The future of FinTech has never been brighter, with the emerging technology and increase in the awareness about the benefits of Fintech post the pandemic. The FinTech companies are entitled to making their way in the market faster than ever before with the digital transformation occurring in Banking. The Fintech Revolution started during the financial crisis of 2008 with the promise of open access to data, hassle-free Banking experiences and fairer deals for customers. The need for Digital Transformation has already begun to grow from the COVID-19 pandemic.
The coronavirus pandemic has disrupted normalcy in every sphere of our life. At a time when every sector is facing a huge fundamental shift, FinTech companies have been witnessing an unprecedented spike in demand from organisations to help them navigate this uncertain period. Though the value of FinTech has been widely acknowledged, many firms are now, stepping up to achieve their full potential by widening the scope of innovations to help organisations overcome the present barriers. One very important factor that is leading to higher demand for the services of FinTechs is the willingness to revamp the traditional systems and processes and bring in the cost-effectiveness of product and service delivery, make it faster, more efficient and easily accessible. Innovative propositions or ensuring contactless transactions to ensure social distancing norms is being seen to be a top priority for organisations today.
Looking at the current scenario of COVID-19, Banks need to innovate and explore new ways to use financial data. Banks can unlock the data from their purchase-to-pay offering to enhance existing services and develop new ones. It’s observed that FinTechs has been serving pretty well with rapidly advancing technological innovations, from robotics to artificial intelligence and machine learning, offering Banks new ways to transform their businesses without replacing core banking systems which have brought tremendous growth in the Banking Industry.
Talking about Upcoming Fintech Trends and Strategy post COVID-19:
More Collaboration with Traditional Banks
Today most of the Banks are living in the same old model of surviving on CASA whereas the Consumer needs have moved much beyond; they want to see a consolidated dashboard and no single line items. With the increase in competition in the offerings, with the AA model, (Account Aggregator) Banks will have to provide the information of the account holder, FinTech being nimble will be able to access the information and build better products, Onset of Challenger Banks is going to tremendously impact the Banks functioning. Fintech’sare going to innovate extremely fast and make Banks the custodian of the money and rest all the functions will be done by them. Open Banking is further going to help the FinTech companies to wean the control over the customer from Banks which will then manage Mutual Funds, Fixed Deposits, Insurance, Alternate Investments etc. from a Single Account and the history shown as a Consolidated Dashboard.
This crisis will ultimately end up benefiting the FinTech industry by accelerating the rush to Digitisation. As COVID-19 continues to reshape how society behaves, digital-only services will become commonplace, especially within the financial sector.
With new demand comes opportunity. So FinTech companies have to work on their innovations as there will be high demand for AI, Automation and other Digital services to cut cost on the expenses.
Partnerships between FinTechs and Corporates
In the coming time, we will observe Banks to work Collaboratively with FinTech players to clear out irregularities to provide value-added services and smooth customer experience, along with a series of advanced features to ease operations to the Corporate sector.
Technology-driven trends of FinTech companies tend to deliver solutions that capture the attention of consumers who were dissatisfied with financial institutions.
Changes in consumer behaviour
Customers became more willing to access, view, and perform financial transactions online because it was quick, convenient, and saved them on unnecessary costs (such as overdraft and monthly service fees)
Advances in cloud-based technology
Customer-initiated transactions were able to be executed in real-time for processing and clearing, which helped enhance digital capabilities available to users online.
Power and availability of mobile devices
The evolution of mobile devices, especially app-based smartphones, conveniently brought banking from a desktop to a customer’s pocket.
Increased security in Digital Payments
This new era of customer-centricity requires that companies prioritise security while providing a good customer experience. The COVID-19 pandemic has made us extremely vulnerable. Throughout this crisis, more than ever, we have come to rely on computer systems, mobile devices, and the Internet to connect, shop, work, and exchange information. As a result, many digital and e-payment platforms have never been stronger. The COVID-19 crisis may have put the world economy on the sidelines, but in recent months online payment transactions have jumped by almost a third.
The road to stronger security involves a close partnership between all the stakeholders such as Banks, Payment Gateways and Regulators, to pre-empt and avoid cybersecurity incidents. The transition to a cashless Indian economy is underway, but it is essential to build fundamental principles like striking the right balance between and security.
Neo Banking has been a part of International Markets since quite some time now and has catered to an Unbanked section of the society. Neo Banks are no different than other Banks with their end-to-end services being digitalised. Neo Banks are 100% Digital Banks, which offer services ranging from accounts, credits and payments without the burden of a physical network. It’s a new version of old banking models with easy modes of payment with less hassle.
Open Banking is a beautiful concept and has been around for more than a decade around the world, but it hasn’t taken off yet especially in India because it requires the necessary surrounding infrastructure for it function. But with the advent of UPI stack, it took off suddenly and the number of use cases being built around it is huge. The ability to be able to open a Bank Account in minutes and to be able to see your entire transaction history across banks along with the AA license companies being able to provide the financial data, it’s a great opportunity. With standardizations by means of guidelines and consortiums, it would become far easier for fintech players to not worry about bolts and nuts of how to build but rather focus on what to build. The crucial purpose of creating a Consortium is for bringing together major industry players to develop or advertise new technologies as it too and risky for one company to do it alone. Another important reason is to draft uniform regulations or codes of conduct that will govern individual companies throughout that industry and to set standards for the licensing of professionals within an industry.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of HelloPost.)