Bullish On Leveraging Influence Of Digital Innovation In Fintech

Every other business in India has grown to rely on Fintech for a prompt solution to all their financial needs. In recent years, Fintech has attained unprecedented growth in India, ranking third-largest globally and valued at a whopping $31 billion. Given the aggressive reliance on technologies these days, the value of Fintech is expected to redefine several market benchmarks.

Considering its prominence in the world and, more importantly, in India, Fintech has evolved and how it continues to transform Indian businesses. Fintech companies' growing partnerships with traditional banking, insurance, and retail sectors, where they are actively catering to evolving customer needs, will further accelerate Fintech's expansion in India

What type of digital innovation do you think has enabled the evolution of Fintech in India?

Today's technological market is such that every step taken towards innovation aims to provide greater benefits and convenience to the consumers. This factor has significantly aided the evolution of Fintech. Services like mobile money would allow consumers to control their finances using their smartphones. The peer-to-peer (P2P) or marketplace lending allows several prospective entrepreneurs to engage with investors. Robo Advice provides greater precision and accuracy when providing financial services. In fact, Insuretech (insurance technology) & Crypto-Asset have significantly redefined the possibilities of Fintech. 

However, Fintech has brought a substantial advantage to India’s budding Electric Vehicle sector. It has made credit supply possible for interested buyers, created digital payment solutions for drivers and established an incredible ecosystem where insurance providers, battery manufacturers, and other key players of the electric vehicle domain can connect seamlessly. Fintech players have stepped up in a sector that conventional financiers ideally avoid. The influence of technology has not limited these services to India, but is being extensively accepted and implemented throughout more significant parts of the world. 

How do you think the New Age Tech has influenced the Fintech industry?

The implementation of new technologies like artificial intelligence, cloud computing, machine learning, distributed ledger technology, IoT has expanded the impact of Fintech, enabling businesses to serve their consumers in a more optimised way. Not only has it benefited corporations and consumers; it has greatly aided in the development of Regulatory Technologies (RegTech) and Supervisory Technologies (SupTech) in ensuring compliance. Identity management and control, risk management, and regulatory reporting are now accomplished with perfection. New-age technologies have also greatly aided in transaction monitoring and trading financial securities advancements. While new tech ensures the evolution of Fintech, it also equally ensures that RegTech and SupTech are equally evolved, which assures safety and fairness regardless of the advancement.

Fintech players in the country are transitioning towards the use of alternative data points using unique technologies like psychometrics, biometrics and gamification to help the vast population of financially excluded individuals get access to loans conveniently. Such techniques help generate data for loan assessment in real-time rather than relying on historic data, which traditional lenders follow.

Do you think the pandemic has accelerated the growth of Fintech? Also, due to the pandemic do you think people have started relying more on digital payments?

The pandemic forced several industries to implement temporary measures for survival during the unprecedented events. Much in line with the rise of work-from-home and online schools, many Fintech services, mobile money, and digital payment platforms, in particular, peaked during the pandemic. For instance, the pandemic brought a significant thrust in demand for electric vehicles for personal use, last-mile mobility, and hyperlocal deliveries due to rising fuel prices. The Government’s policy further pushed the usage of electric vehicles for pollution reduction among e-commerce companies, fleet owners and aggregators. This brought an explosion in demand for EVs driven by first/last mile connectivity and hyper-local deliveries in Tier 2 and 3 towns. Revfin’s innovative product made loans accessible to those with past loan history, no banking transactions, no digital data, daily wages in cash income, and very low education level, yet wanted to be a part of this clean technology.

That said, the pandemic has clearly influenced people to rely more on digital payments. According to a 2021 McKinsey Global Payment Report, the Asia-Pacific sector of the world, which includes India, has dominated the digital payments sector. The report further highlights the increase in digital payments in India.

How do you think the fintech industry can address the existing challenges?

It is always an arduous task to start a new business. This factor has been exponentially compounded during the pandemic. Yet, the pandemic witnessed a spike in startups globally and in India. It was primarily because the businesses could easily leverage FinTech solutions to solve their emerging problems. Whether it was about securing seed money, investing capital, borrowing money, or allowing customers to conduct transactions safely, a FinTech solution can easily assist businesses in conducting commerce securely and seamlessly. According to a report recently released, the cross-border compound annual growth rate (CAGR) is growing at a steady 5%. It will exceed $156 trillion by 2022, enabling an ideal environment for startups& SMEs to grow.

What is the current scenario of the Fintech industry and where it is headed to?

Fintech companies in India and worldwide have experienced an unprecedented rise in recent years. In the shortest time comprehensible, a large number of Fintech companies have surmounted themselves as ‘Decacorns’ (businesses valued at more than $10 million). The ones that offer Buy-now-pay-later options, digital payment platforms, and other money lending services have grown tremendously. Several reports show that global funding for Fintech has exceeded from the past year by more than 96%, and interestingly, more than 65 per cent of the early-stage deal activity happened outside of the USA. The Fintech companies are also adopting the platform-as-a-service (PaaS) model as it allows them greater flexibility to comply with any new regulatory changes.

How are Fintech companies catering to the needs of their customers?

Not just recently, but for a significant period of the past decade, many improvements have been made by banks and other independent financial services companies to provide customers with a one-stop solution. Several banks have significantly invested in creating APIs that go beyond enabling mobile money. Banks, financial services, and Fintech companies aim to provide their consumers with a complete one-stop-shop solution. 

We at Revfin have been providing loans to bottom of the pyramid individuals who have never taken a loan in the past; live in Tier 2, 3 and 4 towns; have not studied beyond the age of 10; are daily wage earners earning less than Rs 300 per day. The platform uses psychometrics and biometrics underpinned by machine learning and artificial intelligence algorithms to determine repayment intention. Meanwhile, it gamifies users to repay on time, substantially reducing NPAs. We approve loans for such users without any human intervention in under 15 minutes!

Such easy credit availability has impacted over 1 million lives by providing them financial empowerment to thrive and begin contributing towards the growth of the country and the world.