The revolution in the finance industry has witnessed the emergence of bespoke services at affordable expenses. Online banking, cashless payment processes, chatbots, advanced data lending are some of the leading trends shaping the industry. These advancements have not just made banking convenient for consumers but have also potentially improved the way we transact in all aspects of business. Through adoption of these technologies, even other industries such as retail and corporate are being able to serve a large and diverse client base, improve customer relationships, increase productivity and reduce overhead costs. Let’s look at how fintechs are bringing a change in the finance landscape.
The introduction of e-wallets and credit cards has been beneficial to online businesses. The bricks and mortar stores have installed point-of-sale terminals and some have even started selling online. Banks & fintechs have helped retailers restructure their payment strategy, automating the process of payment. The customer base has widened as well with online presence. On the other hand, consumers are empowered with a wide array of purchase options to choose from when shopping online. The increased competition in the e-commerce space in turn has encouraged retailers to tie up with credit card companies and banks to offer discounts, cashbacks and no-cost EMIs on product purchases to customers.
Automation of asset allocation is another contribution of the fintech industry. Robo advisors administer investment advice to customers based on their profile and financial goals. Automation is a more effective way to manage wealth as the decision-making is not driven by inhibitions, client-broker relationship or any other emotions. It is more accurate and cost-effective. It is also capable of providing personalised service to a larger consumer base. Automation provides more updated information promptly to the users on their devices where human brokers face limitation.
Acting as aggregators
Fintech aggregators bring together several services in the financial ecosystem which goes beyond banking. It works as a marketplace for consumers to compare and shop financial products. At any given point, the aggregator is at least connecting three parties: the payee, the payer and the payment instrument provider. The product line is not just limited to banking products but also investment and insurance products. Some of them even allow you to pay your mobile, electricity and water bill through their platforms. These fintech firms often help you with financial planning as well based on the information you provide to them. The value proposition of these companies is the transparency provided to customers through a platform which helps you compare and find the best priced product while ensuring optimal benefits. The products and services offered can be accessed remotely without any legwork and without having to invest a lot of your time.
While banks along with fintechs have started offering instant and paperless unsecured loans up to Rs 60,000, loans above that amount are still not completely paperless. The KYC process still requires meeting with banking executives in person and completing KYC through counter-signed document and biometric. However, the fintech industry has moved on to electronic processing of application, income documents, e-signature and electronic repayment mandate. The next big trend in fintech could be people opening paperless accounts without being present or submitting a single paper proof of identity or without meeting with the bank – all from a cellphone using digitised KYC techniques. More Indians will instantly get the products they need even in the deep corners of the country not serviced by bank branches. True financial inclusion in India can only happen with presence-less finance.
The author is CEO, BankBazaar