In recent times, technology has paved the way for automation and transformation in the financial services industry in India. Advancements within the fintech space significantly fosters innovation and powers financial institutions to offer digital services and retain relevance in the market.
The fintech segment alone is projected to grow to $150-160 billion by 2025 and has enormous growth potential.
To put it simply, this amalgamation of finance and technology in recent times has encompassed all kinds of technology leveraged with finance to service both – businesses and consumers.
Whether it’s larger organisations indulging in blockchain technology or you paying a juice vendor next door via UPI, welcome to the world of fintech.
If one part of the economic ecosystem seemed averse to change but has embraced fintech in a big way is the traditional banking system.
This can be attributed to a dramatic shift in customer service expectations and involves a significant change towards digitisation to offer more personalised, instant, superior, and secure service to customers via various digital channels.
For example, QR codes have made business payments seamless; IMPS and UPI have made person-to-person fund transfer smooth, and video KYC has helped consumers open bank accounts from the comfort of their homes.
One fundamental change that COVID-19 has brought about is how you and I transact. This has led to a significant shift in perception about the fintech space as well.
It was observed that jurisdictions with more stringent COVID-19 restrictions witnessed rapid adoption of technology-based financial solutions. The pandemic, therefore, prompted fintech companies to pivot to solve unique challenges faced by customers.
Fintech in India is well past its infancy in terms of acceptance and growth within the financial services sector and the masses. This can be attributed to the increasing penetration of smartphones and the internet.
The time is ripe for fintech firms to go beyond just solving systemic problems and catering to customer preferences, but also embrace customer sentiment and play a more prominent role in simplifying customers’ lives to make them better.
Take the case of fintech company TALA. It provides customers with no formal credit history access to microcredit in countries like Mexico, Kenya, and the Philippines using a scoring model that is based on data points from cell phone bill payments to online behaviours. Talk about innovation!
In Europe, large financial institutions are leveraging new technology to evolve into more customer-centric organisations that provide a seamless digital experience to patrons and stakeholders. These organisations are going digital-first to offer end-to-end digital products and services on top of traditional banking to customers.
A little farther from home, Silicon Valley-based fintech startups are collaborating with large financial institutions like banks to offer Banking-as-a-Service (BaaS) to change the way banks operate significantly.
For India to become a hotbed for fintech, it must study and adopt some of the regulatory practices followed in the best fintech ecosystems of the world.
We must create a system to monitor the risks and regulatory impact of financial technology development, lower regulatory barriers to investment, give tax incentives and regulatory support for the financial technology industry.
Among other factors, lack of trust has been a major barrier to the adoption of fintech among consumers in India. This makes it imperative for fintech companies to simplify to foster transparency, eliminate confusion, and build reliability.
Leading global banks and consultants collaborate with fintech companies to integrate new services and technologies to enhance customer experience and efficiency. They have established innovation laboratories to promote technological innovation in financial services and support the development of the entrepreneurial ecosystem.
Universities and public institutions have a pivotal role in cultivating entrepreneurial thinking and developing entrepreneurial skills to accelerate fintech innovation.
In this direction, we can learn from Hong Kong, which is promoting courses focused on entrepreneurship. A great deal can be learnt from the success stories of other countries in the areas of the right ecosystem, collaboration, and talent. We can also learn from Singapore that is honing the diverse skills of its citizens, and Australia that is giving tax incentives to help startups retain the right talent.
The next wave of the fintech revolution will be dominated by startups that can pick up proven solutions from across the world and adapt them to address the unique challenges in their home country.
Today, the world is a much smaller place, and we’re going truly borderless with fintech innovations around us. It is only a matter of time when the cross-pollination of ideas will uplift lives everywhere globally, one fintech at a time.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)
