Fintech: Meaning, Evolution & Outcome

fintech

/ˈfɪntɛk/noun: fintech; 

computer programs and other technology used to support or enable banking and financial services.

It’s 8 a.m: You wake up to a busy day.

It’s 12 p.m: Uncountable invoices on excel workbooks. Endless meetings. Payroll calculations. Compliance payments. 

It’s almost 7 p.m: “Ping! 386487

Ping! 189674

Ping! 907345”

OTPs follow you everywhere.  

8 p.m. and you are tired and stressed.

9 p.m: “Ping! 896734”

Your CA is calling you.

But you hate all of this. It’s frustrating.

Slow bank solutions hold you back and hinder your growth plans.
Businesses have been relying on traditional banking for their financial operations and are held back by

• Lengthy approval processes
• The outdated code base for account integration
• Heavy UI, complicated user flows
• Poor customer support for queries

All of this reduces the efficiency and effectiveness of banking operations. The weight of legacy infrastructure has been limiting the potential of business banking for far too long. A lack of automated financial operations for your business like, processing your payroll, fetching invoice details, paying your vendors, and calculating and paying your taxes was felt.

Enter Fintech.

What is Fintech?

Fintech, short for financial technology, is a broad term that encompasses the technology and innovation being used to support and enable banking and financial services. It includes a range of financial tools, from digital currency and payment systems to automated investment platforms and mobile banking. Fintech is transforming the way we manage our personal finances, interact with financial institutions and access financial services.

 So when it comes to financial services and banking what’s the end goal?

•             Fantastic Customer experience.
•             Smoother and faster intuitive platform.
•            Automated/think-savvy financial services 
•            Real-time insights and reports to aid business decisions
•            Easy integrations with accounting software

While technology and innovation had started to get integrated across various industries, the financial sector was untouched for a long period. 

Most businesses felt that there was a gap between their business banking expectations and what is actually being offered by traditional banking services.

With the introduction of digital and online banking, the monetary landscape of India has been undergoing progressive evolution. The rise of online payments has been significant in the last few years. 

Businesses felt the need for faster, smarter and smoother platforms to transact digitally and for other business banking services like seamless vendor payments, faster tax payment, automated payroll processing etc.

This gave rise to Fintech: the amalgamation of technology and financial services for a fantastic customer experience.

How does Fintech work?

Fintech is a broad term used to describe the use of technology to improve financial services.

➡️Fintech is currently being used to improve the speed, accuracy, and convenience of financial services, as well as enable access to more affordable services.

➡️Fintech works by using technology to streamline the delivery of financial services. This can include using automated algorithms to process transactions and store customer data, as well as providing access to online banking services or mobile applications.

➡️Fintech can also be used to facilitate payments, such as through mobile wallets or peer–to–peer payments.

➡️Fintech can also be used to provide more personalized financial services to customers. For example, some fintech companies use machine learning algorithms to analyze customer data and provide tailored advice. This can help customers make better financial decisions and achieve their goals.

➡️Finally, fintech can be used to make financial services more accessible. For example, some fintech companies are providing access to financial services to people who may not have access to traditional banking services. This can help bridge the gap between those who have access to financial services and those who don’t.

What are the Fintech Trends?

Let’s have a look at the Fintech trends.

1. Digital Payments

Digital payments are becoming increasingly popular, with the rise of mobile wallets, contactless payments, and cryptocurrency payments.

2. Open Banking

Open banking is becoming more popular, allowing banks to offer customers more personalized services, based on their data.

3. Artificial Intelligence (AI)

AI is being used to improve customer service, reduce fraud, and provide faster and more accurate financial advice.

4. Online Lending

Online lenders are making it easier and more convenient for individuals and businesses to access loans.

5. Blockchain Technology

Blockchain technology is revolutionizing the financial industry by reducing costs, improving transparency, and providing increased security.

6. Robo-advisors

Robo-advisors are automated financial advisors that use algorithms to provide personalized advice on investments and other financial decisions.

7. Cybersecurity

Cybersecurity is becoming increasingly important, as financial institutions are targeted by cybercriminals.

How secure is Fintech?

The security of fintech is determined by several factors.

➡️It depends on the specific technology and system used, the security protocols employed, the data and systems being protected, and the level of risk associated with the services being offered.

➡️Fintech companies must take measures to protect data and systems from unauthorized access, malicious attacks, and other cyber threats.

➡️This includes using encryption, secure authentication, and access control measures.

➡️Additionally, fintech companies should have a comprehensive security policy that outlines how they will protect customer data and ensure confidentiality, integrity, and availability of the services they provide.

Examples of Fintech

Let’s have a look at some of the examples of Fintech.

1. Mobile Payments

Mobile payment services such as Apple Pay, Google Pay, and Venmo allow people to make payments using their smartphones.

2. Investment Platforms

Online investment platforms, such as Acorns and Stash, make it easier for people to invest in stocks, bonds, and other financial products.

3. P2P Lending

Peer–to–peer (P2P) lending platforms, such as LendingClub and Prosper, allow people to lend and borrow money without the involvement of a traditional bank.

4. Cryptocurrency Exchanges

Cryptocurrency exchanges, such as Coinbase and Binance, enable people to buy and sell digital currencies like Bitcoin and Ethereum.

5. Personal Finance Apps

Personal finance apps, such as Mint and Clarity Money, track people’s spending and provide personalized financial advice.

6. Insurtech

Insurtech services, such as Lemonade and Metromile, allow people to purchase and manage insurance policies online.

Challenges of Fintech

Here is the list of challenges faced by Fintech. Let’s have a look.

 1. Regulatory Framework

Fintech companies face a unique challenge in that they must navigate the ever–evolving regulatory landscape in order to remain compliant. Regulations vary widely by country and can be difficult to keep up with.

2. Security

Fintech companies must ensure that all customer information is secure and that any transactions or data transfers are done so in a secure manner. This can be a challenge, especially when dealing with sensitive financial information.

3. Privacy

 Fintech companies must also ensure that all customer data is kept private and secure and that all personal information is handled with care.

4. User Experience

Fintech companies must create a user experience that is both intuitive and engaging in order to drive customer engagement and loyalty.

5. Market Competition

The fintech market is highly competitive, and fintech companies must constantly innovate in order to stay ahead of the competition. This can be a challenge for smaller companies with limited resources.

How is Fintech winning over banks?

Today, Fintech is outdoing the scope of traditional banking.

 Financial Operations that sounded tedious back then are just a click away today. 

The involvement of technology in financial services empowered Fintech platforms to approach challenges with a customer-centric lens.

Fintech firms are also ahead of the curve in adopting new technologies with:

• Seamless and automated Vendor Payments, Tax payments, Payroll and compliances
• Robust and easy solutions with developer-friendly documentation, open APIs, and cloud capabilities
• Faster and more accurate services like front-end interfaces, data analytics, infrastructure systems and artificial intelligence
• Smart insights and predictive analytics greatly aid business decisions.

Everything from the health of cash flows to tailoring sticky offerings for customers to identifying the top expense buckets and revenue drivers can all be derived from rich dashboards and reports. 

Fintech solutions are always optimized for easy access and seamless delivery, through the use of technology.

	Fintech	Banks
Technology	Open APIs and SaaS-based solutions	Legacy and Clunky infrastructure
UI/UX	Intuitive & easy to navigate. Continuous feedback incorporated through NPS surveys	Complex and non-intuitive. No feedback is incorporated to upgrade the user experience
Customer Support	Dedicated 24/7 support and specific SLAs for issue resolution	Too many manual interventions and too many delays
Dashboard & Analytics	Built-in data analytics platform with insights and suggestions that can be easily accessed from the dashboard	Mainstream data with no insights or reports. Need external tools to derive any actionable insights

 

As a business, you can get all the details about your banking, and financial transactions Accessibility and other important updates online, retrievable at any time and viewable on desktop and mobile. 

In fact, many fintech solutions are easily accessible via dedicated mobile apps. You can even set up notifications or alerts as per your business preferences.

What is a Neobank?

With the rise of Fintech, traditional banking platforms have come forward to collaborate with fintech firms to enhance speed, relevance and proactive customer support.

This partnership is taking the fintech industry by storm.

Enter Neobank.

With Neobanks, you can enjoy the goodness of intuitive and automated banking platforms as your one-stop business banking solution in the front end while still availing all the benefits of traditional banking in the back end in a compliant way.

Neobanks are new-age banks without any physical location, present entirely online. They provide digital, mobile-first financial solutions for payments, money transfers, lending, and more.

 

Neobanks are gaining immense popularity majorly for

• smarter business banking services
• smoother UI 
• ease of use

Neobanks facilitate faster business banking services like easy loan approvals, credit decisions, seamless tax and vendor payments, automated payroll processing and so much more. 

Automated reporting tools and accounting software integration have simplified banking operations for businesses.

Neobanks are bridging the gap between traditional banking services and banking services that founders expect. Especially small and medium enterprises have felt a significant need for this new-age automated banking platform.

 According to a recent study on the “challenges Small and Medium Enterprises (SMEs) face due to reliance on legacy financial systems” with International Data Corporation (IDC), we found out that the annual average loss suffered by SMEs depending on conventional banking operations is INR 67 lakh per SME.

Our recent report explores the rise of digital payments in post-pandemic India. According to the report, online payment transactions more than doubled in 2021 compared to 2020, crossing a billion.

This situation has further empowered Neobanking platforms in India and businesses are now shifting to smarter Neobanks.

India’s Neobanking market is expected to grow at a three-year compound annual growth rate(CAGR) of 50.5% to reach USD 11.65 billion by FY2025- Grant Thomson Bharat Banking Matrix Report

Banking has faced prominent evolution. From traditional banking to neo-banking the evolution of the fintech space has had a significant impact on businesses today.

 

It reimagines how businesses manage money flows and simplifies banking for Founders, CXOs Chartered Accountants and finance professionals.

RazorpayX is a full-stack banking suite that supercharges the current accounts and 

• Provides end-to-end automation with powerful features like Automated Accounting, OTP management, Maker-Checker Flows
• Corporate Cards with 20X higher limits
• Automated Vendor Payments
• Forex Services
• Payroll – India’s ONLY payroll with Full compliance automation, Employee Insurance management and TDS filing)
  
  
  Fix my Finances!

Frequently Asked Questions