Thursday, November 30, 2023

Fintech startups are pushing the next wave of innovations


By Rashid Ali

The fintech sector has been reshaping the Indian economy for the last few years. Fintech firms are not just empowering the country’s economy but bringing a wide range of innovations, be it technological or in other segments as well.

Digital modification is reconstructing the convention and pace of financial services. Reforms in financial technology such as mobile money, peer-to-peer or marketplace lending, insurance technology and crypto-assets have developed worldwide. While this tends to be more diverse, competitive, efficient, and inclusive for multiple economies, it also increases the market concentration. In the past decade, fintech has grown and evolved to be thought of by many as an industry in itself, composed of organisations offering newer and more accessible alternatives for performing financial assistance. Over the years, fintech has been an attraction for investment, and it has revolutionised the way people and businesses transact and interact financially.

The first few years of fintech were fundamentally about implementing new ways of performing preexisting services more promptly, efficiently and strived to supersede extensive financial organisations. As a result, critical attention in the initial few years was directed towards business-to-consumer (B2C) intercommunications in the banking sector, primarily focused on payments, banking, lending and securities.

Considering the traditional way people use a bank as an example, multiple startups assisted in curating banking efforts on a phone or a tablet, which is the predominant way people interact with their banks today. Likewise, companies that encourage and enable digital payments have altered people’s spending for things and paying each other, changing how these transactions occur daily. Adding to those services, digital banking has evolved the way people invest their savings has seen a total adjusted thanks to companies assisting in digital banking.

The next evolution for the fintech sector is currently underway and is demonstrating to be distinctively different from the first.

Large financial institutions studied and observed the increase in demand for these advances and got ready to evolve, modify and grow their services by fundamentally procuring fintech startups or developing their own offerings. In addition, many of these organisations also endeavoured to make innovation more pivotal to their offering by creating innovation labs and incubators and investment channels to help assist the development of innovation.

The next evolution for the fintech sector is currently underway and is demonstrating to be distinctively different from the first. This next wave is foreseen to transform the way we conceive fintech, making us consider fintech less of a stand-alone sector of finance that aims to agitate and more of a manoeuvre for companies to continue developing and redefining business services. In addition, this next wave will motivate more significant collaborations and alliances between technology companies and institutional financial companies.

Innovative elements like blockchain will redefine financial transactions via digital platforms.

From a technology prospect, innovative elements like blockchain will redefine financial transactions via digital platforms. This could be a game-changer for consumers and economic organisations, as the rate with which financial transactions can be carried out via blockchain is far superior to what is experienced through conventional banking processes. In addition, companies across the globe are promoting the application of incorporating blockchains to carry out extensive volumes of financial services.

The development and application of the internet of things, artificial intelligence and application program interface (APIs) will transform the landscape of all financial institutes and services. For example, companies complement or supersede market strategists by using big data to analyse and recommend investment actions in AI. In addition, companies are turning towards using APIs to reenvision banking in customer onboarding and account opening and card management.

These advances foster a deeper partnership between fintech companies, financial institutions, and significant finance-based technology corporations. Banks and large financial corporations have started working with fintech startups and corporations to assist with advice and sequentially benefit from innovation created by the fintech partnerships.

The next evolution of fintech will also spread its influence into other sectors of the financial assistance industry that did not receive much attention in the past.

The next evolution of fintech will also spread its influence into other sectors of the financial assistance industry that did not receive much attention in the past. Historically, an unplayed aspect of the financial services industry has been alternative investments by the general public. This activity predominantly relies on physical documents to operate, and many modifications from the first fintech evolution never influenced it.

However, the $7.5 trillion that flooded into alternative investments has dramatically raised its profile in the past few years. In addition, investors requirement for a digital existence affiliated to the one they encounter in online or mobile banking, coupled with a potential for more prominent transparency, has installed enormous demand on fund administrators and fund managers that manage the administration of alternative investments.

Fintech companies are actively operating with fund administrators to help regenerate and update the reporting and operations of private funds to bring them to the same digital capacity as other banking services. Fintech companies provide investors with a digital experience akin to what people see in their individual investments and facilitate the fund administrator to automate their transactions. While another sector of Fintech Companies are encouraging to change how investments in private funds are identified made investors.

Scandals have improved administrative agreements to the forefront of the alternative investment industry and even encouraged a new term: RegTech. We already see innovations coming from RegTech, helping critical stakeholders like financial companies more precisely and instantly comply with KYC (Know Your Customer) regulations.

Compared to the first evolution of fintech, the successive changes promise to be more collaborative rather than aggressive, more collaborative rather than disruptive, and more broad-reaching than specialised. As such, fintech startups have impacted and positively transformed the finance landscape and have already had a productive impact on the financial landscape across the globe.

Although some have expressed concern about fintech burnout with recent scandals and hype, the capital invested in fintech companies continues to grow. This infusion of wealth is not only the lifeblood that the industry needs to continue but also a strong indication of the continued belief that the best days are still ahead for fintech.

Also Read: How women are empowering the Indian fintech sector and way round

(Rashid Ali is Managing Director of Ezeepay.)

(Disclaimer: The views expressed in the article above are those of the author’s and do not necessarily represent or reflect the views of Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.)


Please enter your comment!
Please enter your name here

Share post:


More like this

Navigating the path to sustainable energy: Trends and challenges

With climate change and its adverse impacts on mankind,...

Unmasking Artificial Intelligence: The game changer in today’s digital revolution

Artificial Intelligence (AI) has been garnering a lot of...

The growing need for security at the Edge

By Rahul S Kurkure With the growing focus on cybersecurity,...

Improving mental health in India: Challenges before us

By Siddhartha Mitra Mental health remains a major issue in...