Fintech is the driving force behind the transformations within the finance industry. In the last ten years alone, there have been incredible advancements across retail banking, wealth management, and payments. Now, consumers are shifting attention to fintech for even more enhanced financial services, and the trend is gaining greater traction with every passing day.
The global pandemic caused by COVID-19 has further increased the significance of fintech in the financial world. Therefore, let’s look at some areas that are emerging as key opportunities for entrepreneurs and will continue to be so beyond 2020.
To minimise virus transmission, there has been a significant change in consumer behaviour vis-à-vis the mode of payment. In pre-COVID times, consumers predominantly used cash to drive payments/transactions. But the pandemic has completely changed the scenario. We now rarely see face-to-face payments across the retail space.
As such, this change in consumer behaviour is accelerating the transition from in-person transactions to remote and digital. And it is only logical for consumers to do so considering the health crisis that rages across the globe. At the end of the day, in a world where there is a health hazard in physical contacts, contactless consumer experience is bound to take precedence.
The lending sector has proven to be a game-changer as well with its innovation-driven solutions. It is empowering people to address their pandemic-induced financial woes using a touch-of-the-button customer experience.
There is also considerable development on the integration front with digital transformation and concepts like open banking. That is to say that digital lending is the future. People now have a profound desire to overcome the traditional pain points of the lending process that entails red-tapism and complicated processes. Tech-driven lending platforms have made the entire process paperless and much faster.
Moreover, the ever-increasing data has simplified the onboarding process for lenders as it is becoming easier to profile a prospective borrower. Leveraging such an enhanced service capacity is now the need of the hour. The traditional lending process takes three to five weeks, and the average time to cash can stretch to as far as three months.
Such a slow process is now antiquated and unacceptable. With digital platforms and integrations, the Turnaround Time (TAT) can be reduced to a few days and hours. There are a lot of opportunities in digital lending – including consumer finance, SME lending, open banking, and so forth – for entrepreneurs.
Helping people manage their money digitally – investing, analysing, and advising – is an area ripe for innovation while being compliant with regulations in the space.
The net disposable income in India has been rising for the past couple of years along with digital adoption. India also has a growing base of HNIs and Ultra-HNIs who typically leverage wealth management services.
The ever-increasing data has enabled fintech platforms to develop cutting-edge solutions driven by technologies such as Artificial Intelligence and Big Data. Indians, in general, are also inclining towards unconventional investment instruments beyond real estate and bank deposits, especially in wake of the COVID-19 outbreak. It is directly increasing the penetration of tech-driven wealth management services in our country.
Fintech AI assistants
One of the most popular fintech technology trends of recent times is chatbots. The year 2019 already saw some promising developments. This is to say that the financial services and the banking industry are embracing conversations. The last decade has witnessed the rise of gadgets and applications that can listen, analyse, and address our queries and concerns. Artificial Intelligence-based chatbots are entering the scenario and actively driving changes, owing to advancements in Natural Language Processing (NLP) and speech capabilities.
It appears that the same technology can be leveraged to enhance and take financial services to a new level, and conversational banking is now a possibility.
For instance, financial institutions such as Morgan Stanley are already using AI to recognise fraud and execute a trade. HSBC appears to leverage AI in a more decisive manner as it utilises robots to reveal fraud, money laundering, and terrorist funding.
RPA in fintech
Robotic Process Automation (RPA) is also another promising fintech opportunity for entrepreneurs now and beyond 2020. When applied to existing traditional processes, it results in the reorganisation of legacy systems and cost reduction by a significant margin.
RPA has a versatile application as it is not a point-solution, meaning that it can be applied to any tasks of a rule-based and structured nature. Apart from cost reduction, RPA can also help companies reduce human errors, thereby helping to allot more time and window to focus on high-value tasks that, in turn, result in enhanced customer experience.
As 2020 draws to a close, questions about the future take centre stage. What is certain is that the fintech trends mentioned above will continue to shape the finance industry. As things stand, the trends in question are the key to meet the demands of tech-savvy customers.
If we look at the pace of technological advancements, we can see that down the line, technology will take over the finance industry completely as new consumers will be more tech-savvy than they ever were.