Indian investment platform Groww is working to launch a neo-banking vertical in collaboration with Federal Bank, Moneycontrol reported citing people familiar with the matter.
“Federal Bank and Groww are in talks, but it will take a few months for any integration to go through considering this is a long process on the technological front,” one of the sources told the publication.
The tie-up will allow Groww customers to open a bank account and will be the third such partnership for Federal Bank.
The Indian private lender operates on a “branch-light, distribution-heavy” model and has already partnered with neobanks such as Jupiter and Fi to expand its digital presence.
Before the Federal Bank can onboard Groww customers it will have to upgrade its internal system.
“It will be interesting to see how Federal Bank will scale up for this new partnership,” the source added.
Groww, which offers access to Indian and US stocks, mutual funds along with the subscription to initial public offerings and fixed deposits, is looking to streamline integration for its customers through the move.
“For a number of use-cases, a bank account is very integral. Say you want to invest in an international stock, the money has to necessarily go from your bank account. A lot of friction can be eliminated if they offer a bank account product,” an industry official was quoted by the publication as saying.
“A bank will have the infrastructure to handle these transactions and they can make the application at the front end very seamless for Groww.”
The fintech started exploring the neobanking space after raising $251m in Series E round in October 2021, which valued it at $3bn.
The Sequoia and Tiger Global-backed firm counts Microsoft CEO Satya Nadella as an investor and advisor.
Like its peers, Groww may form partnerships with multiple banks in the long run for its neobanking arm.
It has already partnered with Equitas Small Finance Bank, Axis Bank, IndusInd Bank and Bajaj Finance for its FD offering.