Fintech Insider Podcast by 11:FS
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.
00:47:33 · Ross Gallagher, Pranav Sood, Valentina Kristensen, Sarah Kocianski
[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. [00:47:39] S2: Yeah. And and in fact, the laws on foreign direct investment are quite strict. So it's hard for people to kind of come in and do that from the outside. I think they made the investment today. The Feet was talking about it being 1,300,000,000 US a few days ago. I think the ticket size was about a quarter of that, if I've read the story right. So I'm sure as Val said, there are going be a ton of questions being asked about corporate governance. And I'm sure there's going be some kind of a lock in period as well to make sure that things turn around in the next three to five years. But as you say, Sarah, the main thing is let's hope that it doesn't drag a whole bunch of other things down with it. And there are I mean, look, there are lots of things going on in India right now in general with the geopolitical situation, with what's going on in Kashmir and all the rest of it. I think it would be a hopeful and optimistic interpretation to think that fixing this particular thing is is top of the list of things that Narendra Modi is waking up in the morning and [00:48:33] S0: and wanting [00:48:33] S3: to do. [00:48:33] S1: Very fair point. He probably has an an awful lot else on his plate right now.
00:48:33 · Sarah Kocianski, Ross Gallagher, Pranav Sood
[00:48:33] S1: Very fair point. He probably has an an awful lot else on his plate right now. [00:48:37] S0: And and and I think a lot of the the questions that these guys are gonna have to answer moving forward do speak to governance and ops and all of that sort of stuff. It seems they also just have some systemic issues around, like, credit decisioning. It seems the proportion of bad loans in their loan book was disproportionately high. That was then underreported. So I think this was an accident waiting to happen. I think Sarah you summed up quite nicely the impact on the other fintechs. The one thing that I'm keen that we don't understate obviously then is the impact on the consumer. And I think we actually talked a little bit about the impact on consumer confidence in these types of providers moving forward. The fact that their online and mobile banking just went down, the fact that there was no information forthcoming from the banks themselves to the actual customers. Customers talked about turning up at 8AM to withdraw money even within the limit that have been set at $630 getting there at 8AM and not having any sort of communication or anything like that until 3PM and still just being kind of in in a queue just waiting to that's that's gonna affect consumer confidence. This [00:49:38] S2: is also a country where there was a huge demonetization exercise not that long ago and also where the government has turned off the internet in large parts of the country in response to civil unrest. So again, not a lot of this stuff surprises me.
00:49:38 · Pranav Sood, Sarah Kocianski
[00:49:38] S2: is also a country where there was a huge demonetization exercise not that long ago and also where the government has turned off the internet in large parts of the country in response to civil unrest. So again, not a lot of this stuff surprises me. [00:49:52] S1: It's just to your point as well, just I believe I'm right in saying that a lot of the population of India, the first sort of access to banking systems they've got is through digital services, know, it's one of those countries where the digital revolution has had a huge impact on giving people access to financial services. And I really, really hope, and maybe this is naive of me because I don't understand the bigger picture at all, but this will not prevent that continued growth and that continued attempts by by companies to actually continue extending the accessibility to people who who previously have no other access, particularly, as say, in the wake of demonetization. If you haven't got cash and you haven't got, you know, a digital bank, what have you got?
00:49:52 · Sarah Kocianski, Ross Gallagher
[00:49:52] S1: It's just to your point as well, just I believe I'm right in saying that a lot of the population of India, the first sort of access to banking systems they've got is through digital services, know, it's one of those countries where the digital revolution has had a huge impact on giving people access to financial services. And I really, really hope, and maybe this is naive of me because I don't understand the bigger picture at all, but this will not prevent that continued growth and that continued attempts by by companies to actually continue extending the accessibility to people who who previously have no other access, particularly, as say, in the wake of demonetization. If you haven't got cash and you haven't got, you know, a digital bank, what have you got? [00:50:30] S0: Yeah. And that that human impact, think, is is is is where we should sort of move us on. So our and finally story this week comes from Sky News and concerns Starling becoming the official bank sponsor to Team GB for the the Tokyo Olympics. So the challenger will serve as the British Olympic Association's official banking partner. Starling already employs a former Team GB archer as an executive, which is just kinda cool, and plans to provide each competitor with an account and a £100 credit. So Bowdoin said we feel extremely privileged to be the official bank of Team GB and we'll be sharing our excitement with our customers in a number of creative ways over the next few months. So what do you guys think? Is this something that's sort of mutually beneficial? Does this make sense?