From pen and paper to digital screens, the financial services sector has come a long way. Gone are the days when every financial transaction, be it banking, trading, or investing, was based on manual methods. Enter today’s digital-first world; a smartphone is enough to perform these functions from the comfort of our home, which means no more physical visits and standing in long queues of banks – thanks to fintech innovations that enabled these chores merely at the click of a button.
Today, India boasts the highest number of fintech adopters at 87 per cent, which is more than even the global adoption of 64 per cent. Being home to 7,460 fintech companies, India stands in the third position, only behind the US (22,290) and China (8,870). In this article, we will discuss the role of technology in revolutionising traditional financial services in the country and how it is making our lives more convenient than ever.
UPI: The new face of digital payments in India
Do you recall the last time you made a payment using cash? No, because you hardly use it and instead rely on UPI for even the smallest transactions.
The 2016 fintech innovation, UPI or Unified Payment Interface, has significantly evolved over the years, with growing consumer faith and awareness about its robust security. Today, almost every Indian is familiar with apps like PhonePe, Google Pay, or Paytm.
Currently, our country comprises nearly 26 Cr UPI users, with the total transactions surpassing the 6 Bn mark in July 2022. Its growth is demonstrated by the fact that India has achieved a stronger position than developed nations like the US, the UK, Canada and Australia, as highlighted by the ACI Worldwide report.
Technology: Transforming financial services beyond digital payments
India has witnessed several fintechs providing digital lending services to consumers as well as businesses, giving a solid push to the microfinance sector, which has the potential to grow at a CAGR of 40 per cent by 2025.
These solutions are especially beneficial for the country’s SMBs that fail to get timely financial support from traditional institutions due to multiple reasons, be it lack of digital presence, a reliable credit score, or collateral, and therefore end up taking loans from informal sources or the loan sharks at exorbitantly high-interest rates.
Digital lending fintechs leverage technologies like AI, ML and Big Data to assess and analyse the digital footprints of a business to derive spending patterns and credit needs. Accordingly, they provide businesses with personalised and flexible loans which they can repay without hassles or stress.
The aforementioned advancements help fintechs streamline and accelerate the entire lending process, thus ensuring quicker customer onboarding, better credit underwriting, enhanced security and compliance, fraud detection, debt recovery, and much more.
While human interaction is imperative in investment, technology has automated several manual functions that are now being handled by robo advisors or chatbots powered by AI and ML. Today, a consumer can reach out to an investment company through their website or app and get instant investment advice as per their requirements without connecting with a physical broker.
Once a customer’s basic queries are addressed digitally, company representatives will take you through the benefits of an investment with more insights and help you make informed decisions in real-time. Adding more convenience, fintech players also incorporate AI-powered voice assistants to handle finance-related functions and eventually initiate investments without accessing a keyboard.
From a security perspective, fintech players implement stringent measures to ensure that the consumer’s data is safe and secure across all transactions. These companies must develop robust security infrastructure to protect customers’ inputs around funds and personal information. It is essential to build, strengthen and maintain high-security levels to win the trust and loyalty of your customers, without which it is impossible to scale and thrive in this highly competitive ecosystem.
As the world goes digital, cybersecurity becomes pivotal for businesses to ensure breaches and attacks are at bay. And technology is playing a key role here in protecting businesses from the ever-evolving threat landscape and preparing them to respond smartly to future events.
The fintech scene in India is rapidly growing and will continue to flourish in the coming years, with more players joining the bandwagon. As technologies evolve, the scope for innovation will also increase, enabling fintech companies to offer tailored financial services to customers while also driving financial inclusion across the country.
Views expressed by Sujit Patel, Founder, and Managing Director, SCS Tech