New bank bridge builders are creating a level playing field


In September, Equitas Small Finance Bank redesigned a banking product that had not changed in decades: the term deposit.

Traditionally, opening a fixed deposit involved going to a bank, filling out tons of paperwork to open an account, then choosing how much money you wanted to hold and for how long.

Equitas has eliminated almost all of that. Instead, users simply need to open the Google Pay app (now GPay), fill in a few details, transfer the amount they wish to deposit, and voila! The whole process takes less than two minutes. At the end of the deposit term, the principal and accrued interest are transferred directly to the user’s bank account.

For Equitas, this digital fixed deposit offering helps overcome the inertia felt by most users when it comes to changing banks or even selecting a banking product. GPay, meanwhile, is already India’s second most popular payment platform. By partnering with Equitas, it hopes to become more anchored in the financial lives of its users.

This partnership, however, would not be complete without a third actor—

application programming interface (API)

application programming interface (API)

Simply put, APIs allow a set of products or services to communicate with others. In this way, they open up data and functionality to other developers and other businesses.

Setu supplier. The underlying infrastructure that enables the whole process was built by Setu. According to a senior executive at Setu, the company has acknowledged that there are no legal requirements preventing banks from digitizing the term deposit process. Setu pitched the idea to Equitas, then spent a whole year developing his technological capabilities.

Modern APIs have been around for over two decades now. However, the increase in digital financial activity due to online payments, digital lending and the emergence of neobanks has placed technology at the center of digital banking and how customers interact with their finances.

One way to look at this growth is to think of API makers like Setu from the same point of view as companies that build roads and bridges. If the number of vehicles using a bridge increases, the company that collects the toll makes windfall gains. Likewise, as APIs gain in importance and usefulness, revenues flow in. And where there is revenue growth, investors are not far behind.

IInvestors are betting that as digital banking and online financial services platforms grow, they will explore new ways to engage and monetize their customers. This should benefit those who run the rails of monetization, said a financial services analyst at a global investment bank. The Ken. He added that this is part of the reason the API fintech space has seen such a trading frenzy in recent months.

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