IDFC First Bank and a lesson for fintech startups

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Editor's note: The idea behind most of the fintech industry is to revolutionize and/or disrupt financial services as we know it, with one common target being banking. On the flip side, though, for several types of fintech startups in India, banks are invaluable and unavoidable partners. What, then, happens if a bank decides to just walk away? Increasingly, this has happened with larger and even mid-sized banks going easy on partnerships with neobanking fintechs—which essentially relied on banks to hold customers’ actual accounts. Now, the tussle seems to be escalating to at least a couple of card startups too. IDFC First Bank might be the best example. The young bank became the darling of fintechs some four to five years ago; like Yes Bank and RBL Bank before it, IDFC First Bank was eager to partner with a number of startups. Again like Yes and RBL, IDFC is now reconsidering that strategy, and has been the source of many a sleepless night for fintech founders. Earlier this year, IDFC First Bank terminated its agreement with Bengaluru-based neobanking startup NiYo. The Tencent-funded company …