The Fintech industry is experiencing rapid evolution, driven by emerging technologies and changing consumer needs. In a conversation with Karthik Thenkarai, Co-founder and Director of Paycorp.io, we delve into the potential innovations, disruptions, and advancements that lie ahead.
The Next Wave of Innovation
Indeed, the emergence of infrastructure platforms such as Account Aggregators (AA), OCEN (Open Credit Enablement Network), and ONDC (Open Network for Digital Commerce) has created new opportunities for innovation in the fintech industry. The next wave of start-ups will use these platforms to introduce game changing solutions.
Talking about the current scenario, there is an unprecedented surge in the popularity of recurring payment options due to their ability to automate fixed interval payments. Despite their advantages, recurring payment options such as ACH and UPI Auto-pay have not been fully utilized or adequately represented. However, ACH and UPI auto-pay are starting to reverse this trend positively. It is crucial for customers to have a payment method that aligns with the specific nature of their recurring payments. ACH and UPI auto-pay cater to this need by allowing users to make a conscious decision once to pay for a particular service at a predetermined frequency, eliminating the need to remember or be reminded each time.
Therefore, we anticipate that as new use cases involving recurring payments emerge, the utilization of ACH and UPI auto-pay will rapidly increase alongside them. This innovation in the Fintech industry will certainly lead to better results for the consumers.
Exploring Disruption Potential
Of course! Not many are aware that UPI has also come up with UPI-Autodebit and overdraft facilities. I believe that UPI will now look at further disruptions in the B2C and B2B segments. UPI has already brought about a significant transformation in the digital payment landscape, gaining acceptance not only at high-end stores but also among small and micro-businesses. However, fintech companies like Paycorp.io are enhancing the payment system by introducing additional features that make it even more user-friendly. Today, individuals can make payments simply by utilizing payment buttons, gateway APIs, link push options, and customized gateway pages tailored to their specific needs.Standardization of bill payments under the UPI platform, and tighter participation in ONDC environments are all possible directions in which UPI can progress in the near term future.
Thanks to UPI, small and micro-businesses have been receiving their proceeds directly into their bank accounts for the past three years. Consequently, banks now possess three years' worth of revenue data for these merchants. This data is substantial enough for banks to assess and assign credit scores to such businesses, enabling them to offer loans with a clear understanding of the associated risks. As a result, credit can be priced competitively. The availability of reliable business data allows MSMEs to access credit at significantly lower interest rates, leading to further disruption in the transaction domain and streamlining the process.
The Fintech market has only started its journey. In a country like India where so many problems need solving, I believe there will be multi-fold growth in the Fintech ecosystem in the coming years and decades. There will be some consolidation too, but the ecosystem growth will eclipse the consolidation.
Emerging Technologies with Disruptive Potential in the Future of Fintech
In the past, payment methods such as credit cards, debit cards, and net banking eliminated the need for cash in consumer transactions. Over time, fintech companies capitalized on technological advancements and introduced a range of services, including enterprise payments and recurring payments, which encompass options like standing instruction (SI) payments and cloud-based payments through ACH.
UPI also made significant strides by offering payment solutions to MSMEs and e-commerce owners. One of the latest additions to UPI is the Single Block Multiple Debit feature, which instils trust and payment assurance. With this feature, merchants can block the transaction amount in the buyer's account and debit it once the product has been delivered. This method is gaining popularity as a preferable alternative to cash on delivery, as it eliminates uncertainty surrounding payment.
Recurring payments have also become a favored service among consumers. It allows users to conveniently pay monthly bills to vendors, employee salaries, or quarterly taxes without the worry of meeting deadlines or missing due dates. These payments are automatically debited from the user's account at fixed intervals, such as weekly, fortnightly, monthly, quarterly, and even yearly. Recurring payment options are anticipated to become the preferred mode of payment in the near future for all non-discretionary payments. This and many other AI based solutions will surely disrupt the near-term and long-term Fintech future. The fusion of analytics and AI will produce very interesting insights which will in turn fuel new venues for innovation.
Addressing AI Biases: Fintech's Approach to Ensuring Secure Transactional Environments
AI biases have many sources. The biases creeping into the training data is the primary contributor. ML models are growing in sophistication, fighting biases. There is no immediate solution to this challenge. But the maturity of AI technology will filter out common biases eventually.
At times, during online shopping, you opt for cash on delivery as a payment method. However, this poses a problem for the merchant because they have no guarantee that you will indeed pay for and accept the product or service when it arrives at your doorstep. As a result, the merchant cannot finalize the transaction until the money is deposited into their account, even if the delivery person collects cash from you.
To address this uncertainty and provide assurance to the merchant, a new digital payment instrument called Single Block Multiple Debit has been introduced under UPI. With this feature, the merchant can now request to block the transaction amount in your account at the time of the online purchase and subsequently debit it from your account once you confirm the delivery. This ensures that the transaction is safe and the seller will not have to bear the losses if transaction fails. This creates a secure transactional environment, wherein AI only automates the process, and does not impact the decision.