By Praveen Paulose
The Fintech sector has undergone several changes as a result of digitization. Technology has vastly improved the many services that financial institutions provide to their customers. These improvements have not only brought a whole new world of convenience to users, but also improved the operational efficiency of these companies. This has created a positive spiral where both companies and consumers have been able to benefit from the technological advancements that have revolutionized the Fintech sector.
Digital platforms have brought companies and customers closer than they ever were before by enabling direct interactions between them. Companies are now able to connect borrowers to lenders, customers to investment advisors, individuals with insurance providers, and more. This has increased the accessibility of people to their desired financial services, bringing them to their fingertips via their smartphones. Companies have gradually made their services user-friendly for use on smartphones, with proprietary mobile applications being developed for people to use. Today, customers can open bank accounts, apply for loans, invest in financial products, and conduct transactions online with just a few clicks/ taps of a button. The accessibility of these services via devices such as smartphones also reduces the friction in customers’ processes and journeys with the brands they require services from.
Fintech companies today are also tasked with trying to thoroughly understand customer preferences so as to provide services that are more personalized to their needs. This is done after analyzing their behaviour patterns and assessing their creditworthiness, following which personalized recommendations are provided. With newer technologies on the rise including Artificial Intelligence, this process is all the more streamlined. Many processes are automated, thereby reducing or completely eliminating the need for manual intervention that can often take up time or resources. It also helps reduce errors across procedures, thereby minimizing the risks of data inaccuracies.
Other technologies such as Blockchain and Distributed Ledger Technology (DLT) have introduced decentralized and secure transaction systems. These are leveraged by companies to enable peer-to-peer transactions, smart contracts, and transparent record-keeping. All of this culminates in creating a system that is secure and efficient, seamlessly facilitating processes like cross-border payments, trade finance, and identity verification.
Digital platforms have also increased the ease of collaborations between fintech companies and traditional financial institutions through open banking. This allows fintech firms better access to customer data securely, enabling the development of innovative solutions for a broader range of financial services. For customers, they receive an expanded pool of choices they can make with regards to their finances.
As more technological tools are adopted and employed in the fintech sector, the industry is inevitably going to witness significant growth. Increased digitization will also create new economic opportunities, improve the efficiency of financial services, and contribute to the development of India’s economy as a whole.
(The author is Praveen Paulose, MD & CEO, Celusion Technologies, and the views expressed in this article are his own)