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Banks go big on partnerships to expand services, lure customers

Lenders are tying up with global companies, fintechs and other organisations to provide additional and advanced services to their customers.

January 31, 2023 / 08:58 AM IST
Representative image

Representative image

As the economy recovers from the pandemic, banks are going aggressive with partnership models to expand their services and get new customers.

Both public and private banks have been on a partnership spree in recent months to bring more customers on board. Lenders have also introduced offers by way of new debit and credit cards, digital banking services, and lending rates.

State Bank of India, the country’s largest lender, has tied up with about 20 companies over the past five months to offer services ranging from digital banking and financial payment options to credit facilities. The lender recently partnered with Warehouse Development Regulatory Authority to provide low-interest rate loans to farmers. SBI also partnered with motorcycle company Jawa Yezdi to provide financial options to its customers.

Canara Bank, another public sector lender, has joined with National E-Governance Service Ltd. to expand its digital banking services. The lender will offer a digital workflow of bank guarantees that will eliminate physical insurance, stamping, verification, and paper-based record maintenance.

Among private sector lenders, Axis Bank has tied up with OPEN, a digital banking enterprise, to provide digital current account services for its various customer segments.

DBS Bank India recently partnered with Gofrugal Technologies, a platform offering ERP solutions to adopt Open Network for Digital Commerce for its enterprise customers.

Laura Spiekerman, president of Alloy, a fintech and banking facilitator, said in a report that such partnerships help banks adopt new technologies and infrastructure to provide their services.

“Partnerships with fintech companies help banks provide new features to eager customers without spending costly resources to build their own digital products, while still earning a share of the profits,” Spiekerman said.

International partnerships

Some private banks have partnered with international companies and airlines to expand their products and services.

HDFC Bank, the largest private sector lender, partnered with Microsoft for cloud services for its banking operations.

Yes Bank and Mastercard have got together to introduce a debit card for its ultra-high net worth individual customers.

IndusInd bank tied up with Qatar Airways and British Airways to introduce a multi-branded credit card.

Partnerships here to stay?

Banks have traditionally partnered with companies for reasons including reaching a wider customer network and availing advanced technological services.

As banks recover from the tumultuous times of the pandemic, experts said partnerships will be their focus for some time in the near future.

“Customers would prefer using different banking services. And not only that, but banks are looking for more tie-ups with companies. We feel that these partnerships will stay for some time,” said Vijay Singh Gour, a senior analyst at Care Ratings.

Any risks with partnerships?

The Reserve Bank of India (RBI) has been strict on regulations concerning fintech firms and companies that are native to the digital ecosystem. Experts are of the opinion that barring partnerships with fintech and other digital lenders, on which RBI has kept a close watch, there is no risk involved in such partnerships.

Gour said there are some risks which the banks and the RBI are working on.

“The regulator has been working in a collaborative manner to mitigate the risks associated with fintechs and digital lenders,” Gour said.

Jinit Parmar
Jinit Parmar is a correspondent based out of Mumbai covering banks, banking trends and more, tweets @jinitparmar10 #banks #bankingtrends #RBI