Fintechs are in the news again. Not that they had ever disappeared, but this time on a more ‘revolutionary note.’ Prime Minister Narendra Modi, recently addressed a leadership forum encouraging Fintechs to empower India’s financial health.
India has already embraced the Fintech ecosystem through its adoption of digital payments. With the new year around the corner, let us have a quick look at how the industry has taken shape amid Covid-19 imprints in 2021 and what it holds for 2022.
How has Fintechs Empowered India’s Financial Health in 2021?
Through Fintechs, the nation was better able to access financial inclusion. Financial inclusion means ensuring that disadvantaged groups have access to affordable financial services, timely loans, and other support.
India’s financial inclusion has improved considerably in recent years. Nearly 80% of Indians now have bank accounts, which is expected to rise.
Fintech companies are steadily making inroads into the Indian market. According to the global Fintech adoption index, India earns the highest place. So, let’s see what kept Fintechs in the game for the year 2021.
BaaS – Banking as a Service
Platforms providing Banking as a Service (BaaS) offer clients specific banking capabilities. Without establishing their banks, retailers, and extensive holdings, they like to conduct financial operations. BaaS is the best option in such cases.
BaaS platforms break down the bank’s infrastructure and offer individual access via their APIs. By providing good-quality personalised services, whether it’s granting a short-term loan or opening an account with low fees, Fintechs have made a new sphere with BaaS, building strong relationships with their clients.
Blockchain: An incorruptible, decentralised, and digital public ledger. It stores all digital assets and economic transactions across a peer-to-peer network. Digital solutions such as blockchain allow cryptocurrencies to exist. Using P2P networks, share data securely and transparently.
It is used widely in fund transfers, digital identity, and payments infrastructure. The Indian banking industry has indicated an interest in deploying this technology in both vendor financing and international trade finance. Businesses have reduced the need to maintain many different databases at various locations by implementing blockchain technology.
A digital-only banking model
It’s no secret that banks have come a long way over the last couple of decades – a Fintech marvel aims to combine globalisation and cryptocurrencies into a single banking service.
There is no need for drawn-out paperwork or long lines at a physical bank now that consumers have P2P transfers. A game-changer for the year 2021.
For example, MasterCard has zero transaction fees and can make global payments. Physical bank branch visits have decreased due to the technological evolution of banking, and the trend is likely to continue.
The Way Forward – Fintech Revolution in 2022
Eliminating payment friction while maintaining compliance and regulation
The Consumerisation of B2B payments has raised awareness of the need for frictionless, real-time payments and highlighted the importance of compliance and regulation.
The significant challenges businesses face are – slow transfers, poor user experience, high transaction fees, etc. Therefore, Fintechs need to facilitate international business growth by deploying new technologies, like AI, machine learning, BPA for swifter B2B payments without compromising security regulatory guidelines.
Both traditional players and disruptive Fintech companies need it for long-term sustainability.
Embedded finance in its broader gears
Modern businesses want (and need) a seamless payment experience, just like consumers. With embedded finance, companies can streamline the entire financial process while being more efficient in their operations.
Companies can offer a holistic experience through embedded finance, and customers can experience seamless funds transfer.
It’s high time for Open Banking
Open banking can transform the financial industry, but the road ahead is still long. Banks and Fintech companies must embrace the technology and future use cases to satisfy increasing customer expectations to make this approach a success.
In the year ahead, Fintechs, banks, and regulators should consider how open banking can become a reality.
In conclusion, it is evident that Fintech companies are more innovative than traditional financial institutions.
The Fintech revolution is sure to stir India’s financial health. The industry improves its credit, lending, and borrowing capabilities when it takes a strong learning approach.
There are many fintech players in India, but those with flexible business models that adapt to customer demands, stand out. Quick adoption of tech trends and a robust IT structure are crucial to keeping pace with changing markets. Precisa is never afraid to take on the changing tides.
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