16th January 2018, Bengaluru: Financial technology, popularly known as FinTech, is a groundbreaking technological advancement that has eased the use of financial services globally. It has redefined the use of technology in the industry with mechanisms like digital payments, the blockchain, bitcoins, etc. IFIM Business School recently hosted the 3rd edition of its corporate meet, Confluence 2017 with industry leaders to gain an overview of this new landscape with the theme of ‘FinTech: Opportunities & Challenges’.
The forum emphasised on the current financial scenario along with the opportunities and challenges in industries. The keynote speaker for the event was Nithin Kamath, Founder, and CEO, Zerodha, a discount broking company in India. Addressing the immense growth potential in FinTech, he stressed on the ongoing trends in the financial sector and how FinTech, with increasing policy changes, is creating a space for itself. The panel members at the conference were financial industry stalwarts like Ravindra Prasad, VP - Technology and Ops, DBS Bank; Uddipan Bagchi, VP Global Ins Practice, NTT DATA Inc; RN Murthy, SVP-Sales Head, MSME, Capital Float; CS Sudheer, Founder and CEO, Indiamoney.com; Aruna Venkatachalam, Sales Controller - Retail Financial Services, Janalakshmi Financial Services; and Dr. Rajendra Kumar Sinha, Professor & Chairperson, Centre of Excellence in Banking, IFIM Business School.
Nithin Kamath said, “Only 1% of the Indian population participates in capital markets. If ever there was a time in India to start a FinTech startup, it is NOW.
Demonetisation, push towards digital transactions, and lower interest rate cycles are all conducive reasons for the rapid expansion of this sector. As processes become more efficient, it is imperative that the workforce adapts to the new workings of the economy and invests in the right skills.”
Uddipan Bagchi mentioned, “In my role, we work with FinTech's and InsureTech's across the globe; for much of the technological age, the focus of the BFSI sector had been mostly inwards. However, a slew of new technologies in this decade have changed that equation forever. Going forward, I feel that the pace of change in financial services will only accelerate and so, the relationship between existing players and FinTechs will only grow stronger and broader.”
“In the FinTech lending space, just the surface has been scratched. India has just gone through major reforms like GST implementation, demonetisation and Aadhaar integration with all accounts. This will enable more data flow digitally and empower FinTech lending space more power in terms of efficient underwriting and faster delivery also will push to reduce interest cost,” said RN Murthy.
CS Sudheer added, “FinTech as an opportunity is pretty huge considering the size of financial services business in India.
FinTech is not a new service, but an effective tool to make financial services more accessible and efficient. The word ‘FinTech’ must now move from experimentation to execution. I am very sure FinTech companies would solve various problems/gaps around savings, investments, payments, lending & insurance. However, the success of these solutions purely depends on their approach.”
Dr. Rajendra Kumar Sinha mentioned that in today's context, digitalisation must be perceived both as an opportunity as well as a challenge. “Presently, banks have their capital outlay prioritisation for meeting compliances and the digitalisation roadmap requiring a significant capital allocation for technology upgradation. Therefore, this is a big challenge for public sector banks in India. Leading banks have already swung into action.”
Aruna Venkatachalam spoke about how FinTech can provide greater efficiencies, customised segment specific services at reduced cost for the customers. She said, “FinTech is doing the same thing to banking that e-commerce did to retailing. There has been a slow decline in brick and mortar stores in retail in the last decade. In the USA alone, about 5000 physical stores got closed in 2017 among prominent retailers like JC Penny, Kmart, Macy's, Radioshack, etc. This can happen in banking too. If technology enables every banking touch point to be automated, sooner physical banks will disappear.”
Ravindra Prasad added, “The thick layer of payment gateways will disappear with one touch or zero touch e-wallets. The need of third-party gateways offered by credit card companies will slowly disappear. Customers trust banks and deposit their money, but the reverse is not true so far with traditional banks. When in need of loans, banks do ask many documents and often loan sanction takes days. But FinTechs powered by data and algorithms are filling that gap by issuing loans in a matter of a few minutes.”
Ultimately, FinTech will have an impact in multiple areas. Gone are the days a customer had to somehow find two witnesses to sign and wait for a week or two to open an account. Now within a few minutes, someone can set up an e-wallet account and in less than an hour, can set up a banking account, thanks to e-aadhar authentication.