In mid-2017, B Madhivanan, the chief technology and digital officer of ICICI Bank, met Rohan Angrish, the chief technology officer of online lender Capital Float. Madhivanan had questions about online lenders’ small-ticket loans. Fintechs like Capital Float lend to underserved segments like kirana stores that banks don’t normally touch. Madhivanan wanted to know more about how technology can help banks reach these segments, and how these segments will evolve. But he didn’t just have questions. He had a proposition. “That conversation then grew to whether I can build what fintechs build within the bank,” recounts 39-year-old Angrish, a computer science graduate from Stanford University with about 16 years of experience in building products.

This approach fits in with the beliefs of Chanda Kochhar, the MD and CEO of ICICI Bank, who stated, “Whatever fintechs can do, we can do too.” A year ago, the bank got its board’s approval to either partner with startups or even take the unconventional route of building financial technology internally. Angrish was the missing piece of this puzzle. ICICI Bank has now launched ICICI Labs, which will be helmed by Angrish and is aimed at building technology for ICICI Bank that will allow the bank to compete with fintechs. In addition, it will also foster collaboration between the bank and fintechs.

This venture didn’t emerge out of the blue. It was spurred on by the hitherto untapped potential that Indian fintech ecosystem has managed to unlock. The transaction value for the Indian fintech sector was approximately $33 billion in 2016, according to a Nasscom-KPMG report. By 2020, this is slated to more than double to $73 billion. With India offering the highest return on fintech investments at 29% compared to a global average of 20%, banks like ICICI are realising that the fintech space is something they cannot afford to ignore. And ICICI Bank is hoping to be an early mover.

Brave new world

Banks collaborating with fintechs isn’t new. But ICICI Labs marks the first time in India that a bank wants to build digital products from the ground up. Traditionally, everything tech in a bank, like the core banking software, has been bought from the likes of Infosys, Tata Consultancy Services, Oracle, and thereafter maintained by an internal team. This approach has meant that tech in banking is dated, with digital innovation largely non-existent, save for an app here or a feature there. Still, users have readily lapped up any digital offerings by banks. During a recent investor presentation, HDFC Bank revealed that 85% of its customers did their banking transactions via the internet and mobile phones. For ICICI Bank, about 82% of its savings bank transactions are digital.

But users want more. So, when fintech companies adopted new ways – wallets and Unified Payments Interface – to pay, users flocked to them.


Arundhati Ramanathan

Arundhati is Bengaluru-based. She is interested in how people use money in the digital age and how new economies will take shape based on that interaction. She has spent over 10 years reporting and writing on various subjects. Previous stints were at Mint, Outlook Business and Reuters.

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