Customers are the pivot: Fintech shaping the new-age banking

“We’re witnessing the creative destruction of financial services, rearranging itself around the consumer. Who does this in the most relevant, exciting way using data and digital, wins!” says Arvind Sankaran Fintech investor and Advisor.

Memories of writing a cheque, going to the bank, collecting a token and waiting for your number to be called out to get your money has long faded. Some of us may have never experienced this. You then had to take that money and shop for your daily needs. All this can now be done in the comfort of your home, with a click on your mobile phone. FinTech has rapidly changed our way of life. According to an E&Y report, ‘The e-commerce market in India is expected to reach INR 7 trillion by 2023, growing at a CAGR of 20% during 2019-23’.

Harshvardhan Pusala, Founder and Managing Director, Techurate

The Reserve Bank of India recognised this trend way back in 2015 which has led to defining the life cycle stages of this boom in the financial technologies’ era. Over the last 6 years, we have reached the cusp of the Digital Transformation phase of this life cycle. The exponential growth phase will only grow for the next decade. The fintech industries spurring growth has been fuelled by their ability to provide larger customer reach and enhanced customer user experience.

Reduction in costs through automation and more secure transactions has changed the customer mindsets on new-age banking channels. Fintech empowers the banks to think beyond traditional boundaries of banking creating a single window for all user transactions adding sheen to conventional banking. On the other hand, bank customers are increasingly becoming more demanding and consumer behaviour is rapidly changing.

The customer is as finicky as in the FMCG space with little or no brand loyalty. The Neo banks and other fintech start-ups are weaning away customers built and honed by the traditional banks over years. There is a mad rush to invest in products that create sticky customer experiences in an attempt to retain the slice.

The Indian internet and e-commerce sector has mushroomed to become one of the fastest-growing sectors of the country. There has been a massive adoption of digital payment systems in India, making it a lot more convenient to go about with basic financial services. This growth and expansion of the FinTech ecosystem in India have been aided by a number of factors, including the growing availability of smartphones, increased internet access, and high-speed connectivity. According to a report by Boston Consulting Group and FICCI, India is well-positioned to achieve a FinTech sector valuation of USD 150-160 billion by 2025, implying a USD 100 billion in incremental value creation potential.

The government's "Make in India" and "Digital India" projects also played a significant role in accelerating the adoption of Fintech. It is commendable that the Reserve Bank of India (RBI) has also pushed the growing use of electronic payments to establish a truly cashless society in recent years. The demonetization and shortage of currency that followed, nudged people to adopt digital platforms creating substantial growth opportunities for fintech projects all over the country.

In a country as diverse and large as India, crores of people remained outside the preview of the formal banking system. The Prime Minister’s ‘Jan Dhan’ accounts followed by direct transfers of subsidies like gas and fertiliser enabled many to become an integral part of this banking system. This financial inclusion played a huge role in the payout of relief during the COVID pandemic. Apart from just seamless government pay-outs, rural and needy customers can now build a credit history and access credit in their time of need.

The change in mode of payments from cash to other alternative modes such as UPI, internet banking, banking cards along with various value-added services like bills payment, recharge, insurance, mobile recharges etc. have turned out to be a boon. UPI is today the number one in the world on real-time digital payments. This has put India into a coveted bracket of countries creating disruptive technologies to the world. India is not the only country that relied on the traditional brick & motor form of banking. Till the recent past, Africa was deprived of digital and modern banking solutions. The emergence of Fintech and in specific relevance to what Techurate is doing in Africa will largely be shaping the financial inclusion goals of various economies. These countries with vast UNDERBANKED AND UNBANKED markets will experience an explosive growth like M-pesa in Africa.

We certainly are at the cusp of a financial services boom

Author: Harshavardhan Pusala, Founder & Managing Director at Techurate Systems Private Limited