By Mr. Siddharth Kukatlapalli, Co-founder and CBO at Syntizen Technologies
The emergence of fintech or digital technologies has altered and revolutionized the financial markets. Due to the growth of fintech services customers now have a one-stop shop offering services like crowdfunding, mobile payment choices, online portfolio management, and international money transfers thanks to the growth of fintech in the banking industry. The implementation of digital innovations by the financial sector has increased financial inclusion, decreased risk, and increased efficiency. Fintech has drawn a lot of interest on a global scale as a result of digitalization and the rising desire for speedier transactions. India is one of the world’s fastest-growing fintech markets and has the fastest adoption rate for fintech. With estimated GDP growth reaching US$ 5 trillion by 2026 from its current level of US$ 2.62 trillion.
Digital identity easing financial services
Traditional financial services have seen a dramatic transition as a result of innovation and technology. Fintech can be summed up as technology-based companies that work with, compete against, or empower financial institutions. Fintech develops a highly integrated ecosystem that brings together the knowledge, skills, facilities, and cutting-edge financial services to enhance customer experiences thus promoting digital inclusion.
The growth of fintech in financial services has enabled various benefits that are listed below:
Convenient & Time saving: Everybody and everyone with a bank account now has access to digital banking thanks to fintech. Customers can easily visit the bank’s website or mobile application to carry on their transactions even when the bank is closed. With only a device and an internet connection needed to access the services, it is comparatively easy to use and saves a lot of time.
Banking Benefits: Due to the convenience of any-time, anywhere banking, there are now more customers using financial services. Human errors are less likely to occur during calculations. Since all transactions in digital banking are electronically recorded, record-keeping has become easier.
Lower Overhead: Because of the digital banking services started by fintechs, banks can now operate considerably more affordably. They are now able to charge lower prices for services encouraging the adoption of digital services and give greater interest rates on deposits as a result.
Security: In the digital banking process the data is encrypted in such a manner that only the financial institutions can understand it, allowing the users to conduct transactions safely. Fintech makes use of, AI/ML, blockchain technology, eKYC to overcome information asymmetries and provide secure mechanism in assisting a protected digital identity and risk-free financial services.
Fintech services empowering financial institutions
Financial technology uses specialised software and algorithms that are used by financial service providers to save valuable resources like time and money to better manage their operations. The deployment of fintech digital solution like OCR technology by the financial institutes has enabled them to onboard customers instantly as it helps to verify and store customer information while eliminating human error. OCR technology also assist the financial institutes by enabling a scan-to-pay function, allowing to quickly identify customers before wire transfers, opening and logging in bank accounts using biometric data and more. It further promotes the financial inclusion by making the use of customers mobile phone cameras to act as a scanner for document verification.
The evolution of fintech solutions has eased KYC process by replacing the traditional in person verification method with a video verification to ensure correct digital identity. Video KYC has become one of the safest ways to verify information, particularly for financial institutions. Video KYC sets itself apart from existing KYC verification protocols due to the incorporation of video-enabled features, audio-visual interactions, facial matching capabilities, and general usage of AI technology to improve & accelerate the KYC verification process.
Growth of Digital identity in India
The global digital economy is expanding as a result of the Covid-19 pandemic, and technologies like artificial intelligence (AI), quantum computing, 5G, and the Internet of Things (IoT) are offering businesses in many industries significant growth opportunities. The Indian government introduced the Digital India programme in 2015 to promote the digital inclusion in the country. The initiative focuses on digital infrastructure as a fundamental right for every person, on demand governance and services, and on the empowerment of digital citizens. The programme aims to guarantee the availability of high-speed internet, provide every citizen with a mobile phone and a bank account, guarantee the accessibility of real-time services from online and mobile platforms, make financial transactions cashless and electronic, guarantee digital literacy, and make digital resources widely available throughout the country. The digital initiative of the government also presents the growth of digital economy to a US$1 trillion market by 2025.
To conclude
The financial sector has undergone changes in recent years as a result of fintech, or financial technology. The estimated size of the worldwide fintech market by 2028 is expected to grow with a potential CAGR of 19.8%, is USD 332.5 billion. By utilising big data, AI/ML, and blockchain technology to overcome information asymmetries and create a user-friendly user interface, the digital disruption in financial services promises to lead to an improvement in efficiency and service on a whole. It has also given financial institutes new chances for digital transformation of products, services, and operations in order to better comprehend and meet the demands of the financial customer in the digital age.
