Gamechanger! How fintech firms are disrupting traditional banking and financial services space
Fintech is disrupting the traditional banking and financial services space with innovations backed by robust technology and nimble execution capabilities.
Currently, the fintech industry has become a rapidly growing segment in India's financial sector. This is because of young tech-focused startups and other new entrants are changing the way of doing business in financial services, especially in comparison with banks. Javed Tapia, Founder Slonkit states that, fintech is disrupting the traditional banking and financial services space with innovations backed by robust technology and nimble execution capabilities.
Tapia says, "We will witness innovative ideas come to life in the fintech space in the coming year."
According to Tapia, the year 2019 is the beginning of various changes for fintech industry. Here are top five trends that can be seen in this space.
1. Digital-only Banks
Rapid digitization of the fintech industry is changing customer’s mindset from conventional banking to convenience banking. Customers do not visit banks anymore. They prefer using services online for convenience and seamlessness.
According to a PwC survey, 49% of consumers now conduct their banking primarily on their desktop or smartphones. As per research by Espeo Software, a mobile and web software development company, customer visits to branches of banks are expected to drop by 36 percent between 2017 and 2022, while mobile transactions are expected to grow by 121 percent in the same period.
2. Automation of Business Functions
Fintech companies are transforming various functions of banks such as lending, payments, insurance, credit settlements, etc. The banking industry is recognizing the need to automate business functions and back-end processes. As per a PwC report titled “Financial services technology 2020 and beyond: Embracing disruption”, global investments in the Fintech sector have crossed US$ 12 Billion.
Financial services companies are now collaborating with Fintech companies to digitally transform the entire process from customer onboarding, to underwriting, to issuing loans and managing collections. Furthermore, fintech companies are also enabling seamless program management and bringing contextual marketing backed by AI-based data analytics capabilities to engage customers digitally, enhance repeat purchases and retain customers.
3. AI powered Digital Assistants
Artificial Intelligence (AI) is transforming the way fintech companies serve their customers. Now, voice assistants are being developed to automate processes from onboarding to customer engagement and renewals. For instance, OCBC bank has recently partnered with Google to launch the first AI-powered voice banking in Singapore. Chatbots have also gained popularity by allowing customers to conveniently chat with robots in real-time and get accurate answers. Bots are also being used to detect fraud.
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4. Internet of Payments
The smartphone revolution and internet penetration has transformed banking, payments and money transfers. According to Gartner, the number of devices connected to the Internet of Things (IoT) is expected to reach 20.8 billion in 2020. Fintech companies will create a robust ecosystem that will integrate IoT with banking and payment needs. Consumers are increasingly expecting their IoT devices to facilitate payments. Fintech companies are enabling payments through wearables and other smart devices.
5. Data Security Solutions
Digitization, security and privacy have become core concerns of the fintech industry. As per a recent Fiserv study, 57% of the customers who haven’t used mobile banking yet have cited “security concerns” as their primary reason. Hence, data protection and privacy will continue to be at the center of technological evolution in the fintech industry.
Fintech companies will be very careful while handling Personally Identifiable Information (PII) about a customer. These companies will leverage technology to ensure security and confidentiality of such data collected, if any. They will also use technology to comply with regulatory mandates such as GDRP.