5 Ways Fintechs Can Rise Above In Times Of Crisis

Fintechs, in India and around the world are bringing in a glimpse of hope in the otherwise Covid-hit pessimistic economy. According to data collated from startup research and intelligence platform Tracxn and IBS Intelligence, “Funding into the Indian fintech startups has increased by 40% at $807 Mn for the first three months of 2020 as compared to $570 Mn for the same period last year.”

In the current times, as businesses adapt to Covid-19 and companies move online and digitalize, it is important fintechs are not left behind. The fintech industry is facilitating a melting pot of new trends and measures to safeguard businesses in the wake of a crisis and be better prepared for any adversity.

The Threat And Opportunities: Fintech In The Era Of New Normal

The fintech industry continues to be relevant by helping people cope with the effects of the pandemic through digital-only interactions, for money transfers, payments, or any financial transaction.

However, for fintech companies to stay at the top it is important that they are agile, flexible, and faster in responding to uncertainties. Here are the top five of the most prominent trends to help fintech businesses circumvent or walk-through a crisis with minimum damage:

Risk Diversification

Multiple banking collaborations can help fintech diversify risks and reduce the fragility of singular partnerships. Most investment professionals agree that, although it does not guarantee against loss, diversification is the most important component of reaching long-range financial goals while minimizing risk.

Strong Business Continuity Plans

If planned in a streamlined structure, fintech companies can provide opportunities for level playing, while building on their technological capabilities. With the right services partners, fintech can also build on their growth and customer experience — a win-win for both. Further, in the light of recent events, strategic partnerships based on infrastructural capabilities, compliance with RBI regulations and information security will help fintech stay relevant and continue to grow.

Machine-Learning Advancements

Fintechs are already reaping the benefits of machine learning in their businesses, but they could also use it to safeguard themselves. An advanced machine-learning solution can help follow compliance and have their required checks in place. These solutions can also locate missing links (if any) or detect patterns to prevent any kind of fallout.

Keeping With The Age Of APIs

API-based platforms give fintechs the flexibility to create and enhance their products and services to match market demand, while also taking care of compliance and data security. The modularity of such platforms facilitates a seamless transition to different systems when needed, without critical services getting impacted.

Testing Under RBI Sandbox

The RBI regulatory sandbox with API stack of major financial institutions in a proxy ecosystem gives fintech companies an opportunity to test their services on a live audience and rectify several operational hurdles before commercially rolling out the services.

Even banks are encouraging their customers to use their digital platforms. This also means that despite the economic hardship expected to follow the Covid-19 crisis, investors will look to support fintech whose services can offer the unmatched digital experience to the customer.

The growing demand for convenience has proven that digital financial services will be the future. Therefore I hope the government will look at easing regulations and introducing pro-fintech policies to enable a digitally inclusive economy.