Praveen Paulose, MD & CEO, Celusion Technologies, 0
India is at the forefront of a booming fin-tech revolution facilitated by several tailwinds. According to the EY Global Fin-Tech Adoption Index 2019, India has an adoption rate of 87 percent compared to a 64 percent global rate. Let us examine the reasons why India is leading the world in this sector.
1.Advancement in Technology:
The proliferation of smartphones and the availability of cheap data with high-speed connectivity has orbited India to a different sphere as far as access to information is concerned. As of 2020, India has 550-600 million smartphones while 694 million Indians have access to the internet. This number is expected to hit 900 million by 2025 which is a clear indication of the growth potential. Fin-tech lenders have an expanding customer base and are getting a windfall opportunity to penetrate the underserved segments of the population. This is the foundation on which the Fin-tech evolution and revolution in India are based. Without easy and cheap accessibility to data and a mobile device, none of these advancements would have seen the light of day. Thanks to Jio, the smartphone with cheap data has reached the lower segments of society democratizing access to data which has, in turn, opened doors to many opportunities.
2.Introduction of new Payment Mechanisms and Interfaces:
We are seeing India moving towards a less-cash society as people switched to the electronic mode that gave better access, convenience, safety, security, and traceability. In the last few years the payment infrastructure in the country has evolved remarkably with the introduction of new payment interfaces like Immediate Payment Service(IMPS), Unified Payments Interface(UPI), Bharat Interface for Money (BHIM), Bharat Bill Pay System (BBPS) or Aadhaar-enabled Payment System (AePS). This has transformed the retail payment scene leading to a whopping nine-fold rise in the volume of online payments over the last five years. With the introduction of new payment interfaces, customers and merchants have happily switched to the online payment mode replacing cash for basic transactions like paying for a ride, buying vegetables or paying for services.
3.COVID and Demonetization:
The two big drivers for the shift in consumer behavior in India have been demonetization in 2016 and COVID in 2020. While the first event transformed the payment modes and the second event changed the way transactions were completed. The lock-down forced people to stay at home and led to a radical change in the way they purchased, worked, and transacted. The retail scenario changed drastically as businesses accelerated their digital transformation to cope with customer needs and offline merchants started building an omnichannel presence to make use of the hyper-local distribution system. Food, groceries and medicines started being delivered to customers at their doorstep creating a huge spike in last-mile deliveries. The combination of these two events led to a radical transformation in the manner in which Indian consumers gone through their daily life. Whether it was buying groceries or getting a loan, Indians have moved to the online mode aggressively and this spells good times ahead for the fintech companies.
4.Fin-tech-Bank Collaboration:
Banks and Fin-techs have built a formidable partnership over the last five years. While banks have the capital and physical reach, Fin-techs have brought smart technology to digitize the banks’ legacy systems at the backend and enhance customer experiences by creating user-friendly interfaces at the frontend. This collaboration has been a win-win for all stakeholders. Today, banks are used for providing capital and completing disbursal while Fin-techs are intricately linked to the borrower’s experience such as underwriting, on-boarding or KYC. All the leading banks in India have tied up with Fin-tech companies to provide their customers with a digital experience that is quick, responsive, interactive and seamless. At the back-end, Fin-tech has built-in capabilities that enable quick background checks to confirm the creditworthiness of customers, detect frauds and manage the lending risk.
5.Customer Targeted Services:
Fin-tech companies have consistently focused on delivering a superior customer experience by managing their growing demands for convenience, ease of use, tailored products, transparency, accessibility and data security. Online banking has transformed the customer experience. Today you neither have to visit the branch nor wait for days for transactions to be processed. Real-time data transfer has given financial services a new pair of wings; Fin-tech offers customers a satisfying and seamless experience. Fin-tech is built on advanced technology a platform that allows them to be more agile and nimble in adapting to dynamic market conditions.
AI and ML are used to process vast amounts of data generated every day to create actionable insights by predicting customer behavior. This helps companies to upsell and cross-sell products to customers or suggests potential products which may interest them. AI-enhanced Chatbots can interact with customers 24/7, handle transactions, provide information and help them in multiple ways. RPA or Robotic Process Automation helps to improve the user experience by using bots to complete repetitive tasks automatically. This reduces human errors as well as frees up resources to handle more complex queries. Today’s customers can get a loan sanctioned and credited in just fifteen minutes. All it takes is to fulfil the minimum criteria, fill up the online application and upload the minimum required documents. The system completes its checks, approves the loan and credits it within 15 minutes.
6.Account Aggregator Ecosystem:
An account aggregator is a portal or app which customers can use to provide consent for sharing of personal financial information. The account aggregator network has three main nodes called financial information provider, financial information user and tech services provider which is account aggregator itself. Account aggregators make it convenient to consolidate all your data in one place and provide a digital framework to share the data in real-time between various financial service providers. A lot of manual work and time wasted in collecting documents, making photocopies, getting them attested and sharing them with multiple financial institutions is eliminated. It is a safe consent-based framework that gives you control over your personal information and provides faster access to financial services. Eight leading banks of the country have become part of the account aggregator network that has been created under the supervision of the RBI for safe and easy data sharing. This is bound to increase efficiencies and provide convenience to all the stakeholders in the financial ecosystem. This must be listed as one of the most dynamic transformations in the world of finance as far as ease of service is concerned. It will radically change the way financial services are provided as it will cut down the processing time making it seamless and paperless.
7.Healthstack:
The National Digital Health Mission was announced by PM Modi in September 2021 to provide every citizen with a Health ID, a unique 14 digit ID generated by the Ministry of Health and Family Welfare. This contains patient’s complete medical history from prescriptions to reports which can be accessed not only by the patient but also by other stakeholders in the healthcare ecosystem including hospitals, laboratories, insurance companies etc. This humongous database for 1.3 billion Indians will need storage space which is where the National Health Stack comes in. This will be the building block for the digital infrastructure on which the National Digital Health Mission will operate. The NHS is a collection of cloud-based services, with each service provider developing their own open-source APIs which will allow them to access the health data and provide services. This mission is expected to revolutionize healthcare in India and is another example of how fintech has changed mindsets and redesigned the paradigm.
Conclusion:
How will this dream turn into reality? What will it take for the fin-tech sector to grow to $160 billion over the next few years? The government has played a stellar role by building a best in class infrastructure for payments. A collaborative environment has also been created to build synergies between Fin-techs and Financial Institutions. The need of the hour is to create enabling policy frameworks. Once Fin-techs are able to scale up, they should expand to other geographies. If the government, Fin-techs’ and Financial Institutions work in tandem, they can create a superlative ecosystem that will provide the ideal backdrop for Fin-techs’ to add a global chapter to their narrative.
Fin-tech companies have consistently focused on delivering a superior customer experience by managing their growing demands for convenience, ease of use, tailored products, transparency, accessibility and data security. Online banking has transformed the customer experience. Today you neither have to visit the branch nor wait for days for transactions to be processed. Real-time data transfer has given financial services a new pair of wings; Fin-tech offers customers a satisfying and seamless experience. Fin-tech is built on advanced technology a platform that allows them to be more agile and nimble in adapting to dynamic market conditions.
If the government, Fin-techs’ and Financial Institutions work in tandem, they can create a superlative ecosystem that will provide the ideal backdrop for Fin-techs’ to add a global chapter to their narrative
AI and ML are used to process vast amounts of data generated every day to create actionable insights by predicting customer behavior. This helps companies to upsell and cross-sell products to customers or suggests potential products which may interest them. AI-enhanced Chatbots can interact with customers 24/7, handle transactions, provide information and help them in multiple ways. RPA or Robotic Process Automation helps to improve the user experience by using bots to complete repetitive tasks automatically. This reduces human errors as well as frees up resources to handle more complex queries. Today’s customers can get a loan sanctioned and credited in just fifteen minutes. All it takes is to fulfil the minimum criteria, fill up the online application and upload the minimum required documents. The system completes its checks, approves the loan and credits it within 15 minutes.
6.Account Aggregator Ecosystem:
An account aggregator is a portal or app which customers can use to provide consent for sharing of personal financial information. The account aggregator network has three main nodes called financial information provider, financial information user and tech services provider which is account aggregator itself. Account aggregators make it convenient to consolidate all your data in one place and provide a digital framework to share the data in real-time between various financial service providers. A lot of manual work and time wasted in collecting documents, making photocopies, getting them attested and sharing them with multiple financial institutions is eliminated. It is a safe consent-based framework that gives you control over your personal information and provides faster access to financial services. Eight leading banks of the country have become part of the account aggregator network that has been created under the supervision of the RBI for safe and easy data sharing. This is bound to increase efficiencies and provide convenience to all the stakeholders in the financial ecosystem. This must be listed as one of the most dynamic transformations in the world of finance as far as ease of service is concerned. It will radically change the way financial services are provided as it will cut down the processing time making it seamless and paperless.
7.Healthstack:
The National Digital Health Mission was announced by PM Modi in September 2021 to provide every citizen with a Health ID, a unique 14 digit ID generated by the Ministry of Health and Family Welfare. This contains patient’s complete medical history from prescriptions to reports which can be accessed not only by the patient but also by other stakeholders in the healthcare ecosystem including hospitals, laboratories, insurance companies etc. This humongous database for 1.3 billion Indians will need storage space which is where the National Health Stack comes in. This will be the building block for the digital infrastructure on which the National Digital Health Mission will operate. The NHS is a collection of cloud-based services, with each service provider developing their own open-source APIs which will allow them to access the health data and provide services. This mission is expected to revolutionize healthcare in India and is another example of how fintech has changed mindsets and redesigned the paradigm.
Conclusion:
How will this dream turn into reality? What will it take for the fin-tech sector to grow to $160 billion over the next few years? The government has played a stellar role by building a best in class infrastructure for payments. A collaborative environment has also been created to build synergies between Fin-techs and Financial Institutions. The need of the hour is to create enabling policy frameworks. Once Fin-techs are able to scale up, they should expand to other geographies. If the government, Fin-techs’ and Financial Institutions work in tandem, they can create a superlative ecosystem that will provide the ideal backdrop for Fin-techs’ to add a global chapter to their narrative.