The blooming of financial technology aka Fintech has brought about a positive revolution in the various sectors and industries including banks, financial institutions, businesses, and their clients. Fintech integrates finance and technology to introduce productive solutions for businesses to enable them to serve in the best manner possible. Also, to assist the financial service provider to help their clients in dealing with the finances in the most efficient way.
With the event of demonetization in India and later with the global pandemic – COVID 19 various Fintech startups have been established and new additions are made in this area. Fintech now represents various financial activities, for example, money transfers, Artificial Intelligence based innovations, online payments acceptance – eCommerce, cheque deposit through a smartphone, biometrics, etc.
“Currently there are 2707 fintech startups in India and the invested amount was between 2014-2018 of $5.29 Bn, as per the Datalabs by Inc42’s recently released report (Fintech Outlook 2019).”
Further, as per the report of “Fintech Market in India 2020” at ResearchAndMarkets, India is one of the fastest-growing fintech markets in the world.
India estimated the highest fintech adoption rate (87%) in March 2020 among all the emerging markets in the world.
The Indian fintech market was valued at ~INR 1,920.16 Bn in 2019 and is expected to reach ~INR 6,207.41 Bn by 2025, growing at a compound annual growth rate (CAGR) of ~22.70% from 2020 through 2025.
As per the recent reports available at online sources, the Fintech market in India is expected to grow to $31 Bn in 2020 (highlighted by Niti Aayog CEO Amitabh Kant).
The Major Fintech Trends to look forward to in 2021 and after that!
Various sectors, businesses, and customers have started to depend on the online ways of transacting, and thus the increase in the adoption of
financial technology has gone up after the Coronavirus outbreak. The fintech trend is expected to go further up after this. Here are the major trends in Fintech to watch out for in 2021 and after that…
1. Digital Banking – Future of Banking
As per the surveys, the customers are not willing to visit the bank branches and are more interested in trying out the tools for banking operations. The branches are closing down worldwide. After COVID 19 outbreak the customers are ready to try out the new apps and their demand to increase digitalization and introduce digital solutions in the day to day banking operations.
2. AI Solutions
The customized and unique experiences can be provided to every customer by the Banks and financial institutions with the help of various customer data such as transactions, demographics, APP usage, etc. using Machine Learning, Natural Language Processing, Cognitive Computing, etc.
3. Open banking
The system in which the banks open up their APIs (application programming interfaces) to the third-parties so that they can develop innovative applications and other services helpful to the customers is Open Banking. As per this system, the banks have the opportunity to partner with fintech and forget about the competition.
Various different countries including India would adopt the system of Open Banking and PSD2 existing in Europe and would open up the customer’s data to the third parties with their consent.
4. Modular Banking and Omni-Channel
With the help of innovative technology, the customers are able to purchase from more than one provider of the products. The usage ratio of financial products is also increasing, this is known as modular demand. Various third party suppliers and service providers are providing their products and services to the financial service institutes. New institutes have innovative business models. This together is called the modular supply. Combining these gives the concept of the modular industry. The products from the new entrants could increase and the delivery of products and services will be controlled through the digital mediums directing the demands to different suppliers.
Another concept is ‘Omni Channel Banking Experience’. For this, the banks have to redesign the banking platforms and go ‘digital-first’. All the banking services would be available alike digitally as well as in an offline manner through website, app, branch, call supports, etc channels. This will improve the customer experience, attract new customers, and decrease operational costs. Mobile banking would be at the core of this Omni-channel experience.
When a trustworthy source is created for P2P transactions with a distributed ledger technology storing the information among various systems in a secure manner, it is called the Blockchain.
The costs of the banks are reduced with this and various banks and financial institutions are investing more and more in this technology. The operations and functioning are made faster and more transparent. It would bring down the centralized platform and inject decentralized finance procedures.
6. Payments and Fintech
Various new concepts are introduced and its usage is expanded, with the possibilities of innovation and introductions of other technologies as well. The contactless, mobile payments, mobile wallets, smart security with artificial intelligence and machine learning, biometrics, etc are mind-blowing innovations and its adoption has been going upwards due to the COVID 19 outbreak.
As per a research report, Digital payments in India are anticipated to grow over three-fold to Rs 7,092 trillion by 2025 due to the government policies related to the financial composition and increased digitization of merchants. The user base and frequency of the use of wallets shall continue to grow significantly and continuously.
As per a Bengaluru-based management consultancy, the current figure of 160 million unique mobile payments users shall multiply by five times and by 2025 will reach around 800 million.
As per the report, the usage of the wallet is anticipated to spike by 2025.
Advanced fintech services and products such as Cryptocurrency and digital cash, Blockchain technology, RegTech (Regulatory Technology), Cybersecurity, etc are introduced as part of this innovation disrupting various sectors.
The growth in the financial services industry combined with the technology is swiftly going upwards. As per the client’s needs and demands, the FinTech trends have been unfolded and new innovations are rapidly being introduced. With its help, the service and product providers are introducing and distributing more comprehensive financial services with increased financial data availability, more transparency, an increase in the speed of transaction processing, enhanced customer experience matching their requirements, and top-class security and verification.