“Ignoring technological change in a financial system based upon technology is like a mouse starving to death because someone moved their cheese.” – Chris Skinner.
Integrating technology with financial services is the need of the hour. The financial service providers who are unable to evolve according to technological changes are meant to fail. These technologies not only improve the services but also enhance the customer experience. We might see the complete eradication of paper currency as electronic payment methods are getting quite popular in the future.
Financial companies’ success is directly proportional to technology-enabled financial services. Technologies such as Cloud Computing, Big data Analytics, Secure Programming, Artificial Intelligence, Machine Learning, and Blockchain are used to make the system more efficient. The market is vouching for the creative disruption of financial services. The companies are repositioning themselves around the consumer. Financial institutions and banks cannot ignore the technologies for the long term. Time has been always money and financial companies should adapt and bring changes in their operation. If they do not mend their ways are bound to get lost in this new wave of technological evolution.
What is Fintech? Financial Technology (FinTech) describes technological integration with Finance. It improves and automates the use and delivery of financial services, such as Banking, Mutual Funds, Insurance, Tax/Audit consulting, Stock Market. It is the fuel that will decide the race and the winners in the market shortly. Recently, Prime Minister of India, Mr. Narendra Modi, said, “It is time to convert FinTech initiatives into a FinTech revolution, to ensure every citizen is empowered financially.”
What are some examples of FinTech? Let’s see this example of Fintech. You are a customer of a bank and want to inquire about some transactions of last year. Situation before the FinTech era. You have an account with a traditional bank. To know the transaction you have to be physically present at your home branch. Wait for your time. Request the manager. The manager calls one of the employees and he, in turn, calls the peon to bring the ledger. And now the customer will be able to know about the transaction. He would have spent not less than 15-20 minutes to get this information.
Today, due to FinTech implementations, it will be a task of ~60 seconds. Chatbots are used in banking to focus on search-related tasks. In this case, the manager gives access to the bot to the users’ banking transactions data. The chatbot uses Natural Language Processing (NLP), a technology to detect the meaning of the request sent by the user. The request could be related to balance inquiries, spending habits, general account information, and many more. Then the chatbot processes the requests and displays the results. For example, the chatbot of HDFC bank is Eva, and Bank of America is Erica.
What are FinTech segments? Segments that cover Fintech include Payments, Lending, Wealth Management, Insurance, Neo Bank, and Blockchain. While some of the segments are well known, two new segments will be talked about. These are Neo Bank and Blockchain.
Neo Banks are digital banks. They do not have any physical branches. Consumers get financial services through apps that can be accessed from anywhere. RazorpayX is the neobanking platform of India’s unicorn Razorpay. RazorpayX automates refunds of Cash on Delivery orders with Payout Links. Payout Links help in automating the refund process to a customer within a few minutes. Other players in this segment are – Open, Niyo, InstantPay, and YONO by State Bank of India.
The Blockchain is a software protocol that runs over the Internet. It is simply defined as a decentralized, distributed ledger technology that records the source of a digital asset. It is a chain of blocks containing information. Do you know what Genesis Block is? It is the first block in the chain. The blocks are timestamped to restrict possible backdate entries or any kind of tampering. The basic idea of Blockchain was to solve the double records problem and eliminate the need for a central server. The components of Blockchain are Database, Software application, and connected computers.
How big the Fintech Market is? In 2020, the Global FinTech Market was valued at USD 7301.78 billion. By 2026 it is projected to grow at a Compound Annual Growth Rate (CAGR) of 26.87%. In 2020, the India FinTech Market was valued at USD 2300 billion. By 2026 it is projected to grow at a Compound Annual Growth Rate (CAGR) of ~24.56% to USD 8350 billion.
Why Fintech Market will grow? FinTech Market is expected to be positively influenced by growing digital payments, legacy companies embracing technology-based solutions, Innovative startups, and increased IoT devices. A lot of funds are being invested in the first generation of companies. The smartphone penetration is the biggest boon for the Fintech Market.
Who are the main players in FinTech Arena? The government entities will be the main player. What a government can do? It can regulate policies, involve the central bank, issue Sovereign Bonds, and grant licenses that can actively impact the financial sector. The other players with significant contributions are – Traditional financial services firms (SBI and other public sector banks), Tech companies (Flipkart, Ola), Companies providing technology for financial transactions (Amazon Pay, WhatsApp), Institutional investors (Reliance Capital Asset Management, HDFC Asset Management) and New, disruptive companies.
Which services fuel the FinTech market? The following services will fuel the FinTech Market:
- Mobile Wallets (BHIM, PayTM, Google Pay).
- Cryptocurrencies (Bitcoin, Dogecoin, Tether)
- Paperless loans (Unicard, MoneyTap, PaySense)
- e-commerce platforms (Amazon, Flipkart, Snapdeal)
- Insurance – InsureTech (Acko, GramCover, Toffee Insurance)
- Crowdfunding (Wishberry, FuelADream, Ketto)
- Stock trading (Zerodha, Basis, Groww)
- RoboAdvising (5 Paisa, Angel Broking, FundsIndia)
- Wealth Management – WelthTech (Upstox, Kuvera, ETMoney)
What are the customer segments? There are four customer segments:
- Consumer – Lending, Personal Finance. Money transfer, Bill payments, Insurance, and Crypto.
- High Net Worth (HNW) – Wealth management, Crowdfunding, Real estate.
- Small to Medium Enterprise – Infrastructure providers, Lending, Insurance, Payroll, and Accounting.
- Enterprise – Capital markets, Infrastructure providers, Blockchain, and Insurance.
Is FinTech a good career? The FinTech industry is booming. The new generation does not like to visit banks. They want everything to be on their smartphones. More the need better the career prospects will be. Product innovation and advanced technologies will continue to transform this field thereby creating a demand for FinTech jobs. Job seekers are showing interest in this growing domain. Students and professionals from Commerce, Arts, Science, and all Engineering branches can have endless opportunities. Note that there is a significant shortage of talent in the FinTech domain.
What types of jobs are available in FinTech Market? The various job roles available in the FinTech domain are Software and App Developers, Marketing managers, Financial analysts, Business development managers, Data analysts, Cybersecurity specialists, User experience designers, Cloud Engineers, AI & ML Engineers, Data scientists, Blockchain Expert, Test engineering manager, Business analyst, Product Manager, Operations Manager, Fintech Software Engineer, DevOps Engineer and many more.
How to make a career in the Fintech domain? If a student is from Commerce, Arts, Science, and any of the engineering streams, he or she can make a career in the FinTech domain. IANT (Institute of Advance Network Technology) is one of the Leading Training Institutes. It provides training and placements in the field of FinTech, Digital Marketing, Infrastructure Management Services (IMS), Software Programming, Information Technology (IT), Coding, Robotics, Artificial Intelligence (AI), Cybersecurity, and Disruptive Technologies. IT also provides Technology International certifications at the world’s lowest price.
The FinTech course at IANT includes Introduction to BFSI, Tally, Accountancy basics, Python. Building Robust, Secure & Scalable APIs, Introduction to Cloud Computing, Digital Transformation & RPA, Blockchain, Artificial Intelligence, Machine Learning, Big Data, and Case studies.
IANT not only Trains but Crafts students’ careers by making them Job ready. “IANT Transforms Student into a Professional!”