Bet big on fintech | Chennai News

Chennai has a long history in banking, insurance, non-banking finance and even interest funds. Madras Bank, later merged with SBI, was established in 1682. Madras Urban Cooperative Bank, India’s first cooperative bank, was established in 1906. The country’s first private mutual fund was launched in the city in 1993.

The city is a competitive hub for technology and several IT specializations have established themselves in the BFSI services sector. But when it comes to combining finance and technology, Chennai lags behind Mumbai and even the emerging GIFT City in Gujarat.

“Chennai offers a fantastic ecosystem for fintech. It is home to some pioneering banks and NBFCs and has always had a strong technology talent pool in BFSI,” says Venkat Subramanyam, founder of Veda Corporate Advisors, a leading investment bank. “This fusion of financial and technological expertise should ideally place Chennai at the forefront of fintech action. We hope to see more successes in the future,” he adds.

As a first step, in November 2021, the state government unveiled a unique FinTech Policy. Its main objective is to develop infrastructure to attract next-generation fintech companies.

“The financial services space is changing rapidly. Banks like IDFC First Bank and JP Morgan increasingly see themselves as technology companies with a banking license,” says Ramkumar Ramamoorthy, partner at Catalincs, a technology growth consultancy.

“Similarly, born-digital companies like Google and Alibaba, also called techfin companies, are interested in financial services in a big way. The distinction between traditional financial services players, NBFCs, fintech companies and techfin companies will gradually blur and we will see increasing collaboration and cross-pollination,” he adds.

“Knowing this, TN’s fintech policy covers all categories of financial services companies that use technology as a business platform, as well as those that are building the technology platform ecosystem,” says Ramamoorthy.

“I expect not only Tamil Nadu fintech unicorns like Yubi (formerly CredAvenue) to multiply, but also established financial services players, ecosystem and platform builders like M2P Fintech and Kaleidofin, infrastructure providers like FSS and incubators like FinBlue – play a significant role in technology-enabled financial services,” he adds.

Last January, TN launched FinTech City, a project spread across 56 acres, which will offer built-up plots for financial institutions to set up base, with commercial and residential spaces. It will also have a FinTech tower with 5.6 lakh sq ft of space developed for fintech startups and BFSI companies.

“The state government is a little late with the focus on fintech. No one marketed or talked much about FinTech City. They could have identified and built smaller infrastructure instead of waiting for the larger project. If they wait for construction to be completed, they will miss the bus,” says TR Suresh, general partner at July Ventures, a venture capital fund.

“Chennai has the technology and knowledge base for this sector and is already the capital of SaaS. But financial services are highly regularized. If institutions already performing key functions join hands with innovation-focused companies, the products will be perfect in terms of compliance,” says Suresh.

“It’s not too late to develop anything, especially infrastructure. Unlike other states, FinTech City is coming up well within city limits and in line with the upcoming metro rail corridor,” says Sandeep Nanduri, managing director of state-owned Tidco, which is promoting the project.

“We are developing it in two phases to offer infrastructure support to enable the growth of fintech companies. While the FinTech Tower is under construction, we are also offering built-up plots for auction for financial institutions (FIs) to establish their bases,” he says.

Two lots were recently auctioned and two FIs bid to win them. Since the Model Code of Conduct is in force, formal agreements will be signed after the first week of June.

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