The Disruptive Influence of FinTech: Changing the Face of Financial Services


India ranks as the world’s third-largest fintech market, following the US and the UK. The country boasts a thriving ecosystem of fintech unicorns, start-ups, and ample funding opportunities. According to a recent study by EY and Chiratae, the Indian fintech sector is poised for exceptional growth in the coming decade, with expectations of expanding tenfold. The target is to achieve an impressive milestone of $1 trillion in Assets Under Management (AUM) and $200 billion in revenues during this period.

Fintech has revolutionised conventional financial systems by offering creative alternatives to traditional banking, insurance, lending, payments, and investment services. Through digital platforms, individuals and businesses now have convenient access to financial services without the need for physical branches or intermediaries. Alongside this accessibility, fintech prioritises improving customer experience, simplifying intricate financial processes, and driving cost efficiencies.

Additionally, various sectors like investment management, retail banking, education, and nonprofit fundraising are adopting fintech solutions, contributing to further opportunities for growth in the Indian fintech market. However, challenges such as poor Internet connectivity and a significant unbanked population may hinder the market’s growth during the forecast period.

The Fintech landscape is marked by a diverse range of game-changing innovations. Mobile payment apps, peer-to-peer lending platforms, roboadvisors for investment management, crowdfunding platforms, digital wallets, blockchain-based cryptocurrencies, and automated insurance underwriting are just a few examples of how technology is reshaping financial transactions. Beyond convenience, these technological advancements have also played a critical role in promoting financial inclusion. By providing services to those previously underserved by traditional financial institutions, Fintech has empowered individuals to access and benefit from financial services like never before.

The impact of Fintech extends far beyond national borders, gaining traction on a global scale. Both traditional financial institutions and venture capitalists have taken notice, leading to substantial investments and attention in the Fintech industry. The rapid evolution of this sector is a testament to its potential to reshape the entire financial landscape. With new players and technologies continually entering the arena, established norms are being challenged, ushering in an era of constant transformation and innovation. Additionally, the government’s initiatives, providing incentives and financial support to startups, are playing a crucial role in boosting the country’s fintech sector.

Government initiatives to boost the fintech sector are set to propel the growth of the India Fintech Market

India possesses a strong fintech ecosystem, backed by initiatives such as PM Jandhan Yojana, Unified Payment Interface (UPI), and Digi-lockers. The central and state governments are actively seizing opportunities in the fintech sector, with initiatives like Digital India and Make in India playing a crucial role in encouraging the adoption of fintech services.

The disruptive influence of Fintech continues to revolutionise financial services, driving unprecedented change and offering a glimpse into a future of seamless, inclusive, and technologically-driven finance. As the Fintech revolution unfolds, the financial world braces itself for a journey of profound transformation, with the promise of redefined customer experiences and a more interconnected and efficient financial ecosystem.

Leading Fintech startups driving market growth

Invest India, the National Investment Promotion and Facilitation Agency reports that India currently houses more than 2,100 Fintech companies, with a staggering 67% established in the past five years. In a notable development, seven fintech startups, including BharatPe, Ofb Business, CoinDCX, and Chargebee, achieved unicorn status in India in 2021 alone. Additionally, prominent players like Paytm, Shiksha Finance, Lendingkart, and Policybazaar are already dominating the market with their diverse array of services.

As the number of fintech companies continues to grow, fostering increased competition among them, the India fintech market is expected to thrive during the forecast period.

Why is Collaboration between Fintech Companies and Banks Essential?

Collaboration between fintech companies and traditional banks plays a vital role in advancing the banking and financial industry. Here are several reasons why fintech and banks should work collaboratively:

Technological Advancement: Fintech companies are renowned for their agility, technological expertise, and innovative mindset. Through collaboration with banks, they can bring their cutting-edge technology and innovative solutions to enhance the banks’ existing infrastructure and processes. Banks, in turn, can leverage the expertise of fintech companies to accelerate their digital transformation and maintain competitiveness in the rapidly evolving market.

Improved Customer Experience: Fintech companies excel in delivering seamless and personalized customer experiences. By working together with banks, they can help improve the banks’ customer interface, provide user-friendly digital platforms, and offer innovative services. This collaboration enables banks to meet the changing expectations of customers and deliver a more convenient and personalized banking experience.

Market Expansion Opportunities: Fintech companies often target specific customer segments or niche markets that traditional banks may not fully serve. Through partnerships with fintech firms, banks can tap into these new markets and expand their customer base. This collaboration allows banks to reach previously untapped customer segments and offer tailored financial solutions to meet their needs.

Meeting Regulatory Requirements: Navigating the complex and ever-changing regulatory landscape in the financial industry can be challenging for fintech companies. By collaborating with banks, fintech firms can benefit from the banks’ expertise and established regulatory frameworks. Banks possess extensive experience in complying with regulations, and their support can help fintech companies navigate the regulatory landscape effectively.

Mitigating Risks: Banks have wellestablished risk management practices and processes in place. Collaborating with banks allows fintech companies to leverage the banks’ risk management expertise and frameworks. Banks can provide guidance on risk assessment, compliance, and security measures, helping fintech companies strengthen their risk management practices and build trust with customers.

Resource and Infrastructure Access: Banks have well-established infrastructures, customer networks, and financial resources. Through partnerships with banks, fintech companies can gain access to these resources, enabling faster scalability and growth. Banks can provide the necessary capital, operational support, and distribution channels for fintech firms to expand their reach and scale their operations effectively.

Also Read | The importance of implementing design thinking in the Fintech industry

Fostering Ecosystem Synergy: Collaboration between fintech companies and banks fosters an ecosystem of innovation and cooperation. The synergy between the two entities allows for knowledge sharing, idea generation, and co-creation of new products and services. This collaboration promotes a culture of innovation and drives the development of transformative solutions that benefit both the financial industry and customers.

To Sum Up

Indian Fintech startups are adopting innovative approaches to boost the participation of Indian demographics in domains like crowdfunding and wealth management. However, these companies encounter challenges in attracting and retaining specialists to ensure seamless operations and continuous innovation. Overcoming this obstacle is vital for the thriving of Indian Fintech startups in the industry.

The emergence of Fintech disruptors has heralded an era of remarkable transformation in the financial services sector. These innovative companies are reshaping the industry by challenging conventional practices, driving financial inclusion, and enhancing user experiences. As Fintech continues to shape the financial landscape, the future holds the promise of even more disruptive innovations, benefiting consumers and businesses globally. With traditional financial institutions embracing and collaborating with Fintech disruptors, the financial world stands at the threshold of an exciting new era of innovation and transformation.

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