include the infrastructure (technology as well as operating), the understanding of risk, regulatory compliance processes, and sheer scale which leads to more efficient and reliable services. This is where the partnership opportunities for Fintech companies and banks will reside. 

In effect, the unbundling and re-bundling of banking services at the customer front-end will be mirrored by creation of new partnerships between Fintech companies and banks, which leverage their respective strengths to co-create customer value.

The Indifi Experience – So far

Indifi is innovating in the space of supply chain financing, basis shared credit intelligence. Indifi integrates its financing product deeply with the processes and cash flows in the supply chain – not just in terms of provisioning a loan, but in creating other technology-enabled market linkages through payment systems and analytics. As an example, Indifi has created a product for financing distributors for a large travel consolidator, using supply chain data and other segment-specific signals. Lenders use this analysis to extend working capital loans to the agents, thereby enhancing their business capacity.

Indifi works in partnerships with banks to bring these products to the market. Banks gain by getting access to new segments and tighter linkages into the business flows. Customers gain by seamless access to financing products that fit their use case and process flows. We expect to see more such models that focus on co-creating value for customers.


Evolution of Fintech is at an inflection point, where it is no longer confined to technology and operations functions. It now has a bearing on customer interfaces and strategy of financial institutions. This allows for co-creation of new business models by Fintech companies and banks, which will define the basis of the new terms of engagement of a customer with their financial service providers.

Opinions expressed in this article are the author’s own.