To take Indian Financial Technology to new heights, it is essential to acknowledge and address associated risks. Prime Minister Narendra Modi declared that India would be the new Fintech destination at the Singapore Fintech Festival on 12 November.
Three key Fintech trends have revolutionised financial services in India:
- The scope of Artificial Intelligence and Machine Learning profoundly explored to process enormous amounts of data at high speed, accuracy and reduced costs.
- Instant data transfer and transactions (through cloud-based software) for almost zero cost.
- Smartphone-friendly data for 24*7 access.
Fintech has enabled many unbanked regions to get access to financial services at an unparalleled scale. However, there is a long way to go. Integration of chatbots has enhanced the user experience, alternative lenders have introduced the idea of instant loans, and mutual fund distributors have made immediate investment possible for investors among others.
New mechanisms have expanded financial inclusion. Fintech companies use social media data and transaction history to check bill payment patterns and, customer persona to target consumers who were invisible earlier.
To nurture and facilitate a seamless shift to digitalization, the following conditions must be met:
- Balance the existing regulations to support innovation without compromising on safety and accuracy.
- Supportive guidelines and inclusions to non-banks – Fintechs and crowdfunding.
- Government support for regulatory platforms and infrastructure to test new initiative and solutions.
- Effective and quick settlement systems from service providers
- Reliable national identification systems and the role of biometrics and eKYC
With countless opportunities offered by technology and innovative business processes, it is difficult to remain blind to operational and technical risks, not to mention the loss of privacy.
Some other hurdles to overcome include lack of access and trust in technology (especially in rural India). Designing financial solutions, hence, must be an inclusive process – keeping in mind the different phases of digital financial advancements in society.