Union Bank plans tie-ups with fintechs for sourcing retail loans

Union Bank of India is planning tie-ups with financial technology (fintech) companies to source leads for retail loans.

Speaking to BusinessLine during his visit to Mangaluru recently, Rajkiran Rai G, Managing Director and CEO of the bank, said that sourcing of retail loans is now driven by the branches and the marketing wing.

Stating that a number of fintech companies generate the lead and pass it on to the banking system, he said the bank is planning to source the applications from fintech companies.

“We have started it on a trial basis. We want to go in a big way within two months. My target is to source at least 50 per cent of my retail loans from fintech companies. We are going to tie up with fintech companies,” he said.

Explaining the rationale behind this, Rai said more and more customers are applying for retail loans through the websites of fintech companies instead of going to the banks. “I need to have a tie-up with these fintech companies so that I get the leads,” he said.

To a query on the cost involved in such a process, Rai said there is a small fee which has to be paid. But it is much cheaper than using the services of marketing officers. The bank will go for tie-ups with fintech companies instead of increasing the number of marketing officers. When the volume of such leads increases, the cost becomes much lower.

Asked if the bank is planning to replicate this model for any other kind of loans, Rai said he has this idea for MSME (micro, small and medium enterprise) loans also. He said that most of the non-banking finance companies are using fintech companies for sourcing MSME leads.

Before sourcing leads from fintech companies, the bank needs to strengthen its delivery system. The processing and sanctioning of loans have to be much faster and quicker. The bank is working on this, he said.

“Once my delivery system is stable and once the leads start coming in, I need to dispose of those. That is why I am on the way to stabilising and strengthening my loan sanctioning and processing system. Once that stabilises I will go for tie-ups. That will increase my lead generation manifold and the range of customers to choose from,” he said.

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