Federal Bank sees multiple opportunities in fintech tie-ups

With active support from its fintech partners Fi and Jupiter, Federal Bank is able to open 13,000-14,000 savings accounts per day — more than three times the figure done through organic sourcing.

The Kerala-based lender believes that rather than competition, collaboration with fintechs will create the best experience for customers, and provide opportunities to cross-sell and up-sell.

Shalini Warrier, executive director of Federal Bank, told FE that fintechs are agile and nimble and are equipped with the latest technology. They can provide the best of hyper-personalised customer experience with the use of artificial intelligence, machine learning and other modern technologies.

“We currently have multiple live fintech partnerships in areas as diverse as savings accounts, gold loans, credit cards, personal loans, person-to-merchant payments, microfinance, digitisation of the rural economy and so on. We are also exploring options in areas such as current accounts, non-resident accounts. These options are in the early stages of evaluation and subject to ensuring all regulatory requirements can be met, we would take these discussions forward,” she said.

“We have been investing in technology year on year and this trend will continue. Digital and fintech partnerships are having enhanced focus in our strategy for 2025 and we have budgeted higher spends for partnerships and digital growth,”she added.

The bank has added only 46 branches in the last five years out of a total of 1293 and subscribes to the mantra, ‘branch light-distribution heavy’.It has been expanding distribution reach beyond branches and has over 1,000 relationship managers.

Regarding the customers acquired through the fintech route, Warrier said on an average they are below 30 years of age — mostly salaried millennials.

“These are customers who are literally born with a mobile phone in their hands. They are primarily from tier-I and -II geographies. They enjoy the ease and convenience of digital banking, and they tend to avoid physical, in-branch interactions. They are transactionally quite intensive and use capabilities like UPI, e-commerce etc quite extensively,” she added.

The Covid-19 pandemic has triggered a major shift to digital transactions across the financial services industry, and the share of digital transactions has crossed the 90%-mark for the bank. Warrier pointed out that the characteristic of activities at the branches has changed. “We now see more customers coming in for advisory and non-financial transactions, that require assistance from our staff for execution. Digital will continue to rule financial transactions, in our view,” she added.

Federal Bank reported a  29% year-on-year (y-o-y) increase in standalone net profit for Q3 of FY22 to Rs  521.73 crore largely due to a reduction in provisions.

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