The fintech industry as a whole is reckoning with itself at every level. Every move they make is accounted for and closely monitored by regulators and customers, alike. Fintech companies are at the forefront especially, due to the current scenario with digital transactions taking place higher than ever. The Indian Fintech sector has surfaced as one of the key players in the global industry.
In a recent report, by Research and Markets, as of March 2020, India, alongside China, accounted for the highest fintech adoption rate (87 percent), out of all the emerging markets in the world. On the other hand, the global average adoption rate stood at 64 percent.” The report also states that “The fintech market in India was valued at Rs 1,920.16 billion in 2019 and is expected to reach Rs 6,207.41 billion by 2025, expanding at a compound annual growth rate (CAGR) of approximately 22.7 percent during the 2020-2025 period.”
As the Fintech world is undergoing a radical reformation. Here is a list of 5 key trends that is likely to shape the upcoming future of fintech industry:
Invisible payments take physical payment methods such as cash, debit and credit cards, completely out of the equation—creating a convenient and speedy experience. The demand for cashless transactions in this pandemic-hit economy is expected to create more opportunities for digital wallet operators. The transactions that are digitally linked will not just help to boost transactions but will also help the industry in collecting data. This data can then be used to offer new services. Thereby, creating new revenue streams, providing unbundled offers, and building cost-effective set-ups for businesses to grow.
Communication and consumer education
As more and more customers get on the digital board, fintech’s will have to focus on building trust and consumer engagement. Especially given the time when cybersecurity is extremely vulnerable. To be critical and to stay ahead of the competition than other fintech brands, it is necessary to focus on the security along with making the procedure simple for consumers. Communication is one of the major keyways to drive engagement with consumers. While the digital payment process might not be new for some segment of consumers, it is entirely a new process for another segment of people. Thus, it becomes the brand’s responsibility to build transparency in communication and make the consumers aware of all the activities in a simple way, so they can understand fraudulent activities beforehand.
Communication also includes giving consumers regular updates, sharing clear information with regards to change of policy, polite customer service and so on. Fintech’s in India should also consider going regional or vernacular to connect with a growing majority of consumers. The more they use technology to their advantage, the stronger the brand they will create; thus, surviving difficult times.
One platform, multiple services
One thing a consumer prefers the most would be, multiple services across one platform. Many Fintech brands have already rolled out this process of offering multiple services across one app, but the increase in offerings of robust solutions through powerful API integrations will add on. In the coming days, consumers who need banking services are likely to turn to those financial players, who can offer convenience and ease of transactions that is entirely safe and secure. To address these consumer needs, banks cannot do much, but technology can help a lot in digitalizing consumer demand.
Blockchain and big data
Blockchain and Big Data are two technologies in full swing, but they are also two complementary technologies. According to experts, brands adopting burgeoning blockchain technology will benefit the most. Financial services will be able to reduce fraudulent activities, phishing attacks and ensure secure payments. One of the other things that Fintech needs to bring their attention to is—Artificial Intelligence, Machine Learning and Data Analytics. As all these can help financial services in addressing their key challenges like cost reduction and scrutinize risky transactions. A
This will help financial services to get a better hold on their offerings, reduce fraud, automate trading processes, ensure secure payment processing and so on. The other thing, Fintech brands need to bring their attention more closely to is—Data Analytics, AI and Machine Learning. AI is already helping many address key pressure points, reduce costs and monitor risks on transactions. According to Autonomous, a financial research firm, “AI is projected to reduce operating costs by 22 percent around 2030.”
Localization and Regulations
Fintech has always been known for their coming of age technology owning towards offering the most convenient and flexible options for consumers. It is not surprising that going forward, financial services will offer a customized and local offering to their customers using data analytics. The more and more advanced in technology financial services adapt to upgrade their strategies, the more growth in this sector is guaranteed. This is just the beginning of a huge Fintech market in the upcoming days. The Reserve Bank of India is rapidly adopting the trends as well, by implementing policies to monitor industry more closely. The analytical tools are helping regulators to compare scenarios to avoid potential risks and market-related problems.
As the needs and demands for financial transactions are increasing, payments and the banking industry have been evolving also continuously. The best kind of consumer experience and quick responses to regulatory changes will matter the most. Now, it is only a matter of time to see how high the Fintech market will continue to grow and at what scale.
—Ramki Gaddipati is Co-Founder and CTO, Zeta India, a fintech start-up. The views expressed are personal