Part : 5 – Setting up a Fintech Bank within a Bank (or NBFC) – Learnings from history

Digital Banking is not new, nor is 100% Digital Bank (were called Direct Bank earlier). Last decade has seen many failures and very few successes in fully digital banks. My 2 cents on where they went wrong:

– They spend too much.. Basics of economics is forgotten in building the bank…. Excessive expenses are across all areas including tech, resourcing, working space…

– Lack of focus on legal and compliance (specifically when they are entering new countries)

– Lack of close ties with Parent Bank… which means there is no cross learning as well as no collaboration…  and hence the parent cuts funding for loss making subsidiary…

– Lack of focus on time… Either they rush or they go slow… Rush results in mistakes and slow movement burns cash…

Will this rush to setting up Digital Bank be any different? What are your thoughts?

More details in next part…

 

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