FinTech refers to the Collaboration of Finance and Technology to improve and automate the use of financial services. It can also be described as a financial industry consisting of companies that make use of the latest technologies to enhance business operations and delivery of financial services by changing the old traditional methods.
FinTech is not a new industry; it just got evolved very quickly due to rapid technology changes. Broadly, the term “financial technology” can apply to any innovation in how people transact business to bridge the financial gap, from the invention of digital money to double-entry bookkeeping. After the internet revolution and smartphone revolution, however, financial technology has grown exponentially, and fintech, which originally referred to computer technology that was meant to the back office of banks or trading firms, now describes a wide variety of technological interventions personal and commercial finance.
The future of FinTech is growing at a rapid pace on the back of the rising of start-ups in the FinTech industry, increase of smartphone users, continuous build-up of the digital infrastructure, and the overall streamlining of financial processes across many industries. In a recent report by Research and Markets, as of March 2020, India, alongside China, accounted for the highest FinTech adoption rate, 87%, out of all the world’s emerging markets.
Through its multiple financial institutions, India’s government has been aiming to create a ‘cashless society. But this is a dream, which will take some time to get fulfilled. On the other hand, the technology officers of multiple companies will play a crucial role in adopting technology to drive efficiencies and growth, eventually leading to better profitability. The collaborations between tech innovators and financial institutions will go a long way in building the seamless eco-system benefitting all parties involved.
With elements like payment gateways, Crypto-currencies, digital currencies, Internet banking, etc., FinTech is set to revolutionize the industry and offer a personalized service to the customers, where customers will be truly hailed as a king. Though there were initial resistance and skepticism associated with larger banks to incorporate technology in their systems, the changing consumer behavior has lead the wave of sweeping this sector, which any financial institution can no longer ignore. The role of government regulations will be equally crucial at this stage to support a robust FinTech system to promote healthy competition in the market.
Technologies that Contribute to Fintech:
1. Artificial Intelligence (AI) and Machine Learning (ML)
2. Big Data and Data Analytics
3. Robotic Process Automation (RPA)
Industries where FinTech is used:
In the Banking sector, before, we used to go to banks for every purpose. Now many National level banks have implemented complete banking solutions through mobile. Every work can be done through mobile. With this, there is a leveraged increase in transactions and also the introduction of Neo banks( Banks that are not physically present)
Example: Net Banking, Mobile Banking
with the advent of FinTech, Cryptocurrency has made it way to news everyday and also the popularity across the globe. This will completely change the future where currency will be completely digital and one across the world.
Crowdfunding platforms allow internet and mobile app users to send or receive money from other users on the platform, bypassing more conventional ways of sourcing funds like asking a bank or finance company for a loan.
Crowdfunding allows individuals and businesses to appeal directly to investors for support of a project or enterprise. The platforms enable users to aggregate the funding they receive from various sources in a single location.
Stock-trading apps provide a function for potential investors, offering algorithm-derived advice on the best options for buying and selling using algorithms and also to automate investment advice through algorithm-based asset recommendations and portfolio management, thereby lowering its cost and increasing its accessibility.
This sector has seen a tremendous increase as every citizen is using digital wallets, UPI’s, and many more. This pandemic has made even more increase in usage of this technology.
Examples: PhonePay, GPay
The focus of LendTech or lending technology is on using technology to offer consumers lending solutions through more accurate and streamlined processes. Smart LendTech systems can use Machine Learning (ML)and Artificial Intelligence (AI) algorithms to process and verify identity credentials and ensure error-free results.
Predictive analytics algorithms can forecast income prospects, assess a borrower’s track record, appraise their collateral value, and make predictions about borrower behavior changes.
Many lending apps have emerged to encourage customers to have money as a loan with a high-interest rate.
Examples: Moneytap, paysense
Insurance technology or insurtech aims to use technology to simplify and streamline the insurance industry. Its scope includes everything from car insurance to home insurance and data protection, changing the way that consumers buy and use insurance.
Top Companies of FinTech Industry in India:
- ET Money
- Freecharge Payment Technologies Private Limited
- One Mobikwik System Private Limited
- Mswipe Technologies Private Limited
- One97 Communications Limited
- PhonePe Private Limited
- Pine Labs Private Limited
- PayU Payments Private Limited
Some among them have made their way to be Unicorn companies from India.
FinTech is an emerging future and India will be one of the top countries adopting it. It will generate more jobs and more income. If you are interested or talented enough to work in this sector then this will take you to heights.