Fintech Companies Are Collaborators Than Competitors: Federal Bank MD & CEO

For Shyam Srinivasan, the bossman at Federal Bank Limited, fintech companies like Paytm, PhonePe, BharatPe, etc., are not threats but a ‘collaborator’ to reach out the so-called ‘Rurban’ consumers. He is also of the firm view that this pandemic has only forced the acceleration of digital transactions in the country. The Aluva, Kochi-based firm had already allied with a fintech partner six years back wherein both the partners could explore synergistic options. The private commercial bank is also planning to adopt a similar model for microfinance solutions wherein it will be leveraging on the technological capabilities of its a fintech partner.

While e-interacting with Dr. Annurag Batra, Editor-in-Chief of BW Businessworld, in one of the episodes of BW Dialogue, Srinivasan stated, “It is a win-win proposition for both of us. A couple of years back, when we had built out a fintech partner exclusively for us, we were a little guinea pig bank for them to construct their delivery using technology and doing gold loan at the client’s home of work. So instead of you (as a customer) walking into a branch to do a gold loan, I come to you digitally wherever you are. And the technology, fintech, capital, distribution, reach and the bank skills married. And that is now gaining momentum.”

It may be recalled that Shyam Srinivasan took charge as the Managing Director & Chief Executive Officer of The Federal Bank Ltd. Under his leadership, the bank has achieved quality growth and is over a US$ 3 billion-dollar company in terms of market capitalisation. He played a major role in kick-starting the Digital Journey of Federal Bank which is now a proven leader in the Non-Resident Indian (NRI) segment dominating the remittance business.

“In a month from now, we are going to launch our first “Neo Bank’, conceived by a smart bunch of people who are looking at branchless banking. So, we are in some form partnering with many of them (Fintech players) and all good banks and institutions will do it. So, they don’t conflict or compete as it just expands the ecosystem.  We have designed 70% of our network in semi-urban areas and are reaching out to them using all the contemporary technologies with 4G/5G. literally ‘Jiofying’ India. Initially Fintech (companies) looked like it will eat into our businesses, but now it is a great enabler for either side.”

Srinivasan is an alumnus of 23rd batch of I.I.M. Calcutta and thereafter completed a Leadership Development Program from the London Business School before entering the world of banking. Prior to joining Federal Bank, he had worked with leading multinational banks in India, Middle East, and South-East Asia. He had also served on the Global Executive Forum (the top 100 executives) of Standard Chartered Bank from 2004 to 2010. Srinivasan is a great believer in technology and is an avid follower of sports, especially Cricket.

A charismatic leader who always exudes youthful energy, Shyam believes that an organization, however successful, is only as strong as its ability to foresee the challenges in the future and act accordingly. For him, ‘MSMEs’ and ‘Startups’ are the next growth frontiers for banks when it comes to corporate lending. Delineating his thoughts further, he maintained, “Every company starts from scratch and it is only now that the term MSME is a new coinage. The issue is do they get access to formal finance from banks or financial institutions and are they getting nurtured?  That is the part that is getting worked on. As more people adapt and as the regulations in the country are there, and the ecosystem in the country is enabling and disciplines are coming in time, we will be the first ones to do lending.”

However, he maintained, “The problem is when we are dealing with public money, we are also obliged to make sure we are lending it responsibly. If the borrower doesn’t have records or financial statements to substantiate, or doesn’t have assets to back it, or records to substantiate that they are a bonafide business, it thinks it will be a misgovernance by banks to lend money for them. As things get more digital and organised, you will see all the support it deserves. Recently you have seen even the startups are considered as priority sector lending. We launched the startup fund about six years back to encourage these new-age companies. In the pandemic-led world, this is going to be a real. “

A true believer in the ‘Dharma’ of Leadership, his unique leadership skill lies in being a signpost to his people. No wonder, when he took charge Federal Bank on 23rd September 2010, he understood the importance of keeping pace with the changing times for the Bank to remain relevant in today’s digitally-empowered India.