Trends redefining the FinTech space in India

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Over the past decade, India’s financial services sector has experienced disruption from numerous forces including social to demographics, to technological advancements. Technology, which has been instrumental in disrupting the financial services sector, has forced players to rethink business models and has given rise to the fintech industry.

The fintech insurgency has, to a great extent, revolutionised the overall Indian financial services landscape impacting every segment including banking, insurance, wealth management, capital markets and of course payments processes.  Some of the recent changes technology has brought to this sector include smart voice assistants, chatbots, and of course, cybersecurity. Today, the fintech sector is worth $4.7 trillion.

India’s Fintech Growth Trajectory

The fintech market of India has been witnessing a growth trajectory for the last six years. This is evinced by both the number of fintech companies founded between 2013 to 2019 and the amount of investment they attracted. Within this brief span, nearly 2000 fintech companies were founded, turning India into a nucleus of entrepreneurial and startup activities. This has translated into an increased customer adoption of fintech solutions. The rapid expansion of the fintech landscape has contributed substantially and the overall transaction value of the sector is estimated to jump to nearly US$ 138 billion by 2023.

Emerging Trends Within The Fintech Space

However, come 2020, the coronavirus not only thwarted the global economy but also went onto redefine business tenets for forthcoming times. And the financial space has been one of the most influenced. As social distancing became a rule amidst a global economic lockdown, people resorted to digital payments method like never before, to carry out day-to-day activities.

India was no exception. Digital payments shot up and ensured fintech businesses, especially those involved in digital payments and alternative lending processes—grew manifold even during a global humanitarian crisis. Going forward, business tenets for the fintech space in India will also be dominated by certain emerging trends that will reshape the sector substantially.

Over the years, the fintech sector has seeped into newer avenues, bringing changes and transformation to financial services and experts anticipate that it will continue to do so in the coming years. Here are five fintech trends we can expect to penetrate deeper in the year 2021.

1. Integration of Voice Search

In an era of the consumer-dominated market, customers look for experiences more than anything else. And since technology has pervaded every space of our lives, especially in a post-pandemic era, fintech companies will have to revisit customer experience and embrace constant-evolving technology to do so.

Whether its offering hyper-personalised experience through chatbots or leveraging new technologies like Assisted Intelligence in Action – innovation will be the ascendant curve.

Voice search has gained quite a few takers with smartphones, and with virtual assistants like Amazon Echo and Google Homes, and smart gadgets becoming common across households, it looks set to gain further prominence. According to Google, 28% of all search queries are voice searches in India. And this is predicted to grow in the coming years. With this growing trend, voice search can be expected to seep into the fintech sector as well. 

2. Leveraging AI And ML For Risk Management

Risk management is an integral part and often a difficult-to-address segment within the fintech space. The domain of risk management will undeniably undergo a paradigm shift and will have to incorporate technologies like Artificial Intelligence (AI), Machine Learning (ML) and cloud computing to better address risk management issues.

Machine learning (ML) and artificial intelligence (AI) are already playing a vital role in several industries today. For example, several financial service providers have implemented AI-enabled chatbots to provide customer service and support. In 2021, AI-enabled services will pick up more steam in the financial and fintech sector. The smart virtual assistant market is expected to hit $19 billion in the next five years.  Furthermore, AI is expected to cut bank operational costs and lead to savings of more than $1 trillion globally by 2030. With the development of advanced algorithms and its ability to work with unstructured data, AI can be expected to deal with financial fraud and cyber threats as well.

Apart from that, heightened regulations within the financial space have led to an increase in the cost of compliance breaches, which in turn will drive fintech companies to build sophisticated risk management proficiencies to be able to better navigate in an open, connected global economy.

3. Embracing IA: Combination Of Intelligent Automated Tools

More advanced and finer technology such as a combination of intelligent automated tools will revolutionise the overall sector. Till now, fintech companies in India had been leveraging the technology of robotics process automation (RPA). However, in a rapidly changing technological and financial landscape, ever-evolving technologies of intelligent automation will take the forefront. The fintech space will embrace intelligent automation–a combination of RPA, workflow automation, intelligent data extraction, process intelligence and conversational interfaces.

4. Blockchain, Cloud And Cyber Security to be Avant-Garde

According to PwC’s Global Blockchain Survey 2018, it was found that the financial services sector, (especially the fintech segment) has been most responsive and receptive towards adapting technologies like—blockchain, cloud and cybersecurity. The report recorded 69% of financial service industry CEOs stating that they were either somewhat or extremely worried about cyber threats, compared to 61% of CEOs across other sectors. Improved cybersecurity can be expected to be on top of the list of priorities for fintech companies – right from blockchain-enabled payments to KYC, cloud applications in core areas such as consumer payments and credit assessment and of course, ensuring data ubiquity through the above-mentioned technologies.

5. Reaching the Unreached

There are ample discussions and arguments about how technology can disrupt the financial sector but there are also those asking more pressing questions – how is this technology going to be of help to those who require some of the most basic and important financial services. According to a World Bank report, about 1.7 billion people remain unbanked globally. Many fintech companies view this as a growth opportunity and we can expect to see players enter these markets where there is a need for various financial services.

These trends are just a subset of how the fintech sector may evolve in the future. As the customer and industry demands evolve, fintech too will evolve, making room for newer trends in the future.

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