Future of FinTech: When we talk about future of fintech it’s Over the past few year we witnessed several merger and acquisitions specially in FinTech.
In a recent report, by Research and Markets as of March 2020, India is second highest alongside China, accounted for the highest FinTech adoption rate 87%, out of all the emerging markets in the world. On the other hand, the global average adoption rate stood at 64%.
The report also states that “The FinTech market in India was valued at Rs 1,920.16 billion in 2019 and is expected to reach Rs 6,207.41 Billion by 2025, expanding at a compound annual growth rate (CAGR) of approximately 22.7 percent during the 2020-2025 period.
Government of India through its multiple financial institutions has been aiming at creating a ‘cashless’ society. But this is a dream, which will take sometime to get fulfilled.
Earlier this year, the National Association of Software and Services Companies (NASSCOM) reported that around 400 FinTech firms operated in India, boosted in large part by foreign investments in FinTech-focused startup accelerators and incubators. To a large extent, the Indian tech entrepreneurs have reshaped the FinTech industry with their innovation so let’s see driver of Innovation.
Drivers of Innovation
A variety of factors are at work when we look at the advancement of FinTech.
- New Technology
- Consumer Behavior
- Low Entry Barriers
- Information
- Personalization
- Investment
- Globalization
- Interconnection
Technology:
Technological advancements have changed how we do nearly everything in our day-to-day lives. Technologies such as IoT, AI, blockchain and cloud computing are the major drivers of FinTech companies.
Consumer Behavior:
Particularly in Gen X, Y and Z, has shifted and the previously existing financial systems in some markets are simply not keeping pace with societal changes, allowing technology enabled players to enter the market.
Low Entry Barriers:
Barriers to entry have lowered as technology has flourished, forcing financial institutions to change or be left behind. It has opened the door for new challenger start-ups, like Monzo in the banking industry, who are targeting consumers with different needs and behaviors.
Information:
Greater access to information through analytics, online activities, different authorities, artificial intelligence, and cloud computing allow companies to see trends – and adjust to them – more quickly.
Personification:
Now due to several data providing which is secured and with several compliances fintech can access and then with that processing through AI/ML and they enabling to provide personalized offer as per profile and this is completely automated.
Investments (Investor and Venture Capitalist):
Investment in the sector has been gargantuan and is continuing to grow rapidly, ensuring we will see many more advancements in the near future.
Fintech Trends (Future of Fintech):
Here I’m trying to cover top 10 FinTech type as per my understanding and VC investment trends and list is mentioned at below: –
- Embedded Finance
- Neo Banking
- Digital Banking
- SMB Lending
- Corporate Cards
- Wealth Management
- Alternative Financing
- Digital Payments
Embedded Finance:
This is my favorite, As finance is related with each activity of our life, And previously we witnessed finance is one the most necessary part without it nothing is possible. And most of the innovation, digitalization required in Finance.
When we know finance is everywhere then why we can’t make it enabled in one place? And making each thing enabled in one place called Embedded Finance. I’m mentioning few examples-
- Buy product from your bank or FinTech website,
- Plan Travel and Journey from Bank or FinTech Website,
- Use Buy Now Pay Letter at Banks or FinTech website and Etc.
NEO Banking:
NeoBank in India is basically a digital bank without any physical presence of branches. NeoBanks are fintech firms which is providing digitised and mobile oriented Banking and financial Solution like payment solutions, money transfers, money lending and many more. Instead of being physically present at a particular location, neo banking is entirely online.
In India there is no any digital Bank, Because RBI is not given license of Banking to any company for operating Digitally. So most of the NeoBanks in India is an affiliate of any normal Banks or powered by a Banks. Read More..
Digital Banking:
Over the past handful of years, a small but rapidly scaling cohort of challenger banks launched in the digital banking space specifically focused on attracting a millennial and Gen Z audience. Critically, this challenger cohort is focused on the customer experience layer of banking, a distinctly underserved component of the modern baking system on a macro scale.
SMB Lending:
SMB (Small to Medium size Businesses) Lending is now a buzzword for all FinTech enthusiastic people. Several times we all listen that Small and Medium Businesses are backbone of Indian Economy.
As per MSME Ministry, 6.3 Crore (63 Million) MSME are registered and contributing around 30% in GDP. So with this number and size of market we can understand how big this is and what’s scope FinTech are having for providing technical and financial support to them.
So providing loans and Financial Aid fall under SMB Lending. And many more new FinTech Startups are coming in this segment.
Corporate Cards:
In tandem with digital banking challenger brands, corporate cards have experienced similar waves of innovation across the past few years. The leading companies in the digital corporate card ecosystem focus on partnering with well know, high-growth startups without requiring personal guarantees. In addition, this cohort offers improved control, visibility, and flexibility for employees in large organizations, while centralizing receipts and expense tracking.
Wealth Management:
We all are earning for our survival and better life. We all have seen hard time even many of us have witnessed hard time in life. And for getting recovered, fighting bad time we need to have savings and for that we need to save money and that comes from proper wealth management.
Wealth Management is one the most important factor of Finance. Without wealth management we can’t assume our Future. With proper wealth management we could save more for our future and hard time.