India decided to do away with over 80 percent of its currency in circulation overnight. The move, almost brought the country’s economic machinery to a grinding halt as people flocked to the banks and post offices to exchange their old high-value banknotes for new ones. As experts debate about its potential impact on the country’s economy, Indian banking institutions have decided to upgrade their operations and infrastructure to match present day requirements.
According to a leading Indian business daily, there has been an increase in collaboration between banking institutions and fintech companies since the demonetization announcement. Banks have been wary of fintech and cryptocurrency startups in the country so far. Considered as competition, the fintech industry had to cut through a lot of red tape to gain an audience with banks. But not anymore, as the banks are now forced to work in cooperation with these very companies to keep both the government and its customers happy.
The newspaper, in its report, quotes Sashank Rishyasringa — cofounder of an alternative lending startup Capital Float saying,
“It has been said that banks consider fintech startups to be competitors and disruptors. But through a partnership like this, the bank gets access to new customer segments and innovative products, while it gives us access to the balance sheet and the experience that a bank such as IDFC has.”
Capital Float is one of the startups that recently entered into a partnership with IDFC Bank. These partnerships are driven by the government’s push for digital currency and online payments amidst short supply of new replacement high-value currency notes. Some of the other banking institutions actively collaborating with fintech startups in the region include Yes Bank and RBL Bank.
The collaborative efforts go beyond banking and fintech sector. Recently, one of the largest Indian conglomerates, Mahindra and Mahindra entered into a partnership with IBM to develop blockchain solutions for supply chain management.
The government’s demonetization move has also increased interest in Bitcoin among Indians. The country’s leading Bitcoin exchanges have seen a spike in demand, leading to a price difference of over $200 at one time between the Indian and International markets.
Ref: Economic Times | Image: NewsBTC