Blame it on the tough investment climate for deal closures or the high growth opportunity that entrepreneurship presents, the number of finance professionals taking up roles outside of their forte and also, setting out on an entrepreneurial journey, is staggering.
Investment and banking being their core strength, most of these professionals are launching financial technology products. Fin-tech companies, as they are popularly called, primarily herald the debut of finance products in digital format delivered to the consumer through innovation and technology.
Vineet Toshniwal, managing director, Equirus Capital, who quit the investment banking firm after a decade said he is looking to go live with a fin-tech offering in a week. Toshniwal said his company will target retail customers by offering them unique products by leveraging the Unique Identification Authority of India (Aadhar).
Another investment banker with over a decade of experience, Deepak Jain also quit financial services company Axis Capital to co-found FlexiLoans, a technology based online financing platform to solve the problems that small businesses face in accessing quick, flexible and adequate funds for growing their business.
The list also includes finance professional from the Reserve Bank of India taking up roles in the fin-tech space. Mobile wallet and e-commerce firm One97 Communications Ltd, for instance, recently appointed Shinjini Kumar, a former RBI executive as the CEO of its payments bank.
That so many top executives from investment banks are quitting in succession may be surprising but many of them entering the fin-tech sector is not. Fin-tech business demands solid understanding of financial services space, along with innovative application of technology to solve adoption level, while complying with the Reserve Bank of India’s stipulations.
For investment bankers, years of experience with the traditional financial services gives them an edge in the nascent industry. The fact that the central bank also promised a legal framework for them to operate, only helps them further.
Their existing relationship with venture capitalists and private equity firms, too, make it easier for them to raise capital and to take-on the brick-and-mortar financial institutions from the word go.
Some of the emerging fin-tech sectors include payments, mobile-wallets, trading and investing, online non-banking finance companies, customer engagement, personal financial planning and wealth management, banking and insurance, P2P lending and crowdfunding.
The fast emergence of fin-tech companies has challenged established financial institutions such as HDFC Bank forcing them to innovate or partner with them to roll out products. Last year, HDFC Bank partnered with Mumbai-based Chillr, a mobile app which allows users to instantly transfer money to any contact in their phone book.
The sunrise sector has a lot of scope for financial innovation. While, finance is riding the entrepreneurship wave, you need experienced bankers at the helm.
(Bruhadeeswaran R is Special Correspondent at News Corp VCCircle.)
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