The role of fintech in shaping the post-pandemic business world

The fintech industry continues to expand at a rapid pace in wake of the COVID-19 pandemic. The fintech market in India was approximated at around Rs 1,920.16 billion in 2019 and is expected to reach Rs 6,207.41 billion by 2025, growing at a CAGR of 22.7 percent.

The rise of the startup ecosystem is further bringing investments into the fintech sector. The widespread permeation of internet and easy access to smartphone technology along with improvements in the overall digital infrastructure have also contributed towards the same.

The challenge

In the last few years, several government-led digital initiatives have been introduced, such as the Unified Payment Interface (UPI), along with Reserve Bank of Indiaregulating the digital payment landscape in India and the launch of a centralised digital payment helpline.

These initiatives are aiding the pan-India fintech advancement process as the government strives forward for securitised functioning of the fintech segment. The country is on path towards achieving its ultimate financial objective: holistic financial inclusion.

As the business world recuperates after a long battle with the pandemic, paving the road to a full-fledged financial inclusion is all the more imperative for enabling long-term economic and infrastructural growth for the nation.

Despite the country’s efforts towards becoming a financial superpower in near future, India still has a substantial mass of unbanked adults that roughly accounts for one-eighth of the total population.

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The solution

The fintech industry, armed with technology and agile processes, is fast shepherding the financial integration process in India. Through strategic financial suites that offer a number of customised fast-paced short tenure loans, a plethora of new-age fintech players are heralding the financial inclusion movement for the country’s vast faction of unserved and underserved populations.

Bringing such an exorbitant number of underbanked individuals under the financial cover is a challenge on its own.

As the underbanked population is devoid of a veritable credit history due to lack of documentation and income instability, the traditional banks and NBFCs find it hard to serve this untapped consumer demographic that comprises of self-employed micro-entrepreneurs and blue/grey-collared workers.

Therefore, next-gen fintech and payment enterprises seek to capitalise on this unaddressed and underserved segment by optimising the best of technology and innovation. Thanks to the extensive smartphone and internet penetration across the length of the country, these emerging fintech companies can now collate vast recesses of mobile data by utilising cutting-edge data analytics and Big Data.

The information generated by these tech innovations allows companies to gauge whether a person is likely to repay the loan on the established terms. This alternative data is highly effective in substituting the absence of valid documentation and tangible credit histories.

It is further used for extending small packet loans for short periods that can empower this extant overlooked category.

Security concerns

Fintech companies are dedicated to maintaining the highest levels of finance security and cyber defence since the onset of the pandemic. The financial commotion and business turbulence that ensued as a result of the viral aftermath has equipped cyber criminals with the opportunity and resources to exploit financial citadels and banking systems to their massive advantage.

Reacting to these unwarranted developments in the finance vista, a host of fintech firms are aggressively augmenting their KYC services in their bid to neutralise the ever-expanding threat matrix plaguing the existing fintech milieu.

With a major bulk of the world’s economic and financial front transposing to the digital medium. State of the security systems and cyber fortifications are an absolute necessity for the fintech ecosystem.

Fintech companies are becoming increasingly conscious of the need to safeguard crucial user data and organisational assets from malicious entities and cybercriminals.

The positives

With global businesses transitioning towards digitisation due to the pandemic-induced physical restrictions, entire institutions and even verticals have shifted to remote working and virtual operations.

The resultant post-pandemic chaos that erupted amongst a vast number of organisations has calibrated the need for strategic capital infusion to rescue the dwindling economic markers. This has orchestrated a sharp rise in fintech and loan application activity as countless businesses are lining outside fintech corporations for loans and credit services to effectively bail them out of the global economic crisis.

There has also been a remarkable upsurge in the number of SMEs and MSMEs vying for curated credit packages that best serve their business objectives - improved customer service, maximising productivity, and achieving visible growth.

At the same hand, emerging technology solutions such as voice technology, robotic process automation, regulatory technology, and touchless biometric security are steering India’s road to financial inclusion by reducing costs, improving core operations, and multiplying customer reach while also ensuring optimum cybersecurity.

The fintech industry is gradually sizing up ever-evolving consumer aspirations and requirements. There is a pressing need for fintech players to design their own financial framework that enables them to serve the extant unserved and underserved populations in the country. Only then can our nation realise its vision of financial inclusion and attaining economic sovereignty at a pan-India scale.