Financial technology has revolutionised the way people conduct financial transactions. The thought of banks conjures the sight of long lines, paperwork and delays. Gone are the days when banking operations were complicated, slow, and limited to certain regions. Fintechs are streamlining banking operations, making it easier and more convenient for people to manage their finances. Fintechs have disrupted all streams of the financial sector from lending to the capital market to wealth management, fund transfers, insurance, and payments.
At the forefront of contemporary trends lies the government’s digital-first economy drive, fueled by a push for data-driven financial inclusion. Over the past two years, the migration to digitalization has resulted in an unprecedented amount of data, surpassing all previous records in human history. This vast data pool holds immense potential for various applications, including extending credit to individuals and institutions with little credit history, as well as providing insurance and healthcare services to those in need. Furthermore, it serves as the foundation of the burgeoning peer-to-peer lending industry, expected to grow at a compounded annual growth rate of 48 percent year-on-year between 2016 and 2024.
India possesses all the necessary components to capitalise on this digital dividend. The government has leveraged digital technologies such as big data, cloud computing, and advanced analytics, not only to enhance tax administration and compliance but also to counteract fraud, corruption, and the proliferation of black money.
Fintechs are making banking operations simpler for people by reducing the number of steps required to complete a transaction. For instance, with mobile banking apps, people can now perform various transactions, such as paying bills, transferring money, taking a loan etc, with just a few taps on their smartphones. These apps are designed with user experience in mind, making it easy for people to navigate and complete transactions.
Fintechs are leveraging technological innovations such as artificial intelligence and machine learning to automate banking operations. For example, chatbots are used to answer customer queries, reducing the need for human intervention. This not only simplifies the banking process but also makes it faster. The backend infrastructure of fintech firms is robust enough have to all processes including loan application decision automated and not dependent on human intervention.
With traditional banking, people may have to wait for days for a transaction to be completed. This is no longer the case with fintechs. With the use of instant payment systems, people can now transfer money in real time, with funds being available almost immediately.
For instance, platforms like PayPal allow people to send money to anyone with an email address or phone number in a matter of seconds. This not only saves time but also eliminates the need for physical cash or checks, making transactions more secure.
Fintechs are making banking operations easier for people by eliminating the need for physical visits to bank branches. With mobile banking apps and online banking platforms, people can access banking services from anywhere and at any time. This makes banking more convenient, especially for those who live in remote areas or have busy schedules.
Furthermore, fintechs are making it easier for people to access financial services, especially for those who are unbanked or underbanked. With the use of mobile money platforms, people can now perform various financial transactions, such as sending and receiving money, paying bills, and accessing loans, without the need for a bank account.
Fintechs are making banking operations more global in nature, making it easier for people to transact across borders. With the use of blockchain technology, people can now send and receive money from anywhere in the world with minimal fees and without the need for intermediaries.
For instance, platforms like Ripple allow banks and financial institutions to transact with each other directly, reducing the need for correspondent banking relationships. This not only makes transactions faster and cheaper but also increases financial inclusion by providing access to financial services for people who may not have traditional bank accounts.
In addition, fintechs are making it easier for people to invest in global markets. With the use of robo-advisors and online investment platforms, people can now invest in a diversified portfolio of assets from anywhere in the world with just a few clicks.
By achieving simplicity, pace, ease, and global reach, fintechs are changing the face of banking, bringing financial services to more people, and reducing the cost and time it takes to complete a transaction. As technology continues to advance, we can expect fintechs to continue to innovate and transform the way we conduct financial transactions.
(The author is Managing Director at personal finance platform Branch International, India)
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