FinTech

The OmniPresent Modern Tech

Relevance: Science and Technology- developments and their applications and
effects in everyday life.

“Technology is nothing. What’s important is that you have faith in

people, that they’re basically good and smart, and if you give them
tools, they’ll do wonderful things with them.”
– Steve Jobs

In recent years, technology has cleared the path for automation and transformation
in India's and the world's financial services industries. Fintech advancements greatly
stimulate innovation and empower financial institutions to deliver digital services
and maintain market relevance.

Fintech alone is expected to increase to $150-160 billion in revenue by 2025, with

significant growth potential.
To put it another way, this current fusion of finance and technology has included all
types of technology combined with finance to serve both businesses and individuals.
FinTech Accessibility At Different Levels
Over the last few years, India's Fintech sector has seen an exponential increase in
capital, with investments totaling more than $8 billion already made across various
stages of investment in 2021.

Presence at Individual Level

Smart Personal Finance Management

● Account management no longer requires a business or finance degree,
thanks to the rise of fintech. On the market, there are numerous excellent
solutions that provide automatic budgeting, financial planning, and asset
management services.
● Its customers can manage their bank accounts, credit cards, investments,
loans, and transactions all in one app.
● However, there is still a lot of room for improved, more intelligent personal
finance and banking. Another personal finance management software, Level
Money, for example, allows users to connect their accounts with any of the
2,500 U.S. banks, making it simple to monitor their funds.

Mobile Payments and Transfers

● Payment processing has witnessed substantial growth in recent years,
providing transparency and low cost that most bank transactions lack.
● By 2019, it is expected that over 5 billion individuals will be making payments
via their smartphones, thanks to the exponential rise of eCommerce and
mCommerce.
● Any solution that addresses the requirement for cheaper, faster, and easier
payments processing, whether it's a mobile payment system (Stripe), a
hardware device that can process credit card payments (Square), or an
alternative money transfer service (Transferwise), has a lot of potential.
● Furthermore, the fact that tech behemoths such as Apple and Google are
betting on mobile payments speaks for itself.

Simplified Investing with AI Advisors

● Markets and exchanges, like banks, are undergoing considerable digitisation.
Trading over the internet has become a lot easier and more accessible.
● Another emerging trend in this area is "robo-advisors." They employ a
combination of smart algorithms and human interaction to assist users in
making better investing decisions.
 ● Intelligent algorithms give up various opportunities for fintech, including
automated and personalized service, deep data-backed insights, and wiser
financial decisions.

Peer to Peer Lending and Microfinancing

● Peer to peer lending firms address a problem that banks frequently cannot.
● They remove the middleman from the credit process by connecting loan
providers with potential borrowers via specialized P2P platforms
(LendingClub, Prosper).
● As a result, consumer and business credit is simple and clear to access; the
process is simple, convenient, and quick.
● This location has a lot of potential that has yet to be uncovered.

Presence at the Regional and National Level

Mobile Banking and Financial Inclusion for Underserved

● Fintech clearly signals not just a wonderful chance to enter mobile banking,
but also a significant potential for serving the underbanked.
● According to a survey published by DeNovo, a PwC strategic consulting
platform, an estimated 2 billion adults, or 42 percent of the world's adult
population, are not part of the formal financial system.
● As a result, even little steps toward economic inclusion represent the single
largest potential FinTech opportunity.

Simplified Crowdfunding
● The total amount of money raised on crowdsourcing sites like Kickstarter and
Indiegogo each year is close to $3 billion.
● Non-accredited investors (i.e. ordinary people) will now be able to engage in
equity crowdfunding projects and invest in any business that allows it.
● This is considered as a huge step forward for early-stage firms, and it will
propel the crowdfunding market forward.

Affordable and Easy Accounting for Small Businesses

● While having a simple and effective instrument to automate personal finance
management is helpful, professional accountants require assistance with
bookkeeping as well.
● In this era of complete corporate digitization, using pen and paper or Excel
sheets to manage business finances is no longer an option.
● Accounting has become easier, more secure, and more economical as a result
of the shift to cloud SaaS technologies.
Presence at the Global Level

Cybersecurity
● The number of cyberattacks is unlikely to reduce very soon. Furthermore,
additional attack access points, such as the internet of things (IoT), raise the
need to secure networks and devices.
● The ever-changing nature of security vulnerabilities is one of the most difficult
aspects of cybersecurity. New attack channels emerge as new technologies
emerge and as technology is exploited in new or different ways.
● It can be difficult to keep up with the constant changes and advancements in
assaults, as well as to update practices to protect against them.
● Among the issues is ensuring that all aspects of cybersecurity are kept up to
date in order to protect against potential vulnerabilities. Smaller businesses
without staff or in-house resources may find this particularly tough.

Big Data and Predictive Analytics

● The banking industry is still being transformed by Big Data and predictive
analytics. Established financial organizations such as Goldman Sachs, Morgan
Stanley, and Bank of America are seeking for new ways to apply the data
they've acquired over the years.
● Major corporations rely on actionable business insights derived from
breakthrough technologies to stay up with the challenges posed by industry
disruptors. As a result, it's simple to understand why they're interested in
advanced analytics and big data finance businesses like Versive, Kensho
Technologies, Dataminr, and Antuit.
● There is a need to invest in a data science firm that offers an innovative
machine learning platform for preventing eCommerce fraud.
● These investments will support the development and commercialization of
novel solutions with the potential to transform how to identify and prevent
harmful behavior in financial services," according to the linked press
statement.
● Indeed, fraud prevention and risk management are two of the most discussed
fintech domains, where data science and machine learning have proven to be
extremely beneficial.

Digital banks
● The banking business has been able to grow to accommodate a larger
customer base, new markets, and products thanks to digital channels. Digital
 bank growth has accelerated as a result of the pandemic and social alienation,
and it is expected to continue in 2021. Consumers are moving to digital-only
banks because of better offers and lower prices.
● The Office of the Comptroller of the Currency (OCC) in the United States has
been sluggish to grant fintechs national bank charters, and the procedure is
costly.
● FinTechs are seeking Figures and numbers and many have recently obtained
permissions, demonstrating OCC's commitment to continue in 2021.

Blockchain and Digital Currency

● There is no doubt that blockchain represents a new area of opportunity, not
just in the financial sector.
● The technology behind Bitcoin is now gaining traction, as defined by PwC as a
decentralized ledger, or list, of all transactions over a peer-to-peer network.
Cryptocurrency, such as Bitcoin, is merely one application of blockchain
technology.
● The blockchain ecosystem is a very competitive market. The technology can
be used in practically any of the sectors mentioned above, such as payments
and transfers, loans, and trading.
● Some businesses, however, provide blockchain-based infrastructure and APIs
as a service. Chain, a blockchain technology startup, for example, has
attracted more than $40 million in funding to develop tools for developing
and deploying blockchain networks within financial institutions.

FinTech - During and After COVID-19

New opportunities for fintechs may emerge as the broader economy switches from
"react" to "recover."
How fintechs might use their particular assets and talents to grasp new
possibilities in the future is a critical topic. It could be a good time to think big and
take risks.

Managing Current Uncertainty

● Many fintechs, like the rest of the financial system, have gone into overdrive to
respond to the crisis.
● Many, including insurtech and proptech companies, are shoring up their
capital and funding from investors and lenders.
● Others have implemented cost-saving measures, including workforce
reduction.
● Current market conditions and social distancing practices have also affected
business growth, and many of those investing in real estate are being forced
 to pause their activities until it is clear that they will be able to sell the
properties.
● Aside from these more broad financial and operational factors, each fintech
sector faces its own set of problems. Many online lenders, for example, are
tightening their underwriting rules in order to maintain the quality of their
balance sheets and reduce the risk of increased defaults.
● They may also soon discover that the past data they rely on to make
underwriting choices is less dependable in today's environment, forcing them
to change their models.

FinTech & India During COVID-19

India's massive digital infrastructure played a key role in driving India's tech adoption
with public digital platforms and open-source architecture becoming the core
foundation of Digital India. The Government policies and regulations in the sector
have followed the philosophy of inclusion and innovation.
● India already had the right infrastructure for digital payments on a large scale,
which enabled it to reach a high of 411 crore monthly transactions in
November 2020.
● Despite the economic downturn, fintech payments saw investments double
in the first half of 2020.
● Even traditional BFSI players started accelerating their fintech initiatives and
investing in emerging technologies, either by themselves or partnership with
Software as a Service (SaaS) providers.

Conclusion

The year 2020 was a turning point for digital transformation and consumer behavior.
The disruption caused by Covid-19 has been one of the biggest humanitarian crises
after the great recession.
Once again, necessity brought about a fresh round of invention as virtual and
touchless became the primary modes of conduct, and all businesses had to roll out
digital applications or services to deal with the lockdown.
The next stage of evolution, Digital Payments 4.0 will focus on reaching the masses
with low-cost solutions.
In India, the volume of digital payments is expected to reach 54,800 crores by 2025, a
16x rise in just five years (since 2020) driven by frauds and cyber growth in digital
commerce, personalized solutions, digital of digital payment convergence, and
regulatory innovation.