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FinTech : The Revolution and Future in Banking

Lets start with what is FinTech? FinTech is an abbreviation for Financial Technology. FinTech is an emerging financial service sector. An innovative technology that provides better financial services in sync with the latest technological trends. Technology has become an inseparable element in every aspect and it is difficult to do business without using technology to a certain degree. This has also helped the business to grow faster. There is a revolution in the working of the business and it’s become very easy and simplified today.

Traditional banking has enjoyed monopoly in financial market for a long time. Traditional banking poses fundamental problems like constrain of place, non-availability of 24*7 services and time consuming lengthy process.

The technology boom has slowly moved from Internet Banking to Mobile Banking and is now taking a new direction towards digital banking. We see competition in banking sector has become extensive and included non-banks who provide services in the niche areas of banking. These non-banks are giants of other sectors or majorly are start-ups.

The Rise of FinTech

FinTech companies are automating the major fraction of the banking process, adding speed, displaying transparency and assuring security to the transaction process. FinTech firms identify the costumers’ needs and aim to protect the user hidden charges. Be it money transfer, taking loans and insurance or simply creating and managing accounts, FinTech largely benefit the banking sector.

The continuous advancement has now led to new concepts and product offerings emerging with completely different and unique model. Hyper personalization of product, innovative payment system, rise in the acceptance of artificial intelligence are few key factors replacing the traditional financial system.

Read also: Classification of Banking System in India and how do banks work with RBI?

How does FinTech work?

Now, that every business is going digital and the number of digital transaction is on a rise, FinTech firms are developing innovative style of interacting with the customers’ and extend banking services. The banks are no more confined to a physical space and in-person consultation. Banking application, payment gateways and digital wallet are few basic examples of FinTech Development. It promotes the use of digital technology and pushes the start-ups to innovate product and services for the end customers’.

What are the impact of FinTech on Banking?

Banks have the two C’s – Capital and Customer which the FinTech firms need but are not able to get easily. However, the rapid growth of FinTech in the last few years has changed the ways people do their daily business transaction or cash transactions. It is also taking the cash driven nations to become cashless societies.

Trends that are framing the future of banking sector with FinTech formulas:

  1. Payment Services: FinTech has made payment flexible, fast and cheap, all by the support of high technologies, artificial intelligence, machine learning and Internet. Most payments are done through internet Banking or with the use of smartphones. This has eliminated the need to visit the branches physically. This has also reduced the use of physical cash as well as debit/credit cards. This is convenient and brisk. This has also helped in reduction of crimes like theft.
  2. Improved Products and Services: FinTech involves digital trends to satisfy customers’ needs and provide them the digital power. It also makes it necessary for the FinTech firms to focus on the security of the transaction, data and privacy of the customer especially from the prone cyber crimes. So, providing improved communication to the consumer by the firm will make it easier to understand the account handling. An active communication involves regular updates through e-mails or text messages, sharing information about the policy and customer services. The customer can have a savings or current account, demat account, insurance policy or mutual fund holding with a particular FinTech firm.
  3. Reach ability is Enhanced: Cutting-edge technology and working towards hyper personalized option for the consumer is the speciality of FinTech firms. So, they put data analytics for offering services, ensuring complete execution over the web or smartphone. Application Program Interfaces (API) have becoming a very important aspect and tool for all banking solutions.
  4. Alternative lending: different from traditional lenders, FinTech allow the customer with faster and easier access to capital. It allows online services to directly match lenders with borrowers. The customer can access the credit worthiness of the borrower through the alternative data. It can also be termed as Peer-to-Peer (P2P) lending.
  5. Smart Solutions: The banking sector is experiencing the ever-growing need for solutions that are quick, flexible and robust. FinTech firms look into this need to the customer. It has started developing highly robust and effective solutions for banks for their offerings like loans, insurance etc. Remittance services have expensive for years, but FinTech solutions are making international money transfer swift, cost effective and accessible. The procedures related all these services are less complex, and it is available on the web with customization.
  6. Cryptocurrency: India being a more conservative market where cash transactions still dominate, usage of digital currency such as ‘Bitcoin’ has not seen much traction when compared to international market. However, there are few start-ups for cryptocurrency exchange which is also included in FinTech firms.

Read also: What is Crypto Currency and How to Invest in Crypto? Top 10 Crypto Currencies

Categories of FinTech

After understanding the revolution in the banking sector, we have seen the rise of the FinTech industry and how it works. So, we here at “b4investing” have categorized FinTech on basis of the solution they offer, in order for you to understand it better.

Read also: Pros and Cons of Cashless Economy

FinTech in India

FinTech start-ups have brought a significant change in our economy. Here are some of the FinTech firms making headlines in India.

  • Lendingkart
  • MoneyTap
  • PolicyBazaar
  • Razorpay
  • Paytm
  • Shiksha Finance
  • PineLabs
  • ZestMoney
  • ePayLater
  • WazirX
  • Cars24

This list should help you understand the change in the field of finance and give you an insight to keep an eye for upcoming FinTech companies.

The Bottom Line

At the end of the day, FinTech is here to stay and start-ups are leading the way. Banking regulations are becoming more inclusive and banks are investing in FinTech start-ups. FinTech is literally transforming our lives and habits by making the financial services easy, transparent, cost effective and time saving. Technological innovation is dramatically transforming the financial services and benefiting the society at large. FinTech has forced the banks to rethink its model of services. Moreover, for those businesses, who want to have edge over others will also have to evolve with the technology and provide best services to their customers.

FinTech is a new concept and this write-up helps you understand that it is all that you have been doing with your financial transactions over the last few months.

Be Educated!

Be Bold!!

But, Be Careful!!!

Happy Investing!!!

Post Author: Ragini

Holds degree of Masters in Management(Marketing). She likes to travel and explore, read and learn. Her work is her passion which keeps her Mind and Soul Happy

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