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Partnership between banks and fintechs is the way forward, says HDFC Bank’s Parag Rao

Banks of tomorrow will necessarily have to be like fintechs or have some attributes that fintechs bring to the table, Parag Rao said at an event in Mumbai.

September 20, 2022 / 03:56 PM IST

Partnerships between banks and fintech companies seem to be the way forward in India’s financial ecosystem to bring together forces and value for customers, Parag Rao, group head, payments, consumer finance, digital banking and IT at HDFC Bank, said on September 20.

“Each player in the ecosystem — whether it is a bank or NBFC (non-banking finance company) or a fintech — brings to the table its own strengths. I think the problem happens when we all think we are ‘superman’ and we can do everything,” Rao said at the Global Fintech Festival held in Mumbai. “Sticking to the basic principle of business is key.”

Rao elaborated that there is “ample opportunity” in terms of partnerships in India's financial landscape.

In such partnerships, each player brings to the table their own strength and one individual entity cannot crack the market on its own, Rao said. Bringing together forces and value for the customer is the “nature of the game,” he added.

Further, standalone entities trying to do something alone is not going to help in building a profitable business model, Rao said, adding that he sees more and more potential partnerships happening and “that’s the way to go.”


“I presume serious players are in this game for the medium to long term, which means you need to build a good economic model. Partnerships actually help in crunching the lifetime cycle of this model,” added Rao.

Indian banks are slowly adopting technology to make banking services digital and user-friendly. Banks, non-banking finance companies, and fintechs are all aiming for financial inclusion through innovative products, credit/debit cards and UPI payments. Not just that, banks are also indulging in co-lending partnerships to cater to a broad customer base and widen their reach.

Additionally, Rao said that India’s traditional banking landscape, which flourished in the past few decades, needs to change and imbibe attributes of the new age.

“Banks of tomorrow will necessarily have to be like fintechs or (have) some attributes that fintechs bring to the table,” Rao said. “They will not only have to be innovative (and) agile but will also bring to the table conventional banking attributes like trust, safety, managing risks et cetra.”

“Traditional banking” is now redundant and new banks or the banks of the future will necessarily have to morph into the system by retaining the good values and attributes of traditional banking and imbibing attributes of the new age, Rao said.

Traditional banking, which Rao was referring to, was when banks operated typically only in brick and mortar buildings, wherein staff did the paperwork, underwriting and looked at leisures.

If you don’t adapt to change, you cannot sustain, Rao added
Siddhi Nayak is correspondent at She tweets at @siddhiVnayak
first published: Sep 20, 2022 03:54 pm
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