Decoding Federal Bank’s bet on full-stack lending play

For the past four years, the story in financial services has been all about the relentless rise of fintechs. And how it has shaken old-fashioned Indian banks, which must keep up with the times or risk losing more customers.

Nowhere has this upheaval been more visible than in the credit business, which is packed with new companies signing up would-be borrowers at a record pace.

But some banks are now flipping the script. Instead of just following such companies’ example, they are trying to take the lead in building comprehensive tech for lending and inviting players in the space to tap it. The players could be traditional non-banking financial companies, or NBFCs, and even fintechs with a virtual storefront but no back-end functionalities to process loan applications.

Kochi-headquartered Federal Bank has created a full-stack API platform that others can use to serve borrowers. Broadly, this is software that carries out a number of processes necessary for loan disbursals, from client verification to underwriting. 

The CapTable understands that Federal plans to pitch ‘Digital Credit 1.0.0’, currently in the testing phase, on debt marketplaces and directly to potential co-lending partners.