Finance industry in India is thriving as technology innovations have overturned the traditional processes. Jobs, once handled with cash, bulky computers, and a human interface, are now being brought on to the digital platform. From banking to payments to lending and more, technology is disrupting every type of financial activity through fintech startups. Meanwhile, the traditional banking institutions are trying to solve the puzzle created by the fintech revolution, garnering ways to benefit from the rise of the digital. Fintech firms, however, are constantly upgrading to achieve proficiency, by fine-tuning existing procedures and trying new solutions to enhance customer satisfaction.
The emergence of technological innovations catering to the financial industry has led to a rapidly growing new fintech ecosystem. As a result, the country is witnessing a major shift in financial services delivery across emerging sectors like payments; mobile-wallets, trading and investing; online non-banking finance companies, customer engagement; personal financial planning and wealth management; banking & insurance; retail banking, lending, investment and more. Here are five ways in which technology is playing a crucial role in addressing these specific sectors and challenging the existing traditional financial service providers by revamping the finance sector:
1. Automation and Artificial Intelligence
After being hailed as the game-changer in many an industry, automation and AI are is now being widely leveraged in the fintech space. Artificial intelligence (AI) assists the fintech firms in providing greater insights and better customer experiences. AI-powered data analytics not only capture huge amounts of data in real time but also change the nature of consumer communication by analyzing their sentiments and behaviour accordingly. Meanwhile, automation in the financial sector enables the decision makers in making better data-driven choices. These are paving the way for instant and better chances of loan disbursement.
2. Big Data analytics and social banking
Big Data analytics have become the foundation of the financial industry at present, allowing computers to minimize huge, diverse and deep datasets than ever before. It allows fintech firms to go beyond credit scores and bank statement data of customers and truly understand their credit behavior. This enables them to determine the loan risk better and quicker than any existing system in the market. Meanwhile, social banking enables financial units to engage better with their customers by enabling them to extract accurate information more wisely and devise loan disbursal plans in a more engaging manner.
3. Blockchain
This innovative technology, which is a combination of mathematics, cryptography and economics, creates and maintains a database of transactions involving multiple participants that do not require any third party validation or reconciliation. This technology helps in performing various banking functions such as storing, lending, moving, trading, reconciling and guaranteeing money through its consensus ledger system. Though still at a nascent stage in India, blockchain technology is gradually generating interest among the major fintech players with many of them planning to invest in it on a domestic as well as global level.
4. Digital payments
Technology-powered online payments have become an effective and hassle-free way to make payments in not just your nearby kirana stores but also at your favourite restaurants and shopping places. As economies across the globe are going cashless, banks have been motivating its customers to make their payments through credit or debit cards. However, taking a giant technology leap, fintech platforms have introduced mobile wallets that can be easily financed with any bank account in the country, thereby making payments for any kind of transactions a child’s play.
5. Robo advisory
India’s financial landscape is witnessing a tremendous disruption with the growth of robo advisory technologies driven by factors such as scalability and low cost. This proves to be beneficial for the fintech sector over traditional banking. Moreover, the country’s retail investing space and traditional investment firms are also increasingly adopting robo advisory services to enhance their wealth and asset management as well as hasten their lending services.
In India, 75% of households are below the income group of INR 5 lakh annually. Banks and NBFCs prefer catering to higher income segments as they are not properly equipped to serve the low income groups due to plenty of paperwork requirements and credit reliability issues. Technology has transformed this picture by adding tremendous value to the financial services ecosystem both as a disruptor and an enabler. This also creates a remarkable opportunity for traditional financial institutions and banks to join hands with disruptive players and introduce services and products integrated with innovative techniques. This will not only enable them to ensure efficient delivery of all the financial services but also redefine the country’s financial portrait for good.
— by Manavjeet Singh, Founder and CEO, Rubique
