Federal Bank is fintechs’ new BFF

The chief executive of a bank recently painted a stark outlook for the industry’s future, underlining the growing competition from plucky fintechs that are eating into its business in small but noticeable ways.

“Banking will always be there, but at some point, banks might not be there anymore,” he said at an internal meeting.

But even as traditional lenders square off with startups in more corners of financial services, from credit to cards, some are reaching across the table to strike curious partnerships. The prime example is Federal Bank, which has emerged as the go-to bank for fintechs.

Ask any entrepreneur operating in the space, or sample this stat: Federal has collaborated with over 50 fintechs. It has, for instance, tied up with BharatPe for payments, Rupeek for asset-based lending, OneCard for credit cards, and epiFi and Jupiter for neobanking.

There have been other fintech-friendly banks. RBL once worked with many payments companies, and even today, it has a strong relationship with MSwipe. New-age firms also turned to Yes Bank for a long time, and PhonePe’s partnership with it is one of the most successful in payments. Federal is now the preferred choice of founders in the space.

But why are legacy financial organisations combining forces with their tech rivals? Quick answer: Keep your friends close and enemies closer.