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
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- The outdated code base for account integration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.
Table of Contents
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.
Robo-advisors are automated financial advisors that use algorithms to provide personalized advice on investments and other financial decisions.
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.
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.
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.
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.
|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.
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)
Frequently Asked Questions
What is Fintech?
Fintech is the amalgamation of technology and financial services for a fantastic customer experience and offers a smoother UI.
What is Neobank?
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.
What are some of the best neobanks in India?
With the rising popularity of neobanking, there are more and more such new-age banks every day.
Does Fintech Only Apply to Banking?
No, fintech does not only apply to banking. Fintech, or financial technology, is a broad term that encompasses a wide range of services and industries, such as payments, investing, lending, insurance, digital banking, and more.
How Do Fintech Companies Make Money?
Fintech companies make money in a variety of ways. They may take a commission from the services they provide, charge fees for using their platform, or offer products such as loans, investments, or insurance. They may also partner with banks to offer their services, or rely on third-party vendors to process payments. Additionally, many fintech companies monetize their services by gathering and selling user data.