As a banker who has witnessed the evolving financial industry, I feel India’s own UPI revolution captures this shift. With transaction volumes touching 20.7 billion and accounting for over 85% of the country’s digital payment flows, UPI has become the real-time barometer of consumer intent in India. Its success was not the triumph of one institution over another—it was the result of banks, fintechs, technology players, and regulators building a common infrastructure for the greater good. UPI demonstrates how collaborative architecture can unlock scale that no single player could achieve alone. As UPI spreads its wings beyond borders, such collaborations are soaring to new heights.
Customer expectations keep evolving, and winners in the service industry are those who keep up with them with agility. And today’s consumer has indulged in the convenience of seamless e-commerce and embedded payments. It would be difficult to shift them back to anything that is even slightly detoured.
Thus, the POV of viewing new entrants as threats, where the narrative previously was disruptors versus dinosaurs, has completely turned on its head. The fintech advantage is customer experience, hyper-personalisation and agility.
The obsessive focus on customer happiness, coupled with organisational agility and advanced tech capabilities that banks struggle to match internally, is what makes partnerships with new-age companies compelling. Banks possess something invaluable that can’t be replicated overnight: regulatory expertise, deep capital reserves, and intricate knowledge of risk management. Tech giants offer unprecedented scale, advanced AI capabilities, cloud infrastructure, and ecosystems of billions of users. This is where the value exchange becomes tangible. It is like putting capital to work in a different business model.
The success of Federal Bank’s fintech partnership model lies in the concept of approaching partnerships through the lens of co-creation and collaboration, rather than competition, and in leveraging each other’s strengths.
Of course, challenges exist
Data privacy and security are inherently complex, cultural differences can create friction, and clear accountability is essential.
Regulatory rigour isn’t a constraint on collaboration—it’s the foundation that makes sustainable partnerships possible. Evolving guidelines on digital lending, outsourcing arrangements, and partnerships have created clarity that enables rather than inhibits innovation. When we structure partnerships, regulatory mapping comes first. We ask: Who holds the customer relationship? Who bears credit risk? How is data shared and protected? Where does regulatory accountability ultimately rest?
This disciplined approach has proven essential. This isn’t about banks outsourcing innovation while remaining static. The learning flows both ways. Our teams absorb agile methodologies, customer-centric design thinking, and data-driven decision-making from our fintech partners. These capabilities gradually diffuse through our organisation, making us more responsive even in our core operations.
Strong inroads already made
The partnership revolution in Indian banking isn’t hypothetical—it’s already transforming the landscape in measurable ways.
Consider lending partnerships: co-lending models now serve millions of MSME borrowers and individual customers who were previously outside formal credit systems. Banks provide capital at competitive rates; fintech partners provide underwriting technology using alternative data, seamless digital onboarding, and collection platforms.
In payments and merchant acquisition, collaborations between banks and fintech aggregators have brought digital payment acceptance to even small merchants across tier-3 and tier-4 cities. QR code-based solutions, developed collaboratively, now facilitate transactions for vendors who couldn’t afford traditional point-of-sale terminals.
Banks embracing innovation, even if collaborative, is a cultural shift and a core capability rather than a peripheral activity.
A new innovative model currently in development is digital data aggregators, which are being supported by the government. This initiative aims to empower small businesses by transforming their digital transaction data into actionable insights, such as enhancing access to credit. It’s my strong belief that only those institutions that develop partnership capabilities as a core competency with the ability to identify complementary partners, structure win-win agreements, integrate technically at speed, and manage complex multi-party relationships while maintaining regulatory excellence will thrive. This is fundamentally different from the competitive capabilities that defined banking success.