Read on Twitter
Some thoughts on how the financial world is changing and what Fintech Future brings up and what are current beliefs in the markets that may turn out to be Myths.
Fintechs will disrupt banks -
No, Still by regulations low cost of capital (deposits) can only be raised by banks at scale and all Fintech is doing is they are building their stuff on the top of banks called a co-lending model.
No, Still by regulations low cost of capital (deposits) can only be raised by banks at scale and all Fintech is doing is they are building their stuff on the top of banks called a co-lending model.
Fintechs are trying to solve the problems where the existing model of lending by banks fails. Like very low ticket size loans in the report area to a guy or SME who doesn't have a bank account but has wonderful small business/cashflow (famous chatwala in your town) to avail debt
Or even if you have bank account your data is staying with the bank and they may not bother about lending you bcoz ur need it too small or they are not willing to take the risk that an NBFC can today.
In that case what options you have?
In that case what options you have?
Print out ur bank statements, self-attest them and share them with a lender.
Forward all my SMS and emails to the lender so they can parse my data & recreate ur banking history.
then loan officer will physically come to u to asses your financial assets, businesses, etc.
Forward all my SMS and emails to the lender so they can parse my data & recreate ur banking history.
then loan officer will physically come to u to asses your financial assets, businesses, etc.
and then on a leap of faith, he may approve or reject ur loan application.
What if all that can happen on the click of a button?
What if you know ur getting a loan or not over a click of a button?
That's what exactly Fintech brings on the table.
What if all that can happen on the click of a button?
What if you know ur getting a loan or not over a click of a button?
That's what exactly Fintech brings on the table.
How it can be done over a click of a button?
There are AAs (account aggregators)
Once it’s launched, u will be able to share financial data related to ur bank accounts, mutual funds, stocks, NPS and insurance policies—with a third party, say, a wealth manager through AA.
There are AAs (account aggregators)
Once it’s launched, u will be able to share financial data related to ur bank accounts, mutual funds, stocks, NPS and insurance policies—with a third party, say, a wealth manager through AA.
So on click of a button, u have shared all lending institutions need to know abt you to make a decision.
The AA can either charge from you, the customer, or the party (bank/nbfc/wealth manager) requesting the data.
The AA can either charge from you, the customer, or the party (bank/nbfc/wealth manager) requesting the data.
AAs can bring more on the table - Let's say Google, Amazon, Flipkart or Makemytrip, join the AA system can be used in various innovative ways.
A credit card issuer may scan your spending pattern on Amazon, Flipkart & MMT, suggest a card that fits that pattern.
A credit card issuer may scan your spending pattern on Amazon, Flipkart & MMT, suggest a card that fits that pattern.
The central idea is through the DEPA protocol, ur data will be accessible to the AA at any point; it merely flows from the Financial Information Provider (FIP),Eg Banks, to the Financial Information User (FIU), the lender, via the AA interface.
and as we are extrapolating the future of listed banks / NBFCs by extrapolating the past 20-30 years data (where nothing of this kind happened & was not even possible).
there are real business models are getting tested in the real world by Fintech startups.
there are real business models are getting tested in the real world by Fintech startups.
Stock Market Myth/ belief number 1 -
PSU to Private - Many say this is a megatrend mean trend continued for decades & going to continue for decades until PSUs disappears.
PSU to Private - Many say this is a megatrend mean trend continued for decades & going to continue for decades until PSUs disappears.
A which no one talks about if at all this happens the market share transfer going to transfer the market share of risks from PSUs to Private as well.
But I would argue in the next decade lending enabled by Fintech what are role retail banks going to play?
But I would argue in the next decade lending enabled by Fintech what are role retail banks going to play?
To lend you need raw material - Money and A decision-maker - Humans (today).
The decision processing/making part is going to be taken away by the Fintechs tomorrow, in our data-rich economy it's bound to happen.
The decision processing/making part is going to be taken away by the Fintechs tomorrow, in our data-rich economy it's bound to happen.
What role banks will play? Perhaps merely a raw material provider, the role Iron ore company plays for the steel manufacturing company.
We don't know what will happen but there is nothing stops Fintechs to enable the PSU banks to lend as smartly as HDFC banks.
We don't know what will happen but there is nothing stops Fintechs to enable the PSU banks to lend as smartly as HDFC banks.
There are still lot of question markets about how the co-lending ecosystem going to evolve but like many other things, tech is going to make banking completely commoditize.
and Private banks may not have any Distinct advantage over PSUs.
and Private banks may not have any Distinct advantage over PSUs.
In that scenario, only differentiator going to be what is your cost of CASA and how many CASA you have?
In that PSUs like SBI have the advantage over Pvt banks like HDFC. A normal depositor still trusts SBI more and doesn't believe there is PSU to Prtive value migration story.
In that PSUs like SBI have the advantage over Pvt banks like HDFC. A normal depositor still trusts SBI more and doesn't believe there is PSU to Prtive value migration story.
Apologies for the Typos :)
Next time I'll be more careful about tweeting early morning.
Next time I'll be more careful about tweeting early morning.
