Fintech Insider Podcast by 11:FS
00:41:43 · Sarah Kocianski, Pranav Sood
[00:41:43] S1: I would just... On that note, and it's not really relevant to applying for a license. Although it might be actually. I'd like to see a bit more diversity in their highs. Any more, you know, men who've served at banks, you know, that's not really... If what they are doing is trying to bolster, you know, that that senior suite so that they look a bit more, I don't know, seasoned or respectable Only [00:42:05] S2: one of them worked at Goldman Sachs. [00:42:06] S1: Only one? Oh, right then. Oh, okay.
00:42:06 · Sarah Kocianski, Ross Gallagher
[00:42:06] S1: Only one? Oh, right then. Oh, okay. [00:42:08] S0: But but what we've seen and, you know, I think a lot of the the the more established fintechs now that have had to engage with the regulator and that have since gone on to successfully acquire banking licenses is you need people in your ranks, traditional bankers who are used to engaging with the regulator, who are used to regulator speak. So I think in that sense, I I get it. My only question or my only pushback is, are they a little bit late to the party here? Who knows? TBD. Okay. I am gonna move us on to our next story, which comes from BBC News and concerns Yas Bank in India with their operations being frozen and alarmingly, perhaps, the cofounder being arrested for alleged money laundering. So earlier this month, the Reserve Bank of India took control of the country's fifth largest private bank after it failed to secure a much needed capital injection. The central bank imposed a temporary $630 limit on withdrawals leading to long queues for cash, so no need to be alarmed whatsoever. This had a knock on effect on local fintechs, which Yas Bank supported for QR code payments. A few days later, then the Yas Bank cofounder, Rana Kapoor, was arrested over money laundering allegations. He was also accused of taking money to fund a housing finance company that later went bankrupt. Authorities claim that Kapoor's crimes involved $581,000,000 in funds, So small change. And currently, Yas Bank is working on a revival plan with the State Bank of India. I'm just gonna throw this one out there. This is nuts.
00:43:49 · Valentina Kristensen, Pranav Sood, Sarah Kocianski, Ross Gallagher
[00:43:49] S3: Yeah. It is. Like, I I just... I honestly don't know what to say. I mean, it's it's a problem with how they've been regulated. It's a problem with the corporate governance. It's a problem with the CEO. I mean, it's just like... It's a total disaster. I mean, I'm I'm I'm intrigued to see what kind of recovery plan, they'll come up with, but it's it's just shocking. [00:44:08] S2: To be clear, this isn't a surprise, by the way. So Yes Bank has [00:44:11] S1: Nobody's been in nobody's surprised by this. You've been following Yes Bank. [00:44:14] S2: I mean, it's been in trouble almost since it was founded. So the the whole thing is like an episode of Game of Thrones, the boardroom politics that have been involved almost since the beginning of of this this organisation. [00:44:25] S3: I wish I'd been following it sooner. [00:44:26] S2: It's been a great story, honestly. And even last year, there was a huge decrease in its share price, I think in Q1 when they brought a new CEO in, which is obviously not usually what you hope is gonna happen when you bring someone in to run the organisation. I think, I mean, two things. One is, yes, he's been accused of of lots of heinous crimes. This is also, and I'm speaking as an Indian, it is a country in which nearly 50% of the MPs in our lower house of parliament are accused of accused of crimes as well. So it's perhaps not as unusual as you might expect. [00:44:57] S0: It's almost a done thing.
00:44:57 · Ross Gallagher, Pranav Sood, Sarah Kocianski
[00:44:57] S0: It's almost a done thing. [00:44:58] S2: It's almost a done thing. Yeah, you're in the majority almost. But I think it does bring some quite interesting questions to light. There's been a ton of innovation in the kind of lending space in India in the last couple of years, both from the big tech guys, so Amazon, Xiaomi, Google as well have partnered as well, but also local players too. So Kashy, I think in particular has been quite an interesting one and lots of P2P stuff as well. And I hope that you know, as much as this is a really shocking story, it doesn't detract from the fact that there is a ton of quite exciting stuff going on and that you don't get that sort of tarnishing of everything with the same brush. [00:45:34] S1: To that point, whilst I'm not surprised by what happened with the S Bank because as you say, like a Netflix Netflix series coming soon. What what I hadn't foreseen, perhaps because I haven't been following the story closely enough, was that when it went down, it would take down all these fintechs with it because it's basically a large infrastructure provider. And they, you know, it kind of made sense basically basically what happened was they turned off all Yes Bank systems and that included all its APIs, which meant that everybody that was using the... Oh god, UPI, what does it stand for? [00:46:03] S2: I'll remember.
00:46:03 · Pranav Sood, Sarah Kocianski, Ross Gallagher
[00:46:03] S2: I'll remember. [00:46:06] S1: UPI, which is basically a universal ID system that you use to attach to payments. Basically, those APIs are switched off and so lots of these fintechs were like, well, we all of a sudden we can't do what we're supposed to do. There's a couple of things in that. One is that a lot of the fintechs didn't even know that Yes Bank was involved in that processing because it was hidden within another third party that built on top of them. So when it went down, most fintechs took a while to to work it out. The other thing is that while some of the larger fintechs, I looked one up, but switched in twenty four hours to ICICI. ICICI. It switched in twenty four hours. It it was able to do so because it was very large, had a of money, a lot of funding, can move over very quickly. What concerns me is the smaller fintechs who may not have been able to find a solution. And to your... Exactly to your point that if these infrastructure players go down, you... They'll probably build it back up again. They won't let the bank go bust. They'll find a plan, and it looks like loads of other banks are basically gonna buy shares in it. But what about all those fintechs who were kind of left on the side? And what do we do to protect those fintechs when they're relying on infrastructure from the big guys? [00:47:10] S0: Yeah. And and and, you know, so analysts are sort of saying that it's too big to fail. They're expecting regulators to move quickly to prevent that situation getting worse.
00:47:10 · Ross Gallagher, Pranav Sood, Sarah Kocianski
[00:47:10] S0: Yeah. And and and, you know, so analysts are sort of saying that it's too big to fail. They're expecting regulators to move quickly to prevent that situation getting worse. [00:47:20] S2: I I think this is a live story actually. I think they've actually made the investment today. So just to be clear, State Bank of India is not the State Bank of of India. So it's got its majority owned by the government. [00:47:28] S1: Well, that's not at all. [00:47:30] S2: No. Exactly. It's majority owned by the government. I think it's about 60, 65%. [00:47:33] S0: Yeah. It's the largest... Yeah. The largest state owned. Well, in a in a in a country where I think most of the banks used to be state owned.