03 Nov Small finance banks and Fintechs
Posted at 04:21h
in Insights
Merging a fintech, which has agility and digital in mind, with banks which are used to hierarchy in everything they do, won’t solve for financial inclusion
November 03, 2023 / 09:55 AM IST
A merger between SFBs and fintechs may not work out due to culture differences
Highlights:
Payment banks have not been successful in being profitable or even sustainable
UPI has made payments banks’ model somewhat obsolete and irrelevant
Small finance banks have struggled to scale up and raise cheap public deposits
Profitability has been a challenge for SFBs
A merger between SFBs and fintechs may not work out due to culture differences
In 2014, the RBI established two specialised banking licenses with specific purposes: small finance banks (SFBs) and payment banks. SFBs aimed to enhance financial inclusion by offering savings…