homemarket Newsstocks NewsCan banks tackle challenges posed by fintech cos? Credit Suisse's Ashish Gupta explains
market | Mar 23, 2022 1:31 PM IST

Can banks tackle challenges posed by fintech cos? Credit Suisse's Ashish Gupta explains


Ashish Gupta of Credit Suisse tells CNBC-TV18 that in his view, fintech companies will best operate in a partnership model and are changing the paradigm for the way financial services operate.

Fintech companies will change the way customers interact with a bank, Ashish Gupta of Credit Suisse said in an interview with CNBC-TV18. These companies are "undoubtedly changing the paradigm on how various financial service providers work and operate", he said.

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"We have to be cognizant about the role they can play, and particularly the regulatory framework that allows them to operate. We believe fintech will probably best operate in a partnership model with many of the incumbents and actually provide as much as an opportunity to a lot of incumbents," Gupta said.
His remarks come at a time when fintech companies are disrupting the financial space dominated by large banks and non-banking financial services (NBFCs). He believes that the banking sector is well placed to meet the potential challenges posed by fintech.
"In the near term, all these macro concerns are basically a slightly positive for credit growth. You see higher inflation means higher nominal inventory costs, leading to higher credit demand from corporates. So if we talk about a 2-3 month view, you will not see double-digit credit growth and we are still expecting March to be in double digits," he said.
Gupta, however, expects potential pricing pressure in the insurance space.
In terms of market share and distribution channels, LIC and its private sector peers are "very distinct", he said. LIC has its own captive agency channel but its non-participating segment, which has been the key driver of the state-run insurer's VNB (value of the new business) margin, is likely to impact private insurers. VNB margin is a key metric of profitability for insurers.
"You will see a pricing pressure come in at a time when the reinsurance costs are going up. We definitely think the demutualisation will have an impact on the private insurer’s margins, and the VNB growth they have been reporting for the last three years may not sustain," he added.
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