The financial 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.
Around the world, fintechs are at the forefront of this new financial order. The Indian fintech sector has emerged as one of the key players. In a recent report, Fintech Market in India 2020, “As of March 2020, India, alongside China, accounted for the highest fintech adoption rate (87%), out of all the emerging markets in the world. On the other hand, the global average adoption rate stood at 64%.”
The report also states that, “The fintech market in India was valued at ₹1,920.16 billion in 2019 and is expected to reach ₹6,207.41 billion by 2025, expanding at a compound annual growth rate (CAGR) of approximately 22.7% during the 2020-2025 period.”
Backing this growth, Amitabh Kant, CEO, Niti Aayog recently said, “The Indian fintech market will mature and there is a need to make the country a fintech hub. There is a need to re-evaluate the existing KYC paradigm to make it highly cost-effective and easy to do.”
The industry world over is undergoing a radical reformation. Here’s a list of 5 key trends that’s likely to shape the future of fintech industry:
The demand for cashless transactions in this pandemic-hit economy is expected to create more opportunities for digital wallet operators. Digital-linked transactions 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.
As more and more customers get on the digital board, fintechs will have to focus on building trust and consumer engagement. This will be critical for survival and to stay ahead of the competition. One of the key ways to drive this engagement is communication. Here, communication includes giving consumers regular updates, sharing clear information with regards to change of policy, polite customer service and so on. Building transparency in communication will help create a brand that’ll be valued for years to come. Fintechs in India should also consider going regional or vernacular in order to connect with a growing majority of consumers. The more they use technology to their advantage, the stronger the brand they’ll create; thus surviving difficult times, if any.
Do more with less -- a motto that’s an instant hit with consumers. To address this, fintechs can provide multiple services within the app. Though this initiative has already been rolled out, fintechs will need to look at offering more robust solutions through powerful API integrations. 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. These players need not necessarily be banks. Technology will help address this need.
The ones to adopt the burgeoning blockchain technology will benefit the most, experts predict. 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, fintechs 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 an online publication, “AI is projected to reduce operating costs by 22% around 2030.”
Fintechs are known to offer flexibility and convenience. Going forward, this will determine how they can bring in customised and local offerings for their customers using data. This is just the start of the game. The more fintechs continue to adopt and upgrade their strategies, the more they’ll gain. Further, as new demands evolve it’ll be up to fintechs to mould themselves using powerful and modular platforms with the ability to learn. While fintechs get to the roots of things, regulators are catching on this trend too. The Reserve Bank of India is rapidly adopting these winds of change. They are looking at implementing policies to monitor the industry more closely. With the help of analytical tools, regulators can compare scenarios to avoid potential risks and market-related problems.
As the needs for financial transactions, payments and banking continues to evolve, user experience and quick response to regulatory changes will matter the most. It’s only a matter of time to see how the fintechs will continue to grow and at what scale.