Fin­tech – Dis­rupt­ing the Fi­nance Ecosys­tem in India

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Fi­nance is one of the most rapidly grow­ing sec­tors with a strong need for high pre­ci­sion and ex­tremely low tol­er­ance for er­rors. This sec­tor spurred the development of the first cal­cu­lat­ing ma­chines in the 17th­cen­tury and was never far away from tech­nol­ogy. Today, fi­nan­cial tech­nol­ogy, or Fin­tech, has trans­formed the way money is man­aged. It af­fects al­most ev­ery fi­nan­cial ac­tiv­ity, from bank­ing to pay­ments to wealth man­age­ment. Ev­ery as­pect of fi­nance is turn­ing pres­ence-less, pa­per­less, and cash­less. Tech­nol­ogy ad­vance­ments prom­ise bet­ter con­ve­nience, higher speed, and smaller over­head costs – fac­tors that no one, es­pe­cially the fi­nan­cial sec­tor can af­ford to miss. And these new trends are hav­ing a dis­rupt­ing ef­fect on this sec­tor. Tech­nol­ogy is un­avoid­able for the BFSI sec­tor. Ithas been the back­bone for data main­te­nance, trans­ac­tion en­able­ment, cus­tomer pro­fil­ing, se­cu­rity, and much more for decades now. How­ever, the chang­ing con­sumer be­hav­ior, spurred bythe pro­lif­er­a­tion of smart­phones and the in­ter­net,is rewrit­ing the role of tech­nol­ogy in the BFSI sec­tor. On­line mar­ket­places: Today, tech­nol­ogy has gone be­yond back-end sup­port and has come to the fore­front as an en­abler for ac­quir­ing cus­tomers on­line. On­line mar­ket­places are chang­ing the way peo­ple con­sume per­sonal fi­nance. With the plethora of in­for­ma­tion avail­able on­line and the abil­ity to com­pare prod­ucts based on ev­ery fea­ture and price points at the swipe of a screen is mak­ing con­sumers look at pur­chas­ing per­sonal fi­nance prod­ucts akin to shop­ping for any con­sumer durables. Pa­per­less au­then­ti­ca­tion: Pen and pa­per ap­pli­ca­tion are passé; doc­u­men­ta­tion and au­then­ti­ca­tion is now vir­tual and re­mote. Tech­nolo­gies such as e-Sign and Dig­ilocker al­low ac­cess of au­then­ti­cated dig­i­tal ver­sion of doc­u­ments from bank state­ments to PAN cards to ed­u­ca­tional cer­tifi­cates and more, sourced di­rectly from the is­suer. Au­then­ti­ca­tion, too, is unique, dig­i­tal, and sim­pli­fied with Aad­haar-based e-KYC sys­tems. Vir­tual money: Money is no longer hard cash; it has gone from pa­per to plas­tic to vir­tual wal­lets. Fi­nan­cial com­pa­nies would be able to trans­fer funds vir­tu­ally through wal­lets and the Uni­fied Pay­ments In­ter­face (UPI). On­line and mo­bile-en­abled trans­ac­tion mod­els, be they wal­lets or IMPS or UPI, en­gage with cus­tomers di­rectly, re­duc­ing chances of fraud at both ends. This wave of change in the BFSI space today, brought about by the e-com­merce rev­o­lu­tion and the adop­tion of mo­biles as the pri­mary de­vice, brings never-be­fore ad­van­tages to the sec­tor: Today, ser­vice re­quests in the fi­nan­cial seg­ment are moving on­line, if not di­rectly to mo­bile. This is re­plac­ing the brick-and-mor­tar struc­tures of yore, and break­ing down the bar­ri­ers of ge­og­ra­phy as well as as­so­ci­ated costs of set­ting up and main­tain­ing phys­i­cal in­fra­struc­ture. Pa­per­less trans­ac­tions and au­to­mated han­dling of ser­vice re­quests along with proper doc­u­men­ta­tion and track­ing fa­cil­i­ties have brought down the over­all turn­around time sig­nif­i­cantly. On­line or mo­bile sys­tems like wal­lets, IMPS, and UPI record more and more trans­ac­tions, pro­vid­ing a more de­tailed fi­nan­cial his­tory avail­able for anal­y­sis and ver­i­fi­ca­tion. All these fac­tors, when put to­gether, make a com­pelling case for a sin­gle in­te­grated so­lu­tion that al­lows fi­nance com­pa­nies to reach to ge­ogra­phies and pop­u­la­tions that were out of their reach un­til now se­curely and re­li­ably. This mo­bile- and in­ter­net-en­abled dis­rup­tion in the BFSI sec­tor by Fin­tech is just the be­gin­ning. The fu­ture cut­ting-edge tech­nol­ogy that is poised to dis­rupt the BFSI space is Ar­ti­fi­cial In­tel­li­gence. A so­phis­ti­cated AI bot with com­plex al­go­rithms to fig­ure out your risk pro­file, fil­ter the uni­verse of fi­nan­cial prod­ucts, cu­rate the best and most suit­able prod­ucts for you, all through your smart­phone, fits the bill. Data pat­terns will take the place of in­tu­ition when it comes to de­ci­sion-mak­ing, and bots will en­able the com­plete cy­cle from data to de­ci­sions. An­other wild card that could change the BFSI space is blockchain, which stores and records Bit­coin trans­ac­tions. This tech­nol­ogy could dis­in­ter­me­di­ate many fi­nan­cial pro­cesses and sub­stan­tially lower op­er­at­ing costs. The bot­tom­line is that Fin­tech has ar­rived, and it is here to stay. This is a change that has gar­nered govern­ment and reg­u­la­tory sup­port, with reg­u­la­tions be­com­ing more in­clu­sive. The en­tire idea is to main­tain a tech­nol­ogy-en­abled low-cost struc­ture to pro­vide a plethora of fi­nan­cial ser­vices to the ex­cluded, thus de­moc­ra­tiz­ing fi­nance.For the BFSI sec­tor and the con­sumer, it her­alds con­ve­nience and cost­sav­ings – a win for both.

Au­thored by MURARI SRID­HA­RAN Chief Tech­nol­ogy of­fi­cer, Bankbazaar.com

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