The FinTech Revolution in Banking
Premium- The UK government Department for International Trade presents Mint CXO Dialogues ‘The Era of FinTech: Ushering a New Age in Banking’. The session brought together top leaders from India and the UK to delve into the role of FinTech firms in reimagining banking and opportunities for cross-border collaboration between India and the UK.
Financial Technology, or FinTech, has already started to revolutionalise banking. An industry report pegs the FinTech industry in India to grow up to 150 billion dollars within the next five years. Already over 2,000 FinTech strong with a majority of them having set up shop in the last five years alone, this industry has grown undeterred by the pandemic, and has gone on to produce at least 8 Unicorns since January last year. But, realizing this potential opportunity will need investments estimated to the tune of 20-25 billion dollars, which lends a multinational angle to the entire story.
The UK government Department for International Trade presents Mint CXO Dialogues ‘The Era of FinTech: Ushering a New Age in Banking’. The session brought together top leaders from India and the UK to delve into the role of FinTech firms in reimagining banking and opportunities for cross-border collaboration between India and the UK.
The event brought together top leaders from India and the UK to delve into the role of FinTech firms in reimagining banking and opportunities for cross-border collaboration between India and the UK.
“The UK and India are world leaders when it comes to financial innovation that benefits households and businesses. Our bilateral partnership has strengthened our fintech sectors through the sharing of expertise as well as offering greater access to top talent and resources. Fintech will play a vital role in driving the post-pandemic recovery in both our nations, "said Alderman William Russell, The Right Honourable the Lord Mayor of the City of London, in his opening address.
In the broader banking ecosystem, FinTech has brought about a fundamental shift in the financial services sector, placing the customer at the core of everything. The use of technologies such as Voice, Data and Artificial Intelligence will shape the future of FinTech. There is great potential for Fintech companies to collaborate with banks such as ours, as we would be able to provide the best customer experience and they would get the benefit of a large pool of customers to help improve their solutions," said Punit Sood, Head of India, NatWest Group.
FinTech is reimagining the entire banking space, with banks moving to digitization. FinTech has taken this a step forward making them paperless, presence less and cashless. “In the present era, all banks are working in a completely automated environment. But while banks were ok at improving the automation levels, the difference that FinTech has brought in is helped reimagine the way the banking service was delivered to the end customers," said Biju K, Head Operational Risk and CISO, Federal Bank.
The theme in the banking and insurance space is fast changing towards consumer experience and FinTech has a large role to play there. “We at Policy Bazaar started digitization of the processes about 12 years ago and have reimagined the Insurance space. But, somewhere, our technology partner ecosystem has been evolving at a slower pace than what was anticipated. The pandemic has given it a push and I am hopeful that the entire FinTech ecosystem will only become better," said Saurabh Tiwari, CTO, Policy Bazaar.
Over the last two years, there has been a massive adoption of digital payment systems in India, which is going to be a complete game changer. It makes it a lot more convenient to go about with basic transactions like making payouts to purchasing any financial services. It has also placed the power of data in the customer’s hands.
“Digital payments have become a way of life in India and we have seen 10-15 million new customers coming on to the digital bandwagon over the last 12 months. Two factors that led to this change were demonetization and Covid-19 pandemic. There is a massively complex ecosystem at the backend but the reimagining at the backend has led to fantastic experience for the customers, triggering a massive adoption," said Hemant Gala, VP - Financial Services and Payments, Phone Pe.
But, a lot still needs to be done to tap the true potential of FinTech space in India, where its reach is still limited to a select few who have access to the banking and banking services. What the country needs is the right regulatory push to enable this change.
“You need the right regulatory and policy environment that enables the growth of technology across the financial services sector. What is also key is the ability of the UK to translate this into an international opportunity to communicate with like-minded ecosystems and further opening up a number of global opportunities for UK Fintech businesses," said Peter Cunnane, National and International Strategy Lead, Innovate Finance.
The push for FinTech in India came from multiple factors such as demonetization with share of active clients with FinTech brokers growing from 43 per cent to 57 per cent. The new-age consumer is open to trying out new apps to try out things that were completely unimaginable earlier.
“Earlier, the average age of the consumer was mid-30s which has gone down to 30 now. The millennials are a lot more open to trying out new forms of technology. Technologically, we are quite competitive with the rest of the world. But, I think there needs to be a lot of rationalization around regulation in the industry which will make it more favorable for the smaller investor to allocate a certain portion of his assets into equity," said Nikhil Kamath, Co-Founder and CIO, Zerodha.
FinTech innovations have reimagined traditional processes involved in banking, right from customer experience to risk management and is helping eradicate major bottlenecks in the banking space.
“Lending and payments bring together two parts of banking at the same time, where the customer is looking for speed and convenience. Those are areas where FinTech and the banks can collaborate and provide the customer with a great experience," said Anita Pai, Chief Operating Officer (COO), YES Bank.
FinTech companies in India have grown from 13 times to a staggering 70 times, bringing an opportunity to scale up and bring in cross-border collaboration. “The recent trend of remote working as a result of Covid has made the world smaller and broken financial as well as geographical borders. Revolut will hire over 300 people in India in the next three years as we see India as the number one hub outside of UK," said Alan Chang, Senior Vice-President Revenue and Operations, Revolut.
Post-Covid, there are a lot of opportunities for international expansion, in a world where boundaries are dissolving and the scope is immense. What is being anticipated is an increased demand for products and services that you see in India as well as UK, paving the way for global expansion.
“For traditional banks to be able to leverage the partnerships with the right FinTech to elevate customer experience or a FinTech to work with a traditional bank to get the huge customer base which they can use to test and leverage and roll it out – that partnership is key to elevating the entire industry. That is where boundaries are dissolving today," said Sood.
The last five years have seen a growth of FinTech companies and mushrooming apps and tools. But what the consumer is looking to break through this clutter and get a better customer experience. “We see a lot of changes everywhere post Covid as well as post Brexit, opening up a sea of global opportunities," said Cunnane.
FinTechs are changing the financial services landscape globally due to the role they are playing in financial inclusion. “Finance and innovation are central to our trade priorities and FinTech is the one that brings both of these together. In these challenging times of Covid-19, it has become even more important to facilitate financial inclusion, credit flow and insurance. A collaboration for us is important in both directions," said Neha Sampat, Senior Sector Manager, Department for International Trade, the UK government.
