Do you often picture a utopian scenario of hassle-free daily life? Envision everything at your doorstep, ready to go at a click – allowing you to be unencumbered and stress-free? I know I would love it! Well, maybe not everything can happen that way but banking and financial services can.
A whole new year for fintech makes me eager to dive into the huge chunk of possibilities that are in the pipeline with smartphones and internet of things making it immensely simple yet interesting. These two pillars being the base of fintech 2020 will build a world of ease for daily consumers with AI, Blockchain and IT working more wonders than they had begun within 2019.
The year gone by played a key role in the world-wide fintech time capsule. The fintech conversation of 2019 incepted with the much-awaited advent of 5G, the rise of smart fintech startups creating user-friendly applications, the exponential rise in smartphone users, and a more simplified digital infrastructure.
Fintech has cautiously yet beneficially reshaped the entire financial services and payments space with customized solutions, foundational support and notable developments in all-encompassing sectors including education, insurance and credit management. Is there another industry that could be more theatrical in its evolution within such a short span of time?
As per Deloitte & CII’s Vision 2020 report, India is fast becoming a digital economy with over a billion mobile phones, 330 million internet users (c.94% on wireless devices), and 240 million smartphones.
If there is one question one must ask oneself this year, it should be – how quickly can one innovate to upgrade the existing technology and ride on the next wave of fintech developments? Because the time required for new technology upgrades to convert into real-time data available for access in the hands of consumers is surprisingly short.
To the common man, fintech might still sound new but it has been around for years – including yet not limited to quick payment solutions, automated trading platforms, along with customer-oriented online shopping and mobile banking; moulding financial services for a better tomorrow. The Deloitte & CII’s Vision 2020 report stated that in the past 3 years, Fintech startups working on Blockchain have attracted venture capital funding of over $1.4 Bn.
The inception of technologies such as IoT, AI, blockchain will reinvent the whole transaction experience for users in terms of time and cost efficiency while enabling multilingual penetration and simple design interfaces into remote locations. We can expect further movement in the blockchain-based fintech solutions, cross-border forex payment models and similar avenues as the scope of payment solutions widen. Some of the other areas where I do see fintech businesses moving in 2020 are:
Taking Insurance To The Masses
It would be interesting to see how the penetration of insurance will dive deeper on the rural fronts. Life, non-life and micro insurers will need to be accessible with transparent pricing and alternative ways of expanding covers through digital channels, for instance ‘Mosquito Insurance’ that allows the insured to be protected against ailments caused by mosquito bites at an affordable premium.
Not only are these bite-sized solutions easier to place on digital channels and can be purchased with a single click, but their adoption is higher due to nominal premium rates and no long term commitment. Fintech in 2020 is expected to dive deeper into such short term insurance solutions that are popular across the globe and now are venturing in the Indian space to target customer needs from all backgrounds.
The Fintech Wave In Education
As per a survey by Entrepreneur India, the education market of India is forecasted to almost double to $180 billion by 2020. This is an important market for fintech with an increased demand for quality education in the country. The education sector is already moving towards easier access to international scholarships, lower interest backed educational loans in addition to affordable payment solutions for school fees.
Changing The Landscape Of Lending
The fintech landscape of lending has grown to demystify procedures for the layman with faster processing, documentation and personalized services much differently than one had envisaged. In 2020, alternative methods of loans and credit for the large unbanked population in the country will see further facilitation. For instance, P2P lending has been a trend doing rounds in the past year, which eliminates the basic need of securing a deposit. Rather, the lender receives an interest by lending to others.
Blockchain Will Steal The Show
A study by MRFR reported that one out of every 3 fintech companies is planning to adopt blockchain by 2020 and last year alone, 13 blockchain companies obtained over $365 million in funding as stated in a research by Lets Talk Payments.
In addition to cost optimization of about 70%-80% for fintech companies, Blockchain technology will continue to contribute towards effective risk evasion and augmentation of transparency. In addition to distinguished fintech nuances of KYC automation, cross border payments facilitation, crowdfunding, and electronic notary systems the greatest benefit blockchain will offer to the fintech space in 2020 is that of data protection.
Fraud Detection And Risk Management
The approach in 2020 is expected to be more beneficial by adopting a more proactive and strategic mechanism towards insecure interfaces. Employing a combination of multi-layer authentication and insurance, behavioural biometrics, real time monitoring of frauds and similar are some instruments to control cyber vulnerabilities and risks that will arise with growing exposure of fintech applications.
Bridging The Gender-Gap
Although the number of fintech startups is increasing by the day, the leadership roles here are gender skewed. At present, the gender gap in fintech exists widely at 3 different levels; women as founders of fintech startups, women working for fintech organizations, as well as women who are fintech users. 2020 is expected to bridge the gender gap with more and more women entering the fintech space, either as founders, team members, or users.
B2B Over B2C
B2B startups in the fintech space are scaling growth, customer servicing and profitability a lot faster and 2020 is likely to see a qualitative rise in this momentum serving niche investors and business requirements. Digital B2B results at startup pace, high customer engagement, rapid revolutionizing of cloud computing on payment solutions, a more streamlined end-to-end user experience and more such big bets will override B2B payments over B2C counterparts.
Improved standards and policies will be created to govern the flow of money, payment economics and healthier competition between open and closed payment methods.
Collaboration Is The Key
Almost 80% of financial institutions have entered into fintech partnerships (A McKinsey report). While collaborations between banks and fintech companies at different levels; public and private will be on the rise, other mutual synergies will also play out in favour of the industry with fintech startups as well as incubators or support systems making the fintech journey in India extremely sustainable.
A recent PwC research shows that 44% of those who earn less than $75,000 per year would trust a technology company for peer-to-peer payments, and this rises to 68% among earners making more than $100,000.11. This number shows the growing trust of customers on online platforms.
With uber-fast P2P solutions by technology giants, modernizing payment facilities framed as per customer intelligence, improved fluidity and ease of transactions, this year will see further evolution in complex B2B payments powered by cloud computing and AI becoming the new normal.
In 2020, Fintech startups have the opportunity to disrupt the legacy systems in the financial space with a more integrated approach targeting everyone including the grassroots and empowering them to partake in the fintech leaps in our economy.