Imayan Digital

How to Choose the Perfect Fintech Partner for Your NBFC

Muthukkumaran K | September 16, 2023

Fintech Partnerships

As a Bank or an NBFC Lender, you can leverage the power of financial technology to solve problems across your lending value chain and derive benefit through digital transformation. In this concise guide, we explore crucial factors for choosing the ideal fintech partners.

Prioritizing Value Chain Challenges

Analyze your key value creating activities - reaching prospective borrowers, applications, KYC, underwriting, disbursements, customer service and debt collections. Don't forget support functions - finance, HR, administration, partner relations and more.

Prioritize areas based on the potential benefits of solving.

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Workshop-Driven Problem Statements

Conduct internal workshops with each department led by external fintech experts. Apart from having external environment inputs, this ensures internal senior executive involvement and thoughtful contributions, preventing random inputs.

Further fosters ownership, reduces resistance to change, as employees support and actively engage in solving issues that they identified.

Critical Step: Estimating Benefits

It is important to use these workshops and specific follow-up meetings, if required, to quantify the impact of solving each issue identified.

This guides prioritization and serves as a yardstick for measuring transformation success.

Scouting the Right Fintech Solutions

To achieve timely and successful transformation with tangible benefits, NBFCs must identify fintech startups closely aligned with their specific needs.

While impressive presentations and demos are common in the fintech space, involving a fintech consultant can help objectively pinpoint startups that have fewer gaps with the NBFC's identified requirements.

Where to Discover Fintech Gems

Explore multiple avenues to search for a fitting fintech startup:

  • Fintech Conferences and Awards: Such as the Global Fintech Festival (GFF2023)
  • Startup Databases: Online startup databases offer easy searching
  • Accelerators & Incubators: Can be a source of affordable early solutions
  • Hackathons, Government & Education Networks: Could be useful for more custom solutions.
  • Angel & VC Communities:Access to fintechs in their network.

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Evaluating Fintech Startups: Key Considerations

  • Relevance to Problem Statement: Demos and discussions with multiple stakeholders.
  • Technology Maturity: Review technical documentation and roadmap.
  • Vintage: Balance innovation vs industry knowledge. Review client case studies
  • Client Testimonials: Request references and understand the real-world impact
  • Founding Team: Evaluate the founders' backgrounds, and track record
  • Backing by VCs or Others: Investigate the track record of the investors, if any

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Embrace Disruption: Avoid Overly Strict Filters

Look for innovative approaches that can provide your NBFC with a competitive advantage

Keep in mind that only 30% to 40% of POCs attempted may succeed, so it's important to test promising solutions before making a final decision

Crafting a Robust POC Design

  • Use a Proof of Concept (POC) to test newer solutions or to assess proven solutions in a different context.
  • To avoid back-and-forths/re-pilots, the Definition of Experiment (DOE) for the POC should incorporate clear KPIs, success criteria, timelines, resource allocation, a data collection plan, risk assessment, stakeholder roles, a communication plan, review cadence, and exit criteria.
  • Establish cost-sharing commercials to expedite decision making, fostering collaboration and commitment.

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Building Strong Relationships

Successful partnerships thrive on strong relationships. Regularly assess progress, address challenges, and nurture the partnership for maximum value.

It's equally vital to be an attractive destination for new startups. Celebrate successful partnerships, showcase case-studies on your digital channels, and create transparent avenues for startups to onboard for POC.

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Conclusion

Congratulations! You now have a framework for selecting fintech startups for partnerships to solve your NBFC's problems.

The Author, Muthukkumaran K, is the Founder and Managing Partner at Imayan Digital LLP. Muthu comes with 13+ years of corporate experience and has successfully led Fintech projects for a leading Bank and an NBFC.

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