Why it’s crucial for a fintech startup’s founding team to have banking know-how

This article is from two episodes on Matrix Moments by Matrix Partners India, a podcast featuring candid conversations on what it really takes to survive the startup world. This is heavily revised from the original show transcripts. For the full interview, go here and here. 

We sat down with Rajeev Ahuja, executive director at India-based RBL Bank, where he spearheaded the institution’s financial technology initiatives. Ahuja has 30 years of experience in banking and financial services at companies like Citigroup and Deutsche Bank.

In this interview, he shares how he discovered and evangelized fintech at RBL, as well as his advice for fintech startup founders.

How did you and the bank discover fintech?

In 2010, we wanted to modernize the bank, but the emphasis on technology as a big driver of creating new businesses wasn’t just in our realm. We always viewed technology as a core support function.

In 2013 or 2014, we started building our branch network and found that we would never be able to make a dent by just following the playbook of the more successful institutions in the private sector. Something had to fundamentally change. Our own brand and the consistency in our services were also yet to be established.

We had a couple of members on the board and some friends who were deeply engaged with the tech space. I reached out to them and they said, “Just see what’s happening around you. Don’t do anything heroic. Just go and learn.” We spent about six to 12 months in Bangalore just meeting venture capitalists and startups, hearing things out as to what these guys were trying to do and the challenges they’re seeing.

This ability to listen to people, absorb, and mull it over gave us insights, though it was damn confusing to me at first. But I finally understood what API is in the tech world. We realized that what’s happening in the consumer world will ultimately happen in the world of small and large businesses. It’s just a matter of time. So we started dabbling in developing our own API.

How did you introduce fintech to your team?

I used to bring a script with me that my tech guy made, along with a diagram of what APIs are. When you sit with some VCs and young companies, you’ll be like a fuddy-duddy banker in a suit. But when you start talking about fintech, suddenly eyes light up.

It took us a while to convince our own people. In 2014, we got some people to talk to our teams and the senior management. We said, “Look, we’ll struggle to understand this, but let’s start grappling with it because this is going to be a big driver of our future.”

I think we were a little bit perturbed because of the enormous money the larger players were pumping into the market, and there was this neighbor’s envy. We were a young bank being cajoled and coxed to set up a digital-first institution. We didn’t have the money. Our cap structures were not conducive to lose money to create a market. But we said let’s keep learning.

One of the things I recognized having spent 30-odd years in conventional organizations is that business models and strategies and what you intend to do is a very long-term game. And India is not the kind of market where you can easily make it big and quick and keep it sustainable. So we started reordering our entire business around tech being the core anchor.

We also realized that we’ll never get there on our own, so we partnered with people who are equally hungry. And this partnership mindset has carried us beyond technology to this day. Our credit card franchise, our merchant franchise, etc. are totally anchored on partners.

How do you evaluate partners and what is your advice for fintech founders?