When was the last Time you went to a Bank? Courtesy:Fintech companies
When was the last Time you went to a Bank? Courtesy:Fintech companies | Credit: Bw Businessworld

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When was the last Time you went to a Bank? Courtesy:Fintech companies

Oct 10, 2018

The past few years in India have seen a surprising growth in a new business combination that’s called fintech. This fintech growth has been in enormous leaps and bounds.

How has this new thing come about anyway? When you combine two business ideas or words—and if the combination is the right one—the final result is financially bright and profitable! Yes, fintech is the combination of two words—FINANCE and TECHNOLOGY.

Simply put, fintech means combining traditional financial services and innovative technologies. And this has resulted in an explosive and profitable business sector! What has this done for customers? The value propositions have enhanced and beautified the precious lives of many customers!

However, the meaning fintech has now changed. How? Fintech was initially meant to explain technologies that facilitated banking and financial institutions with the sole intention of reinforcing these traditional banking institutions. In recent years in India, Fintech has come to include a much wider range of the following business models and services:

  • Online payments systems
  • Automated investment advisory platforms
  • Some e-lenders
  • Personal finance platforms such as tax filing portals, insurance aggregators or ‘insur-tech’ platforms
  • And banking technology

Thankfully, all these business models and services have changed the initial meaning and intention of fintech in a positive and profitable sense!

And who could better explain the positivity of fintech than the Director of Fintech, S.P. Jain School of Global Management, Vikram Pandya, who says, ‘Today you can summarise fintech as an evolving ecosystem driven by disruptive technologies, helping to deliver banking and financial services to customers in a way that is faster, more cost effective, intuitive and easy to consume.’

Influence of New Technologies

There’s also something great that some new technologies are doing to fintech. These new and thrilling technologies have brought about a good increase in a number of innovative fintech ventures in India in our recent times. Please look at some of these below:

  • Machine learning
  • Big data
  • And AI

We’re glad that these recent technologies are having a splendid and beneficial impact on fintech!

Factors favouring growth of fintech

Additionally, there’s some good news about the India GDP. The growth of India’s GDP is expected to grow at 8 % per annum for the next 5–10 years! And there are factors that are favouring the growth of fintech. Panya summarises these factors in the following key points as some of the factors that will drive the growth of Indian fintech sector:

  • High adoption of technology
  • Internet penetration
  • Availability and affordability of infrastructure and mobile devices
  • Government policies and framework
  • Increasing financial inclusion
  • Changing investor preferences
  • Availability of huge amounts of data and related intelligence

Practically speaking, what is Pandya talking about here when he mentions the term framework? He is kind of talking about the ‘India Stack’ which is a group of APIs that gives space to fintech companies so that they can influence the digital in fracture of India to go in the direction of these helpful things below:

  • Lower cost
  • Paperless delivery of a plethora of financial services
  • Efficient delivery of a plethora of financial services

Is this real? Yes, some regulatory bodies such as the IRDAI, Sebi and the RBI have mellowed down and greatly softed towards the fintech sector. And the fine result? Now there are some sufficient checks and balances without a heavy burden of merciless restrictions that otherwise would slow down the growth of this wonderful ecosystem.

This mellow, soft and accomodating heart of these regulators has been noticed even by Naveen Kukreja, CEO and co-founder of Paizabazaar.com who says, ‘In India, we have extremely progressive regulators, who understand the importance of technology and the value it adds to the entire financial ecosystem.’

Are banks under attack by fintech?

Although some may feel that the coming of fintech companies may disadvantage some traditional banks, Kukreja expresses some optimism.

‘Consumer expectations are changing rapidly, and so is the technology used to meet and surpass these expectations. This means traditional players like banks, with massive customer bases, will not be able to do everything themselves, at least not at the speed required today,’ he explains.

He’s actually optimistic that banks will work together with fintech companies to keep themselves in profitable existence here on earth.

Does everyone share Kukreja’s viewpoint? Not at all! Pandya is of contrary opinion because he is convinced that many traditional banks in India will be given a tough time by fintech companies who are faster and disruptive in their approach.

So whatever the risks, fintech has a bright and profitable future! Whatever the obstacles, you too can start a fintech business!