Given the changing dynamics in domestic remittance business, Federal Bank is looking to reap benefits from the multifold increase in ticket size in the last few years.

According to Federal Bank Managing Director and CEO Shyam Srinivasan, the size of domestic remittances business is approximately ₹1,00,000 crore, and remittances from Kerala to other States are around ₹750 crore.

“This is a huge market for us,” Srinivasan told businessline.

In India, intra-State remittances are increasing, reflecting the changing nature of migration, he said.

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“We command almost 21 per cent of the remittance business in India. We have the single-most active customer base, lending traction to our top-line growth,” he added.

In the late 1980s and 90s, remittances was a small-ticket but high-volume business. However, the ticket size has grown manifold in the last couple of decades and the bank is reaping the early bird advantage.

Flow of remittances towards the eastern part of the country is growing fast along with northern India. Over the next few years, one will see dynamics of internal remittances changing, he observed.

“I believe the current fintech revolution resembles our tryst with the NRI business. Majority of our customers are mainly small-ticket now and in the early part of their careers. They will all mature in next few years and would do similar to what NRI customers did for us a few years back. I strongly believe that the next phase of our growth will come from fintech,” Srinivasan said.

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“We have become the partner bank for all leading fintech players in India. Fintech is not only about money, but also about the client base as well as volume,” he said.

For the major banks, fintech may not be attractive now.

“Banks of our size can engage with fintechs, but it would require at least 4-5 years to get a head-start. Compared to players smaller than us, we are more attractive to them, since we have a larger customer base,” he said.

On competition, he said the market is huge and growing and, thus, there is space for everybody. 

“We, however, enjoy the early bird advantage since we have been in the domain for 3-4 years,” he said.

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Srinivasan said the bank is seeing a broad-based growth in credit off-take, especially in the industries segment.

The growth is coming from promising sectors such as renewables, infrastructure and alternate energy services. The digital ecosystem and digital public infrastructure also look good, he said.

However, exports related services may have some challenges due to the external situation, while industries serving in India are promising, he observed.

On investment plans in the fintech space, he said the bank has already made investments in 300-400 APIs.

Fintechs’ normally have technology-enabled products. They can develop a customer base but they need a banking platform like CBS or credit card system to provide their services.