Financial technology has emerged as one of the most promising sectors of the Indian economy. The Covid-19 pandemic has been a blessing in disguise for Indian fintech companies. The limitations on mobility boosted the adoption of technology-driven financial solutions. Digital payment is a small part of the broader fintech ecosystem, but the data on digital payment’s growth is revealing of the trend. As per the Worldline India Digital Payments Report, UPI transactions jumped over 82% by volume and 99% by value in the second quarter of FY 21.
With the changes witnessed in the previous year, 2021 is expected to be promising for fintech in India. A number of nascent technologies may find wider adoption along with the introduction of some new technologies. A bulk of fintech solutions have focused on solving issues at the customer interaction level like digital account application, contact-less payments, digital on-boarding, etc. The year 2021 may witness the transformation of the value chain.
Robotic Process Automation
A number of consumer-facing processes are automated. One does not need to stand in long queues to open a bank account or submit scores of documents to open a Demat Account. These processes are largely automated today. Robotic process automation may bring a similar transformation to a host of back-end activities. It utilizes advanced technologies and robots to perform tasks, which are currently done by humans. RPA is being utilized by a clutch of organizations and its adoption is set to increase for several back-end tasks like security checks, customer on-boarding, credit card and mortgage processing, and account maintenance. A set of fintech companies may provide RPA solutions to legacy financial institutions, while others may themselves use it to streamline the workforce. RPA will help companies take care of mundane tasks and free up the workforce for other important roles like marketing and customer service.
Increased use of Bio-metrics
Financial technology has brought a paradigm change across sectors. From the way consumers transact to the way companies access capital, fintech companies have been at the forefront of the change. Consumers and businesses just need a device and an internet connection to perform even the most complex finance-related activities. However, the ease of access has also made establishments and individuals vulnerable to cyber crime. The fintech sector is likely to rely more on bio-metrics to establish identity and ward off cyber criminals. From large organizations that process critical consumer data to small organizations that provide custom financial solutions, every fintech company will need to fortify its security systems. While fingerprint confirmations have become common, the bio-metrics industry is moving towards contact-less checks. The fintech industry is likely to witness increased use of complex bio-metric checks in the current year.
Artificial Intelligence and Machine Learning
Every year of the last half-decade has been hailed as the year of artificial intelligence and machine learning in fintech. Yet, the technologies continue to find new applications in the industry. AI and ML find utilization across different levels of the value chain in the fintech sector. AI can help in the identification and prevention of financial frauds and other cyber crimes. Fintech companies are utilizing AI and ML in offering customized offers to customers.
Since, AI and ML can easily process consumer data to offer client-specific services, some fintech companies are using AI and ML to process the financial data of businesses to provide access to capital. As per a report by Autonomous, AI will reduce the operating costs of fintech companies by 22% by 2030. Consumers will get the cost savings in the form of efficient and affordable financial products.
A number of incumbent financial institutions seek to increase collaboration with nimble fintech companies. Collaborations can lead to innovative and affordable financial solutions for a large number of consumers at a time. However, integrating innovative fintech solutions with the core banking systems of incumbents can be tricky. The year could see a rise of fintech players that enable the integration of fintech solutions with core banking systems. With fintech-as-a-services-platform solutions, financial institutions will find it easier to partner with fintech companies.
The financial sector was one of the most slow-moving sectors in India. The rise of fintech has brought the sector to the forefront of technological change. While predicting the future is not possible, these trends are likely to shape the industry in 2021 and make life easier and secure for all.