Rajeev Ahuja, Govt Director at RBL Bank, has a profession spanning 30 years throughout banking and monetary providers, together with Citibank and Deutsche Bank. He was instrumental in reworking Ratnakar Bank into RBL Bank. He has spearheaded the fintech initiative at RBL and made it among the best companions for many fintechs.
“In 2010, we had so many priorities – to modernise the bank in many areas. But our emphasis on technology as a big anchor and driver of new business was not even in our realm. We always viewed technology as a core support function,” says Rajeev.
He explains, they didn’t have this epiphany that expertise could possibly be the best way to drive issues. Nevertheless, in 2013-14, this modified because the bank began constructing its department community and retail. It came upon that by simply following the playbook of profitable establishments within the non-public sector, they may by no means be capable to make a dent.
The necessity for a change
Rajeev says, one thing had basically modified, they usually had been but to determine their model and be constant of their product providers. It was a like an inner problem and drive about what was occurring.
“And then you see announcements of significant investments by Matrix Partners or global companies in payment products and services and ecommerce, and you just wonder what’s really happening,” he provides.
On the similar time, there have been individuals on the board who had been deeply engaged within the tech area, and Rajeev reached out to them. The tech leaders within the area recommended that the workforce ought to be taught what was occurring round. Rajeev explains, they spent two days each week for six to 12 months in Bengaluru assembly VCs and startups.
“We focussed on hearing things out as to what these guys were trying to do and what was the big agenda they had, and the challenges they were seeing,” he says. This gave us a broad image of what was forming, he provides.
It additionally gave them some insights that there was an actual change in the best way clients had been approaching monetary providers, and the way companies will strategy monetary providers in future.
“I don’t think we got it right the first time. But this ability to actually listen to people, absorb, and mull over it was damn confusing initially.”
“We were lucky because we as a bank built our technology in 2012-13. But then we had to unlearn everything and I understood how an API works,” says Rajeev.
He explains they began peddling on their API engines and put it on a developer platform, and that introduced them plenty of insights.
Learnings from the dotcom period
“I used to be a tech banker in ALEX BROWN in Asia, and this was the first dotcom era. Sometimes, when you have been through that painful process, the aftermath of the dotcom, you tend to disbelieve anything happening around,” says Rajeev.
Whereas his earlier expertise did go away him cautious, Rajeev says he’s a chastened particular person at this time.
However he nonetheless believes that one must be cautious whereas utilizing enterprise models and journeys of nations just like the US and China as they’ve very completely different beginning factors and really completely different legacy developments.
“I think in India we have tried to crash almost like 15 – 20 years of history in three years. It happened in ‘99 to 2001 in India. But the interesting thing is online consumption and the consumption of modern services has been growing. I think it’s just the business model to what you build, what you avoid and how you make money that matters eventually,” explains Rajeev.
Along with his learnings and expertise, he says whereas he doesn’t notably just like the phrase ‘fintech’, he likes the philosophy of fintech.
The rising want for fintech
“The space for financial services companies is enormous. You think about merchants where you have Mswipe and we bank them. And those markets are so underserved by the large institutions. How many large institutions do you have in the country in the banking space? I think NBFCs are marvelous because they bring focus, access to capital and services for customers who are not yet in the scale zone of large banks,” says Rajeev.
He provides it’s a nice benefit typically in not being so steeped in conventional banking or conventional lending as a result of these have by no means been buyer centric. He says simply being purely tech oriented is sufficient.
“A few of these founders have a really eager eye on client expertise, and what clients really need. Typically, we’re simply papering over issues which we have now inherited 20 years in the past and making modifications to that. So I feel it is a good time to start out with base zero.”
“However you could add expertise quickly in your workforce. See if there may be any person with assortment expertise, threat administration expertise, and any person who has seen cycles of credit score,” added Rajeev.
He says what worries him within the lending enterprise just isn’t solely how the fintech startups undertaking a development of 30, 50, 70 %, it’s also when you’ve a big chunk of fairness, the true economics of your small business are examined.
“What you need to do is build these capabilities very early on. And if you do that right, I think you have the chance of actually building out a much healthy business because there will be cycles of credit,” says Rajeev.
Have you ever seen a credit score cycle?
Rajeev says, the logic most fintech startups observe is – if of the 100 million households they get 10 % to maneuver on-line it will likely be a giant market.
“But the problem is all of this works in step functions, which means you have to step down and up at different parts, especially in the lending market. The problem happens when you have 15 players providing small value consumer lending on an app and they don’t meet the borrower. They are lending below Rs 50,000 to Rs 60,000. You are taking income tax, aadhaar, bank, and all, you think you have conquered it. But then the borrowers get so used to the fact that it’s available just like I can order a coffee.”
The rationale this turns into an issue is as a result of many children with 5-10 years of expertise haven’t seen a credit score cycle. They’re simply fortunate as a result of they obtained a job in one of many massive tech companies.
“You put a lot of money at stake with these young founders on financial services. It’s a huge responsibility. It becomes very important to have people who have seen credit cycles. I do think that one of the trends I am seeing is that many experienced people are stepping into this business with 10 – 15 years of having done the hard work. To me, that’s a great start because my firm belief is there is nothing called fin, there is nothing called tech,” says Rajeev.
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