Month: January 2022

The cryptocurrency was first introduced in the year 2008 after the financial crisis that shook the entire world. It gained momentum in India post-2015 after it showcased the potential it holds. At present, over 15 million people own cryptocurrency in India with total holdings of around Rs 400 billion. Moreover, cryptocurrency has massive institutional buy-ins who are still trying to figure out how to put it on their balance sheets. Amongst all cryptocurrencies, Bitcoin is the first and the most common cryptocurrency in India. The Government of India (GOI) has controlled the trading of cryptocurrencies in India full-fledged owing to its lack of regulatory options. Cryptocurrency operates outside the control of governments and central banks making it difficult for regulatory bodies to implement laws on it. The GOI only wants certain cryptocurrencies circulating within the economy to promote the underlying technology. Although Finance Minister, Nirmala Sitaram has notified that the GOI has no plans to recognize Bitcoin as an official form of Indian currency, nonetheless, they are devising a plan to introduce selective cryptocurrencies to the economy through a new Crypto Bill. The GOI is likely to treat cryptocurrency as an asset rather than a currency. This will allow them to get tax returns on crypto assets. Furthermore, the RBI is in talks to amend the RBI Act 1934 to include digital currency under the definition of a banknote. They have been examining use cases and working out a phased implementation strategy for the introduction of Central Bank Digital Currency (CBDC) to the economy. CBDC will augment financial inclusion, a global objective, and can be pushed through the central bank. Cryptocurrencies and CBDC both are technology-driven but have their own set of differences. Cryptocurrencies can transform the banking system globally by increased economic growth, reduced poverty and financial inclusion. It has a strong technology backing it. The blockchain, a distributed ledger record transaction, ensures that the system is decentralized and secure from privacy intrusions. The way forward for cryptocurrencies is still under wraps but considering its global appeal, India may soon adopt selective cryptocurrencies. Individuals and companies both are heavily investing in cryptocurrencies citing the notion that the future will be led through digitalization and interestingly, the population from tier 2 and 3 cities are the early adopters of this transformation.

Artificial Intelligence and Machine Learning are paving the way to a melange of financial services, products and transactions online. It is allowing a course into the digital realm that was otherwise unexplored. The implementation of advanced technology has led to an astounding increase in businesses that specialize and embed financial transactions online. This shift has concurrently ushered an increase in online fraud that is now proving to be a challenge to every business and customer who engages in online transactions. The loss caused by fraud is not only borne by the victim but also puts the reputation of the financial institution associated with it at stake. Moreover, financial regulators charge a hefty penalty from financial institutions for allowing their platforms to be used for fraud. Fintech face several risks but the top areas are- Forging credit reports and legal documents Skimming debit and credit cards Counterfeiting of personal information Fraudulent payment transactions Money laundering Forging account statements for tax and loan benefits Synthetic identity fraud Loan Frauds Fraud Detection Fintech uses APIs to peruse credit history and ascertain customer relationships with banks to determine the scope of financial assistance. They use scoring models that involve special algorithms to calculate the creditworthiness and authenticity of the applicant. Several indicators determine the scope of fraud like country code, geolocations, BINs, transaction amount and patterns, expenditure pattern, etc. Following are the key AI techniques used by fraud detection software- Data mining to signify patterns Expert systems to create rules for detecting fraud Pattern recognition to detect approximate cluster or pattern of suspicious behaviour Machine learning techniques to automatically identify unusual patterns in datasets Neural networks to learn suspicious patterns from samples Fraud Detection through Machine Learning There are two methods of detecting fraud through Machine Learning- Supervised algorithm- Organized data is fed in the system tagged with labels of fraudulent and non-fraudulent activities. The program learns the patterns between the two for interpretation on future transactions. Unsupervised algorithm- Unorganized data with minimal sorting is fed to the system. The program understands the data, sorts it and finds anomalous behaviours on transactions in detecting the patterns for fraudulent activities. Fraud Prevention Fraud detection is the first step to the prevention of fraudulent activities. Here are methods to prevent fraud- Face detection technology- Procure a 360-degree facial image of customers to ascertain their identity. Customer behaviour- It is advisable to use predictive analytics to understand customer behaviour and patterns to observe changes or suspicious activities. Biometric security- Biometric acts as an additional barrier to already existing security. Forging biometric is tougher and incurs a cost to fraudsters thereby preventing fraudulent activities. Keep your customers informed- Educate your clients on basic do’s and don’ts while transacting or availing online financial assistance. For instance, customers must never share their OTP or CVV number with any third party.   KYC- Fraudsters are often well equipped and can forge legal documents. Hence, it is imperative to cross-check before onboarding your customers. Reporting process- Machine learning and neural network assist in generating reports of suspicious activities. File Suspicious Transaction Report (STR) as and when the system highlights. An example of how fraudsters are leveraging technology Banks allot their customers a unique number at the time of issuing a card. The first 4-6 digits of the said card number is a Bank Identification Number (BIN). This code is specific to each bank and the digits that follow are unique to each customer. Fraudsters identify BIN and leverage technology to try combinations to ascertain a legitimate unique customer number. With the help of artificial intelligence and trial and error method, they obtain CVV and the date of birth associated with the said card number. Fraudsters then proceed to make transactions on the card. In the case of an already issued card, the transactions are complete. If not, the banks are highlighted this fraudulent activity. Interestingly, both the parties, banks and fraud have evolved and are leveraging technology. While technology is a boon, it is also a bane that requires a constant upgrade.

The volatile global financial scenario has challenged many of our convictions about the financial sector. The fundamental; financial literacy has enabled this change in belief. It is imperative developing and developed economies partake in this transformation through financial literacy thereby successfully indulging in financial planning. The Economy There is practically no country that has developed and grown with a lagging financial sector. This growth is only possible when individuals and households are financially literate and make informed financial related decisions. Much like an economy, the growth of a household also depends upon quality financial planning to sail through present and future inflation. India’s growth in the financial sector was on an impressive upward trajectory before the 2004-2008 global financial crisis. One of the key factors to contribute to this growth was an increase in savings rate of individuals. Individuals and households today realize the importance of ‘financial planning’ thereby changing the financial demographic. This trend has welcomed several positive financial transformations in the economy. As per experts, if we aspire to achieve more growth in the financial sector, is it vital that the savings rate through individuals and households increase. To ensure successful financial planning through financial literacy, it is also important financial markets design and offer products that households with low income generation can avail. On the other hand, it is equally important to make people financially literate so they know what they need and are equipped to choose between an array of financial products in the market. The Business A company’s financial plan is the business plan it foresees. The financial data and projection give a fair estimation of how a business will fare in the long run. By using existing financial data, accountants plan the coming year’s business goals and investments in numbers. It includes an assessment of the business environment, goals, resources needed and their budgets, contingencies etc. Here are 5 major benefits of financial planning- Cash Flow Management- For a startup, it is necessary to establish the need of the business, i.e., product/market fit. Then on, it is necessary to estimate company cash flow to justify the existence of the business and its future growth and security. Budget Allocation- Budget allocation is closely related to a business’s cash flow. Once a company estimates its sales income, investments etc., it is essential to determine how it will be spent. Ideally, the approach should be to allocate funds into team budgets and a separate provision for investments must be maintained. Cost Reduction- Expenditure is an inevitable part of a business but a proper financial plan ensures controlled expenditure. As a cash flow is prepared, unwarranted expenditure can be identified thereby providing a scope to mitigate or reduce such costs. Risk assessment- The financial team make provisions to avoid or navigate risk at the time of financial or economic crisis. While risks are hard to predict, it can be accounted for on the safer side. Crisis Management- The year 2020 exhibited how a natural calamity can disrupt the economy and how businesses must always brace themselves for the worst. While many businesses sailed through the crisis owing to their strong financial plans and balance sheets, it reinforced the importance of investments, savings and contingencies. The Household Encouraging people towards financial planning through customized product stacks will also ensure ‘financial inclusion’ in the final analysis. Devising innovative products and services that cater to middle and low income households, who’ve recently started financial planning will further the long-term plan of achieving a financial boost. The masses we speak of seek ‘safe, return and liquidity’ products and to stimulate the growth in investments, financial sectors should offer audience centric products and services. Financial planning has also seen a boost due to the growth in literacy rate amongst the youth. An educated and informed generation will further boost the attempt to build a financially literate economy. Literacy has equipped them to plan and budget their income simultaneously saving for a financially secure future. Financial planning as the definition goes is the evaluation of an individual’s current pay and future financial state using current variables to predict future income, asset values and withdrawal plans. While it is an approach to meet one’s life goals through savings, investments and planning. Conclusion As quoted by Charlie Munger, “People make bad choices all the time, usually because of fundamental inability to operate over long time frames.”- You may have several different financial plans and goals they wish to achieve but it is rather important to plan how it will be achieved over time while considering all the elements associated with it.

Banking for teens; a new wave by Fintechs is all about tapping the untapped! With over 2000 Fintechs competing in the digital space, innovation in every segment seems inevitable. Earlier traditional banks had acknowledged this unpenetrated market of kids, teens and tweens as well. They introduced services such as junior accounts to serve the said market but were unable to bring technology and innovation to the equation. Parents had to manage all the banking operations for their kids giving a sense of dependency. Here’s a fact case that showcases vital statistics- Leveraging the fact that India has 15-20 million kids in the age group of 11-18 who own a smartphone and receive pocket money for personal expenses, upstart Fyp rolled out a pocket money app and India’s first holographic card for teenagers. Junio, another initiative to serve the teenagers, provides users a bank issued card as well that works much as an adult plastic card. FamPay, a Bangalore based Fintech, provides teenagers lessons about money matters through gamification along with enabling them to make online and offline transactions independently. Upstart like YPay also provide cashback and rewards on transactions similar to adult reward system. Pencilton introduced the PencilCard, a RuPay debit card for teens across India that can be activated and managed via the Pencilton app. Several fintechs are innovating this space by introducing ‘Banking for teens’ which offers ‘children centric’ products and services. They aim at allowing children to manage their funds while learning financial accountability and budgeting at a budding age. This will provide teenagers with financial literacy who otherwise have limited options to grasp financial-related concepts. Moreover, it will allow fintech to develop a market for themselves at an early stage. Gen Z is the most tech-savvy and technology-driven generation, which is a stimulus for Fintechs. They specifically target individuals aged between 15-24. The AI-driven apps allow them to withdraw, deposit, transfer cash, net banking, UPI payments. These companies also provide teens with secured plastic cards that enable them to make online and offline payments without the need for an OTP. Moreover, they also incentivize by offering rewards and cashback, similar to classic credit and debit cards. From a security perspective, parents can customize the usage and account threshold while receiving insights on expenditure. This provides parents the chance to teach their children money management while monitoring their expenditure. Fintechs are introducing services that are enabling financial inclusion at multiple levels. Although young, children are the future of an economy and teaching them money matters at a young age seems to be a good bet than excluding them.

The concept of financial inclusion was first introduced in India in 2005 by the Reserve Bank of India. It strives at offering banking and financial services to economically underprivileged individuals. It aims to elevate the socio-economic status of individuals regardless of their income or savings, ensuring the marginalized make the best use of their money and receive financial assistance. With the help of technology, more upstarts are making financial inclusion a widespread reality. The Concept Financial inclusion refers to the financial access by enterprises and households to reasonably priced and uplifting formal financial assistance. Access to financial services can be basis several dimensions, for instance, geographic, socio-economic, etc. Enterprises and individuals residing at different geographic locations will require distinct services from location-specific providers. Financial inclusion appropriately designs products and services that are sustainable and meet the needs of clients with a reasonable pricing structure. Financial institutions that work towards financial inclusion indulge in different techniques for effective delivery and provisions. The development and efficiency of financial systems can have an impact not only on aggregate growth but also on contracting disproportionate income distribution and helping people out of poverty. The Measurement The sub-indices of Financial Inclusion majorly depend upon the following variables- Access sub-index- This value is largely driven by the growth over the years, and recently, in the number of bank outlets manned by own staff, FBCs, total number of savings accounts, post offices, number of subscribers in Mutual Funds (MFs), JAM ecosystem, number of offices for insurance, Prepaid Payment Instrument (PPI) issuers, and Point of Sale (PoS) terminals etc. Usage sub-index- Usage has shown highest growth as compared to other sub-indices, driven largely by ‘Insurance’, ‘Credit’ and ‘Saving & Investment’. Some of the indicators under these dimensions which have shown substantial growth include total number of credit accounts, amount outstanding in the credit accounts, volume and value of Unified Payments Interface (UPI) transactions. Increased use of direct benefit transfer (DBT) for various government programmes also had a positive impact on the index value through higher outstanding amounts in Savings Bank (SB) accounts. Of the three sub-indices, FI-Access with the index value at 73.3, expectedly, is higher as compared to both FI-Usage (43.0) and FI-Quality (50.7) which indicates that building blocks for greater financial inclusion in the form of financial infrastructure put in place over the years needs to be built upon by deepening the FI through focusing on promoting ‘Usage’ and improving ‘Quality’. However, before investigating what influences the measurement in financial inclusion, it is imperative to assess the impact of financial inclusion on society as a whole. Several financial inclusion indicators depend upon multiple variables like outreach, usage, quality, etc. The objective to establish indicators are as follows- Include as many economies while maintaining originality to avoid bias results for a cross country setting Standardizing the measure for all countries to develop a consistent and robust method of financial inclusion To validate other findings To reach a measurement, surveying the people keeping in mind the socio-economic factors like occupation, income, literacy, rural debt value, etc. are vital along with understanding perception and acceptance of the services. Understanding the perception will allow financial institutions to device services accordingly while measuring the impact of these services on households. Another important aspect for measuring the efficacy of financial inclusion is collecting information on credit data, deposits, remittances, insurances, etc. The idea is to measure the impact and not simply open a bank account for the underprivileged. One of the main challenges in the measurement of financial access is the distinction between access to financial services and actual use of services. This is because of the presence of voluntary exclusion in the system. As per a study, 33% of the people voluntarily exclude themselves from financial assistance. This may be due to several reasons like lack of knowledge, cultural barriers, religious beliefs, etc. Therefore, measuring the proportion while regarding the voluntary exclusion is difficult. The measurement of financial inclusion is complex, attached with several layers and most importantly, linked to a perception of different researchers. Although the measurement calculates basis 3 vital aspects- financial participation, financial capability and financial well-being, the exact measurement is still a far-fetched objective. The concept and measurement of financial inclusion will face several hurdles but ultimately bring effective policies and comprehensive services that will benefit and uplift the underserved and underprivileged.

Microfinance is recognized internationally as a tool to combat poverty and augment rural development by creating awareness and empowering women which ultimately results in the sustainable development of the nation. As per the census, women have been the most underserved, underprivileged and discriminated strata of the society around the globe. Empowering women begins with changing the power dynamics and other societal, traditional and cultural factors that repress women. Empowerment requires addressing women’s lack of control over their own lives. This control is directly related to their lack of financial power and inclusiveness. Several studies around the globe suggest that women’s empowerment is linked to financial inclusion and no amount of social programs can motivate women to step out of their houses until and unless they are financially independent. Government and financial institutions now understand the necessity to uplift women by financially including them. It acts as the first step towards empowering them and pulling them out of poverty and reliance on societal and structural conditions. Micro financiers and Self Help Groups (SHGs) assist women, especially in rural India, in availing micro-credit and other financial services boosting their businesses and financial status. They help women deal with socio-economic challenges. It has always been difficult for women to avail business loans at affordable rates and the lack of credit acts as a roadblock for women trying to build their businesses. Microfinance institutions, with their last-mile physical and digital connections, can help women entrepreneurs to overcome these challenges. As per reports, 77% of women have a bank account with a financial institution and as per the Global Findex Survey, only 5% of Indian women with bank accounts receive bank loans. Worldwide, microfinance loans serve almost 20 million people living in poverty and 74% of these individuals are women. In India, 99% of the total microfinance beneficiaries are women. There is a far more social value generated when women access formal credit. It offers women the chance to enter the public sphere as businesswomen, expanding their roles beyond social boundaries. Moreover, as women participate in the economy, they become more involved socially and politically. Here’s a graph that explains how the Microfinance Industry’s Gross Loan Portfolio (GLP) has progressed against the number of clients since 2019 and benefitted the underprivileged- Microfinance is recognized internationally as a tool to combat poverty and augment rural development by creating awareness and empowering women which ultimately results in the sustainable development of the nation. As per the census, women have been the most underserved, underprivileged and discriminated strata of the society around the globe. Empowering women begins with changing the power dynamics and other societal, traditional and cultural factors that repress women. Empowerment requires addressing women’s lack of control over their own lives. This control is directly related to their lack of financial power and inclusiveness. Several studies around the globe suggest that women’s empowerment is linked to financial inclusion and no amount of social programs can motivate women to step out of their houses until and unless they are financially independent. Government and financial institutions now understand the necessity to uplift women by financially including them. It acts as the first step towards empowering them and pulling them out of poverty and reliance on societal and structural conditions. Micro financiers and Self Help Groups (SHGs) assist women, especially in rural India, in availing micro-credit and other financial services boosting their businesses and financial status. They help women deal with socio-economic challenges. It has always been difficult for women to avail business loans at affordable rates and the lack of credit acts as a roadblock for women trying to build their businesses. Microfinance institutions, with their last-mile physical and digital connections, can help women entrepreneurs to overcome these challenges. As per reports, 77% of women have a bank account with a financial institution and as per the Global Findex Survey, only 5% of Indian women with bank accounts receive bank loans. Worldwide, microfinance loans serve almost 20 million people living in poverty and 74% of these individuals are women. In India, 99% of the total microfinance beneficiaries are women. There is a far more social value generated when women access formal credit. It offers women the chance to enter the public sphere as businesswomen, expanding their roles beyond social boundaries. Moreover, as women participate in the economy, they become more involved socially and politically. Here’s a graph that explains how the Microfinance Industry’s Gross Loan Portfolio (GLP) has progressed against the number of clients since 2019 and benefitted the underprivileged- Apart from microcredit, microfinance institutions also offer micro-insurance, micro-savings, micro-pensions to poverty-stricken individuals to uplift their financial conditions. As per studies, women are more likely to spend the money they receive on their families and children as compared to men. Hence, empowering women is directly related to offering better prospects to the family and children as well.

The term ‘WealthTech’ was coined in the early 21st century with the convergence of Wealth with Technology. The concept of wealth management evolved to be known as ‘WealthTech’. Elements like artificial intelligence, big data, SaaS allowed a transformation in the ecosystem of hedging. WealthTech has allowed individuals to ‘personalize’ their finance. By automating and increasing the efficiency, individuals are offered a seamless customer experience while picking hedge plans best suited to them. As per data, India had approximately 4 million WealthTech investors in FY 2020 and is expected to grow by 3x to reach approximately 12 million by FY 2025. The Ecosystem- WealthTech Earlier, wealth management was offered as a ‘service’ by banks or financial consultants but with evolution and introduction of WealthTech, companies are focusing on B2B investments and scaling businesses with personalized hedge plans. For instance, Moneyfront offers fully automated investment advice and recommendations based on its signature scientific algorithms allowing individuals and businesses to customize their investments to maximize profits. The idea of such firms is to empower individuals by allowing them to be self-reliant. Differentiated Services in WealthTech Portfolio Management Tools- Individuals and businesses alike can have their investment preferences and plans listed and showcased on a single platform enabling them to have a bird’s eye view of their portfolio. Robo-Advisors- These are machine learning based tools that automatically analyse customer preference and invest in instruments best suited to them. The goal of the software is to make smart investments with limited intervention. Automated Retirement Plans- Technology has furthered robo-advisors wherein they can devise plans through algorithms that manage an individual’s retirement plan with limited intervention. These algorithms calculate and devise customized plans. Quantitative Investment Strategies- Quants strategy compose complex mathematical models to detect investment opportunities. These quant models make the buy or sell decisions based on discipline without human intervention thereby eliminating any emotional response at the time of trading. Scientific Algorithm Tools- These algorithms enhance trading software by automating real-time trading wherein users can configure the software services according to their preference and requirements. Robo-Financial Advisors- Based on extensive data analytics, robo-financial advisors provide close-to-accurate financial advices to individuals which otherwise was an expensive concept. Company advice users of the best option available to them basis their preferences and budgets. Systematic Investment Plans- Companies are offering a platform that allows users to make a one-time decision that result in repeated investment occurrences. Individuals can choose their hedge plan, quantity and amount and automate the entire process. Big Data Analytics- B2B clients often indulge in sizeable investments and hence, data analytics plays a crucial role for such clients. Earlier, owing to insufficient and unstructured data, financial companies relied on manual analysis. However, with machine learning and data analysis, companies are able to offer better insights with simpler customer journey. Cloud Technology- With cloud technology, financial companies are allowing users to invest and manage their investments on their fingertips. This will further the adoption of WealthTech and users are offered ease along with financial assistance. Conclusion Since the pandemic, India has seen an increase in wealth management as customer sentiments have shifted to a future-centric approach. With introduction of startups in this segment, WealthTech has an opportunity to grow immensely.

 Crypto was introduced to the world in the year 2009 as Bitcoin that aimed to become a decentralized mainstream peer-to-peer payment network and digital currency. Since, several other crypto currencies were introduced that function similar to capital market. Individuals can buy and sell these digital currencies swiftly and real-time which gave rise to the possibility that crypto can be a catalyst towards a financially inclusive society. Today, 2 billion individuals stand unbanked globally of which, 190 million are from India. Crypto can be an aggregator in serving this population and providing them banking solutions. Since crypto was initially created with the aim to change the way we create, store and transfer value, with ease on regulatory framework in India, crypto can help boosting financial inclusiveness. Most of the financially excluded individuals reside in developing regions but these regions also have high Gen Z and tech-savvy population. According to reports, 8% of India’s Gross Domestic Product (GDP) comes from its IT industry. Being said that, India has commendable technical knowledge to create and invest in blockchain instruments and at present, India stands at 2nd place in crypto. Crypto is enabling individuals to contribute to the economy. It is increasing their chances of investing more thereby resulting in increased savings. Since crypto is seen as the future of currency, it poses as a profitable bet for individuals looking to increase their savings. As per reports, India witnessed an increase in crypto trading during the lockdown taking the number to $10-30 million daily. A hotbed of global and open financial experimentation, crypto is tangible, programmable and a modular technology focused on value store, peer to peer micropayment, lending, price discovery, market making instrument. This allows individuals to use it in several ways than hard cash. How is it leading to financial inclusiveness? Blockchain addresses high fees issues by enabling almost real-time and accurate payments, thus reducing transactional costs and boosting speed. It facilitates a decentralized approach and helps in managing financial entitlements. It reduces the risk quotient thereby reinforcing trust amongst two participating parties. India being the world’s largest recipient of remittances, blockchain can boost easy cross order remittances. It can serve as a hedge against inflation and currency devaluation. Cryptocurrency adoption is essential for a financially inclusive society but new technologies don’t always make the cut immediately. With introduction of more crypto-startups, exchanges, applications etc., people will eventually make the big shift and allow a new system of payments. Moreover, from a regulatory point of view, forming a crypto-friendly space is also imperative to boost its usage.

Disruption; an aggregator of a number of changes brought about a change in the banking after the crisis of 2008-2009. The crisis revealed loopholes in the banking system and how technology and innovation was the way forward. Whether newer products and services or operations, innovative technology held the potential to improve the overall scenario in financial institutions and credit unions. Today, artificial intelligence (AI), machine learning (ML), big data analytics, robotic process automation (RPA), natural language processing (NLP) etc., have all evolved over time and today, this innovative technology is transforming the financial world especially in the customer experience, fraud and risk arena. Fintechs today are making use of artificial intelligence to curb fraudulent activities, anomalous transactions, risk management etc. However, anomalous activities may not necessarily always be fraudulent in nature; they can also be linked to money laundering. Artificial intelligence has helped minimize the exposure especially since the type of frauds and risks have also evolved with time and technology. Risk and fraud is an inevitable element of any business or process and Fintechs are devising strategies and services to curb these activities with the help of artificial intelligence. Artificial intelligence collects several critical information like IP address, geo-locations, email domains, device information, operating systems, browser agents, phone prefixes etc. Artificial neural network and machine learning algorithms have helped implement these to extract helpful analysis and reports for better performance and risk management thereby, outperforming traditional statistical methods. AI in Financial Crimes Prevention- As per reports, credit card fraud is the most common type of fraud that results in huge losses each year. While eliminating credit card frauds is difficult, it can be minimized by selecting who you choose to on-board. Depending upon the data it is fed, AI can generate a risk profile of a customer thereby intimating financial institutions of possible risks associated with the customer. Detection- Money laundering, a post customer on-boarding element, is a threat to financial institutions. Artificial neural networks have shown improvement in identifying underlying risks by highlighting suspicious patterns. Big data analytics compares current and historical data of customer behaviour, transaction patterns, cash deposits, international transfers etc., thereby assisting financial institutions in earmarking high risk profiles. AI and Data Fintechs are fighting fraud and risk through AI and standard ‘data’ is a critical aspect in receiving desirable results. The output of AI depends on the type and quality of data it is fed and therefore, it is essential to have a standard and quality set of data. The role of artificial intelligence and its sub sets have become a vital part of Fintechs and how they function today. Artificial intelligence has allowed Fintechs to navigate deep water and areas untouched, for instance MSMEs while simultaneously minimizing risks associated with it. Risk, fraud, money laundering, anomalous transactions are different aspects of financial crime that grips financial institutions and artificial intelligence is helping them navigate this deep water.

Acceptance of Fintechs is on an upward trajectory owing to digitization in the financial world and with customers embracing the change, the shift is evident. Artificial intelligence, machine learning, robotics etc. have accelerated the acceptance and currently, Fintechs are better placed than before and are contributing to the financial world in multiple influential ways, for instance, they are attempting to bridge the $ 3 trillion global trade finance gap. By forming a strong technological base, Fintechs can do what large financial institutions cannot, i.e., provide swift access to finance along with alternatives to collaterals especially for MSMEs, an otherwise underserved segment. As per reports, MSME loan value has increased to 24.6% in FY 2021 from 16.2% in FY 2017. While Fintechs are still evolving, legacy banks; who have spent decades building their reputation and trust in customers, offer a wide range of products and services yet stand challenged today. While traditional financial institutions have shown little to no desire to reform, Fintechs have emerged as- Customer centric State of art service provider Sophisticated customer journey enabler Bank charters These aspects have allowed them to navigate and penetrate the market successfully. For instance, digital payments have witnessed a sharp growth in India in the past few years. As per reports, India witnessed 48 billion digital transactions in FY 2020 and is set to account for 71.7% of total payments volume by 2025. With Fintechs evolving so rapidly, traditional financial institutions view Fintechs as strong collaborators rather than competitors. Nonetheless, until the regulatory body does not recognize Fintechs as an independent body, they will invariably be considered lucrative alliances. For instance, Niyogin Fintech Limited, India’s unique early-stage public listed company, offers financial assistance to MSMEs by partnering with several leading banks like HDFC, Tata Capital Financial Services, IDFC etc. They are striving towards becoming a ‘banking as a service’ platform. Why should Traditional Banks collaborate with Fintech? Increase Market Penetration- Fintechs can take advantage of traditional financial institution’s swelling customer data they have maintained over the years while offering their ‘banking as a service’ platform. This way, both, traditional financial institutions and upstarts can map out best opportunities for themselves. State of art stack- Fintechs offer state of art technology and service stack to traditional banks which otherwise may require high intensity brainstorming and most importantly, cost. Advanced Technology- Legacy banks often stick to unreformed systems and solutions due to limitations they face. Fintechs offer simple plug and play up-to-date technology and services. Cloud Based Stack- Fintechs offer technology stack that can be accessed on the cloud and so, cybersecurity, uptime performance, data storage and residency will be managed by them. This allows traditional financial institutions to add new scopes, technologies, requirements etc. at a much lesser cost. Increased ROI- With Fintechs offering platforms that enable out of the box services and technology stack, traditional banks can reckon on them for a better prospect thereby increasing their Return on Investment which otherwise is fairly short. Workable Regulations- While the regulatory framework for traditional financial institutions is quite stringent, Fintechs can prototype new technological approaches that work around current regulations and devise offering within regulatory boundaries. Traditional financial institutions and upstarts both have better prospects if synergized. Both can work collaboratively to bridge gaps rather than competing.

Financial Institutions extract information from existing data to ascertain customer patterns and predict future outcomes and trends, known as predictive analytics. They forecast future with acceptable level of risk, reliability and scenarios. Predictive analytics assist financial institutions fetch admissible customer data, identify risk and fraud, screen varying applications, manage customer experience and relationships basis past and predicted variables. Traditional institutions and upstarts are manovuering through this transformation and relying on the outcomes it offers. Presenting a few key transformative elements through adoption of predictive analytics- Credit Scoring- Credit scores are a prerequisite to availing financial assistance from financial institutions; used to predict the ‘propensity to default’ (PD) by a customer. Predictive analytics has enabled financial institutions to measure customer profiles with the help of modeling tools such as credit risk scoring, collection scoring, etc. These scores have allowed financial institutions to analyze and measure their credit risk while offering financial services. Fraud Detection and Prevention- According to a survey by KPMG, banking fraud has risen by 60% globally in recent years. Scams, phishing, data theft, identity fraud, etc. have become common and predictive analytics has enabled financial institutions to identify risk patterns and curb fraud. With the help of monitoring systems that scan data continuously, suspicious activities are triggered helping financial institutions assess the risk quotient. Risk Assessment- With financial institutions competing for ‘financial inclusion, they are targeting segments with limited to no credit history, putting themselves into high-risk range. Moreover, onboarded customers pose the risk of money laundering. Predictive analytics helps financial institutions by analyzing profiles of customers with limited information and highlighting high-risk profiles by analyzing transactional data. Customer Experience (CX)- With CX gaining prominence in recent times, financial institutions are continuously attempting to improve it at each consumer touchpont. Predictive analytics has helped them understand customer preference, need, behaviour, pattern, etc. thereby offering personalized services that enhance the overall customer journey. Investment Decisions- Investment bankers were heavily invested in for the expertise they possessed in the financial arena. Predictive analytics has allowed financial institutions to reduce their manpower cost by introducing robo-advisory services. For instance, Moneyfront, a Robo-advisory wealth tech platform, offers personalized investment options through advanced scientific algorithms. Product Development- Financial circles are growing highly competitive with the launch of newer and innovative products to match customer expectations. With the help of artificial intelligence, machine learning, big data analytics, etc., financial institutions are able to get critical consumer insights that are then implemented for product development. Customer Support and Retention- In a highly competitive area where customers are gratified, it is imperative financial institutions take note of customer perception and satisfaction degree. Predictive Analytics gives financial institutions insights into customer expectation and decision making criterias thereby, assisting them in retaining customers. Challenges of Predictive Analytics Predictive Analytics look for patterns and behavioural science in every scenario and so, its rulings and analysis are basis of the data it is fed through interactions, perspective gathering, demographics analysis, consumer behaviour etc.Therefore, financial institutions must procure and manage quality data to match customer expectations since feeding substandard or incorrect data can result in detrimental results. Cross-selling, upselling, customer satisfaction trends, operational efficiencies etc., are a few more elements offered by predictive analytics that has successfully assisted financial institutions in making data driven decisions and multiplying their service and product stack while maintaining efficacy.

‘Finance’ has always been an indispensable part of our society. Earlier, an unorganized lending system reigned the market that was then taken over by an organized brick and mortar model and today, with advancement, Fintechs are competing fiercely for a substantial stance. Gone are the days when the idea of integrating finance with technology was a fantasy for a bunch of visionaries. Today, it is here and now! Since the financial crisis in 2008, the banking landscape has been undergoing a steady change. The Return on Equity (ROE) has fallen considerably challenging the existence of traditional financial institutions. The said transformational change can be attributed to the overall evolution of the banking system. But, certain gaps accelerated the revolution of a contender; Fintechs. Stated are a few key gaps that paved the way to the rise of Fintechs- Adoption of Digital Transformation- As per a report by the Massachusetts Institute of Technology (MIT), going digital can reduce the costs of banking by a massive 60–80%. But, since banks have limited their footprint to fundamental offerings like lending, investment, cards, etc., they are quite late in joining the digital wave. Banks earn by adding layers and keeping their operational activities complex and so, the customers have become weary of it. By bringing in technology, Fintechs have taken advantage of this fatigue. Patrimonial Infrastructure- The core banking solution is composed of old data sets that are being used around the globe to this day. Earlier, the said infrastructure offered banks stability and security but with new alternatives creeping in, these data sets come across as medieval. However, the said infrastructure is so deeply integrated into the banking system that changing any aspect may do more harm to the system than good. Hence, banks choose to remain risk-averse and skip the adoption of alternatives. State of Art Services- Traditional banks enjoyed a monopoly for the longest time until Fintechs challenged them. Whether it was lending or payments, customers were hassled by complex procedures and timelines. Fintechs are enriching customer experience by doing away with vile operational activities. Moreover, with the help of Artificial Intelligence, they are offering customers exactly what they need! While Fintechs have been more customer-centric, traditional banks were more money-centric. Inadequate Customer Engagement- Since financial institutions worked in a reverse order earlier wherein they waited for a customer to approach them, customer engagement did not hold any gravity. Informing customers of all their available options and choosing a state of art service is an evolution brought by Fintechs. Where financial institutions have attributed more importance to business, Fintechs have switched the attention to Customer Engagement and Experience (CX). CAPEX model- Traditional financial institutions have often been thick in the book owing to the CAPEX model they follow. With inherent expenditures, it is almost impossible for traditional financial institutions to pass on any extra benefit to their customer, a loophole Fintechs have heavily banked on. Introduction of CryptoCurrency- Although cryptocurrency has not received a green signal from the regulatory bodies in India, it holds the potential to become a disruptor. Its underlying program can simplify several financial processes. While money has been a vital part of our lives for centuries, converting it into a digital asset will enhance customer journey and experience. Financial Assistance to MSMEs- While financial institutions neglected MSMEs owing to their sporadic business cycles and cash flow, Fintechs specifically targeted the sector. For instance, Niyogin Fintech Limited, a unique early-stage Fintech, offers impact-centric financial assistance to MSMEs intending to empower them. Traditional financial institutions have always been wary of testing deep waters and appraising their product and service stack. At present, 1.7 billion adults remain unbanked globally of which, two-thirds of them own a mobile phone. While the limitations faced by financial institutions retrained them from penetrating markets, Fintechs are moving head on to cater to all the untouched segments thus, filling the void left by financial institutions.

Customer experience is now an integral part of most industries. With Fintechs coming in and challenging the traditional methods of addressing the customers, they are also redefining customer experience. Upstarts, i.e., Fintechs are taking it upon themselves to change a number of old age methods and many of these may not even associate with the financial industry. Most importantly, upstarts have recognized and therefore attributed great significance to Customer Experience (CX) and are working towards enhancing the overall customer journey. Subscription to graphs, pie-charts, dashboards and reports alone are trivial instruments. Today, Fintechs are getting customers involved in their own personal finances by empathizing with them over their challenges, creating simplified and consistent processes and building trust therein. Fintechs are therefore exhibiting that by automating upfront one can scale CX personalization without a significant increase in cost. For instance, firms are setting up auto-chatbots who act as first point of contact when a customer approaches for assistance. Apart from the fact that these chatbots are available 24×7, they also help resolving basic grievances or queries or even sharing base level information giving businesses a personalized effect. Robo-Advisors give personalized service to a large number of customers that otherwise cannot afford traditional advising. Through ‘platformification’ and open Application Programming Interfaces (APIs), Fintechs are enabling operational advancements offered by Robotic Process Automation (RPA), chatbots and Distributed Ledger Technology (DLT) with great accuracy. At present, Fintechs are focusing on key areas of agility, digitalization, personalization, artificial intelligence and operational excellence to achieve effective customer experience within competition and rising customer-centricity. For instance, earlier where customers had to involve third party advisors to manage and grow their wealth, today, with the help of scientific algorithms that compute customer preference against their investment amount, customers are able to invest and manage their own wealth. This technology has offered customers the ease of availing all services on the same platform while eliminating additional costs. Since customer expectations and preferences are ever evolving,  especially of the Gen Z, they demand quick, stable, secure, omni-channel, to-order and individualized interactions – and they have little patience for those that fail to deliver. At present, while technology is at the forefront, firms need to align their strategy and objectives with innovation to grow and sustain within a highly competitive market that emphasizes on a seamless and consistent customer journey.

FinTechs are reimagining the entire banking space by revolutionizing several processes and services. They have made ‘finance’ seamless and quick while taking a paperless, presence less and cashless approach. At present, India comprises of 2000+ Fintechs, most of which are based out of Bangalore. With a sudden rise and success of Fintechs in the financial arena, the question arises – How have Fintechs navigated so quickly? Here are some Fintech growth hacks- Technology is the KEY- Though technology was introduced to the banking system in the 1970s, it was dominantly a back office tool. Fintechs revolutionized and placed themselves as “Digital first” banks, a fairly new concept in India. They strategically leveraged technology to their benefit and offered innovative products and services that addressed customer problems and enhanced customer experience. Innovation at the forefront- While Fintechs introduced new products and services for customers, they also continually upgrade themselves with technology advancement for better innovation. For instance, with the help of big data analytics, Fintechs analyse and synthesize customer journey. This innovation has changed the landscape of banking as it has enabled financial institutions to offer customer centric services. Using psychological tools- Fintechs do not wait for the need to arise rather, they leverage technology to understand customer preferences, needs, pattern, behaviour, etc. and create a perception. For instance, Buy Now, Pay Later, a Fintech innovation, allows customers to purchase today and pay on a later date. This innovation has allowed customers to indulge in purchases and extend their budget. Improvising customer experience- Fintechs have introduced a contemporary style of functioning and generating business. By shifting from a Capex model and reducing their Opex significantly, Fintechs are passing the extra benefits to their customers.For instance, Fintechs offer cashbacks, rewards, vouchers, discounts etc to attract customers to transact with them while ensuring the customers benefit as well. Customer-centric approach- Until recently, financial institutions followed a business first approach rather than a customer first approach. Meaning, banking was more money centric than it was impact centric. Fintechs introduced an alternative approach by putting customers on top priority thereby, creating an impact. Today, customers are swamped with options and benefits which means, financial institutions require a unique selling proposition. One-stop solution- Whether it is lending or smart investments, Fintechs have revolutionized the financial ecosystem by aligning technology with finance. They offer seamless solutions that allow customers to transact, invest, insure etc. on one platform, on a single click. Strategically scaling up- Instead of cramming into already exhaustive spaces, Fintechs are introducing fresh innovations to the market. For instance, CRED’s Book Now, Travel Later offering- With travel rules and regulations changing daily, CRED now offers a plan that allows its customers to reserve hotel rooms today and pay as and when they travel. Since this is insured by CRED, customers have the liberty to travel whenever they feel safe while not missing out on their choice of hotels. Fintechs are slowly hacking customer psychology and launching products and services that resonate with customer needs and preferences. At present, although the regulatory framework does not allow Fintechs to operate solely, they have successfully found a mark for themselves through some unique hacks.

India is home to 6.3 crore Micro, Medium and Small Enterprises (MSMEs). While MSMEs hold a major share in the Indian economy, they often face cash flow limitations. Until now, traditional banks were weary of extending capital assistance or loans to MSMEs citing their sporadic cash flow and volatile and vulnerable business cycle that largely depends on seasonality, labour costs, natural calamities etc. MSMEs contribute around 6.11% of the manufacturing GDP and 24.63% of the GDP from service activities as well as 33.4% of India’s manufacturing output. Today, the MSME sector is regarded as an “opportunity overlooked” by Fintechs, rather than a threat. This attitude is transforming how MSMEs were always viewed. Earlier, where MSMEs struggled availing capital for production, expansion etc., resulting in a build-up of non-performing assets, today they are being focussed on and empowered. Availing credit from traditional banks often required a collateral or credit report that MSMEs did not possess and hence, made them ineligible for loans. Today, Fintechs are reshaping how MSMEs have access to working capital and manage their cash flow. With the help of Artificial Intelligence, Machine Learning and Big data analysis, Fintechs analyse various aspects like credit risk, eligibility, cash flow, business behavioural pattern, etc. and ascertain a business’s credit limit thereby eliminating the need of preceding credit information. This has helped MSMEs since their eligibility does not solely depend on a collateral or credit information anymore rather, on their business pattern. For instance, Niyogin Fintech Limited, an impact centric Neobank, focusses solely on empowering MSMEs. With the help of advanced algorithms, they generate end to end business analysis report that proves credit eligibility. The said algorithm analyses aspects like credit risk profile, credit eligibility, business cash flow, loan tenure, etc. With automated pricing and decision engines, loan disbursals are often quick. Furthermore, Fintechs are bridging cash flow gaps by ascertaining current and projected cash flows of MSMEs and deploying technologies to get an accurate understanding of their cash conversion cycle. This analysis enables MSMEs avail financial assistance easily. The cash conversion cycle expresses the amount of time (in days) it takes for a company to convert its investments in inventory and other resources into cash flows from sales. Apart from lending, Fintechs are also enabling MSMEs manage their cash flow by digitizing their entire receivable and payment methods. This helps MSMEs fasten their cash flow in and out of business quickly. Where earlier 82% of small businesses failed due to poor cash flows and management, today by empowering MSMEs, India has seen an increase in MSMEs by 18.5% CAGR between 2019 to 2020. Since MSMEs often use a single bank account, Fintechs have converted this into an opportunity by building technological solutions that check net cash flows and expenditure of the business. While this helps financial institutions in reducing their risk quotient when transacting with MSMEs, it acts as ‘digitization in the unorganized sector’ for MSMEs. Fintechs have further allowed MSMEs invest their surplus income profitably through ‘smart investments’. For instance, Niyogin Fintech Ltd, through Moneyfront, offer Wealth Tech as a service. Based on mathematical set of rules, they analyse vital parameters like past performances and risk-return ratio, etc. & provide fund schemes that match your investment objective. While traditional banks had rigid procedures, limited access to funds, technological barriers, Fintechs are working towards bridging the gap by innovating and digitizing solutions and processes, respectively, thereby improving and boosting cash flow cycle of MSMEs.

The understanding and implementation of technology in various aspects has allowed us to transform how we perform financial tasks. Today, we can initiate a number of financial tasks at a click! And, it only gets innovative as we delve deeper. Finance is no longer associated with ‘banking’ only rather, several businesses are offering it as an extension to their existing service stack, referring to it as Embedded Finance. Embedded finance is the integration of financial services into a traditionally non-financial platform. This integration allows customers to access financial services, for instance- payments, within the service app. Earlier, if a non-financial business would want to offer a financial service, they would’ve had to build a corresponding financial arm with their organization. Today, with the help of embedded finance, all it takes is integration thereby, lowering expenditure significantly. Embedded finance has enabled businesses to increase their customer lifetime value by offering them a complete journey on a single platform while diversifying their product stack. As per Bain Capital, embedded finance has the potential to become a USD 7+ trillion dollar market, while also being referred to as the ‘fourth platform’. The given target does not seem unattainable since Embedded finance has branched out to various types. Here are a few examples of businesses that have adopted Embedded Finance- Examples of businesses that use Embedded Finance Type of Embedded Finance Business Embedded Payments Zomato, Uber, Big Basket Embedded Lending Croma, Amazon, Flipkart Embedded Investments Zerodha Embedded Insurance BMW, Honda, Tata Embedded Payments- This is used while buying a product or availing a service through a non-financial business. The check-out and payment settlement process is now a part of the platform rather than an extension. Severalbusinesses also offer Embedded Card Payments, also known as smart cards, virtual cards, or expense cards, that allows an individual to transfer cash electronically. Embedded Lending- Non-Financial businesses offer loans with a credit limit at the time of purchase which otherwise, was a lengthy process. Buy now, Pay Later is an appropriate example to explain embedded lending, quickly and seamlessly. Embedded Investments- Embedded investments enables investment by offering users a single platform to invest and manage their money. It allows users to invest in various financial offerings like capital market, mutual funds etc without leaving the existing platform. Embedded Insurance- Businesses collaborate with external insurance companies rather than introducing an in-house product or service. Insurance companies integrate transactional APIs and technologies into their insurance solutions to provide service on mobile apps, websites and other partner ecosystems. Embedded Banking- It is when services similar to what banks provide are offered by non-financial players, apart from critical offerings restricted to banking institutions only. It allows you to make investments, apply for loans, manage your transactions etc., on its platform. Embedded finance is enabling companies to widen their demographics while offering an end to end solution on a single platform. Businesses from various domains are adopting embedded finance to stay ahead in their area of competition.

Digitization has transformed the way businesses function today. Organizations are investing in technology for efficacy and optimization of internal processes to build business models with enhanced customer experience. Today, technology is all over and changing the dynamicity of various internal and external processes by integrating various bits and processes on one platform. Product development and services companies have been at the forefront of driving this digital transformation by introducing Software as a Service (SaaS) based offerings. Software as a Service, also known as Web-based Software, On-demand Software or Hosted Software is a way of delivering applications digitally- as a service. It comes as a respite to organizations that invested heavily in professionals and in-house software earlier. Today, with the help of SaaS services, instead of installing and maintaining software, one can simply access it through the internet, freeing themselves from complex software and hardware management since the applications are run on the SaaS provider’s servers and hence, entirely managed by them. The SaaS framework has enabled several blooming Fintechs to hover from launch to profitability in a short span by offering them the liberty to build a complete business model on it. In doing so, Fintechs have drastically increased their scalability while pulling down operational expenditure. Also, it has allowed Fintech start-ups to outflank their competitors by simply adopting the SaaS model for online transactions. The new age Fintechs, who aim for market dominance, compete to build the best possible solutions for the industry and adopting cloud based framework has been a game-changer for them. Adopting SaaS has helped Fintechs understand volatile business cycles and demand patterns while simultaneously making a paradigm shift from a Capex to Opex costing model. This change in the costing model has allowed Fintechs to augment their growth by investing more in operational activities like data analysis, machine learning, artificial intelligence, etc. Big data analysis, Machine Learning, Artificial Intelligence has enabled Fintechs to bring a tinge of freshness and innovation to the table where the preferences of the customers they are dealing with are highly dynamic. SaaS has enabled Fintechs to launch customized and configurable interfaces to match customer preferences while improving operational control as well. While questions of quality of software providers, certifications, process, etc., stopped financial institutions from adopting SaaS in the past, today, it offers them benefits such as data security, cost optimization, deftness, scalability and configurability. Awareness has been a major driving force behind this shift. Cost effective pricing models allowed banks to reduce their CAPEX substantially which paved way for early stage adoption of SaaS. Furthermore, it also enhances compliance, a significant fragment in the financial world, by automating recurrent aspects thereby reducing irregularities. SaaS has helped financial institutions in prioritizing, reducing and realigning their expenditure. While resistance is a thing of past, at present, SaaS is widely used and heavily relied upon by financial institutions.

The Yellow Metal; Gold has been a part of our society for a very long time. For Indians, gold is considered much more than a hedge. While it is a legacy in many parts of India, it is an investment to mitigate financial risks during inflation, economic, social and geographical crisis. Citing this sentiment and furore for gold, financial institutions introduced the concept of ‘organized lending against gold’, a concept otherwise widely practiced in the unorganized sector. NBFCs like Muthoot and Manappuram, who control about 90% of the gold loan market, extend loans against physical gold. Due to an emotional attachment to the gold, individuals seldom choose to sell their gold in times of need, rather they choose to pawn it. And hence, NBFCs view lending against gold as a lucrative option since defaults against gold loans are comparatively lower. During the pandemic, lenders witnessed a significant surge in the demand for loans against gold as borrowers faced an immediate and temporary cash crunch. In most scenarios of an immediate financial crunch, the foremost step one takes is either liquidating or taking a loan against their valuable assets to keep the cash flow in motion. Today, with technology joining the equation, we are introduced to ‘GoldTech’. Where gold has been steeply priced in the market, the pandemic paved the way to an innovative form of lending against gold- Lending against Digital Gold. Financial institutions partner with third-party platforms that enable individuals to purchase gold digitally. The said gold can be converted into physical gold at any point if required. If not, it can be treated as an investment with the bank. For instance, DBS Bank India has partnered with SafeGold, a third party, to offer its customers a platform where they can buy and sell digital gold. This technology has now furthered where consumers will be able to take a line of credit or a cash route, depending on the lending partner and will be able to borrow against digital gold. While individuals will have the ease of availing a loan within a few minutes, financial institutions will have the security. With gold following historic trends rather than market sentiments, lending against digital gold is as lucrative as physical gold. Moreover, with about 65% of gold financing in India taking place in the unorganized sector, a paradigm shift can be expected from the unorganized to the organized sector. However, the regulatory and operational landscape for digital gold lending has been quite a challenge for institutions. Indiagold, a lending startup, appears to be India’s first platform to offer loans against digital gold with a capping of Rs 60,000. Leading players like Paytm, Google Pay, PhonePe in the digital gold-selling space in India may partner with such service providers to diversify their portfolio while furthering the recognition of loans against digital gold. India’s changing landscape in the financial arena has presented several prospects to innovate and introduce newer services. A loan against digital gold is an evolution and can prove as a modifier in the gold credit system.

The origination of the banking saga in India dates back to the 18th century. Ever since, banks and their processes have evolved, adapting to prevalent market needs and sentiments. In comparison to yesteryears, banks have progressed and revolutionized but, with the introduction of Fintechs to the equation, banks are now facing the challenge to evolve further and adapt to the dynamicity rather quickly. Today, traditional banks are keen to embrace a variety of tech solutions to enhance their user interface and customer experience. Only in a theoretical sense can banks exist in the digital realm, gain a vast market and penetrate underserved areas on its overheads. Hence, several small banks like Federal Bank, Equitas Small Finance Bank, etc., have allied with Fintechs to amplify their retail network by combining finance with technology. For instance, Federal Bank launched a mobile-first Credit Card for the millennials and Gen Z in alliance with OneCard, a Fintech, to extend services to their untouched database. Traditional banks possess a sizeable database of customer information in addition to a bulging purse but, limited resources to channel it to their advantage. Fintechs have leveraged this restraint and offer traditional banks the resources and technology they require as the bargaining chip. Traditional Banks Vs Fintechs Traditional Banks are known for their deep pockets and while Fintechs can dent the dominance of banks, they cannot reign the financial world. Moreover, owing to the Indian regulatory framework, banks are still backing most of the transactions creating a sense of dependability for Fintechs. For instance, although Fintechs have introduced the financial world to Unified Payment Interface (UPI), traditional banks act as the alpha in each transaction, therefore, barring Fintechs from operating solely. In the financial world, a license is a prerequisite to lending and hence, Fintechs are heavily dependent on traditional banks when it comes to lending. However, there is a huge gap between the rates offered by traditional banks and Fintechs, creating an opportunity that seems more beneficial to Fintechs. While Fintechs are doing away with brick and mortar model, thereby reducing operational costs, eliminating human intervention is a farfetched objective. Elements like customer on-boarding, collections, etc., cannot be digitized completely thereby, giving traditional banks the extra edge. Looking at the Future / Shaping the Future- Traditional Banks that are striving towards an equal share in the future of the financial world should create a bionic banking structure wherein Artificial Intelligence supports and enhances customer experience and relationships. By leveraging data and analytics, they should aim at serving a broad range of customer needs that extends beyond traditional banking products. This comes as a necessity when global brands like Amazon, IKEA, Mercedes, etc., are eliminating traditional financial intermediaries due to their limited service stack and plugging in software from Fintechs to offer banking services to customers. Furthermore, banks that allow ‘technoid’ counterparts to build a platform and engage people for them to create a bionic banking structure, could end up being highly dependent on these third party service providers, pushing themselves away from the front end and thus, hazing their own brand recognition in the process. The future of traditional banks largely depends on how they collaborate and co-exist with Fintechs while each maintaining its own value proposition. Today, though Fintechs can challenge Traditional Banks in certain aspects, like digital payments, it cannot eliminate or outweigh the whole structure.

Before the plastics, i.e., the cards, money had ruled the market. In the year 1980, The Central Bank of India launched its first Credit Card of Visa brand, and thus, the Indian society was introduced to the concept of credit cards. Ever since credit cards have come a long way in terms of their functionality and offerings to the customers. Today, customers with a credit card are offered various schemes. Cashbacks and Reward Points are 2 aspects of a credit card that banks are leveraging on. Depending upon the transaction size and type of purchase through a credit card, banks offer reward points to customers. These points can be availed in the form of cashback, vouchers, discounts, etc., on the next purchase. In a nutshell, Cashbacks and Reward Points are incentive programs for the customers where a percentage of the amount spent is paid back to the cardholder. It is a rebate from the current purchase that can be applied as a discount on the next purchase. To make the most of the scheme, it is imperative customers know handy ways to maximize cashback through credit cards. 5 handy points to remember- The Right Card- There are numerous options of credit cards in the market, single or co-branded, and it is vital to choose the card that offers you the best interest rates, offers, reward policy, etc. Financial Institutions offer co-branded credit cards, for eg: Flipkart and Axis Bank offer a co-branded credit card with unlimited cashback. Co-branded cards can fetch reward points which may be as much as 5 to 10 times higher as compared to most other cards. Hence, choosing your card wisely is necessary. Monthly Bills & Big Purchases- Choose a card that offers an array of options and fetches you points or cashback while paying your monthly bills and everyday expenses. Paying bills through a credit card in stores, petrol pumps, airlines, etc can fetch you a considerable amount of cashback. For eg: If you make a monthly purchase of Rs 5,000 and receive a 2% cashback, i.e., Rs 100 per month, by the end of the year, the total will amount to Rs 1,200. It is a good amount to add to your savings year on year. Similarly, paying through credit cards for high-value purchases results in higher returns. Festivity Rewards- Follow and keep an eye on limited period offers that are often seasonal. For eg: During Diwali, through cards, banks offer an array of services, products, cashback options, etc., that one may not find on other days. Seasonal cashback is higher than usual and hence, is highly recommended. Adjust on Pending Cashback- Cashback and Reward Points often lapse after a certain period and hence, it is advisable to keep an eye on the dates and utilize the points accordingly to take advantage of various benefits. Multiple Credit Cards- Having multiple cards ensure more benefits as multiple banks partner with a single service provider. These service providers may offer different services, offers, rewards, etc., to each bank and hence, having multiple cards allows you to leverage benefits of your choice. Furthermore, having multiple credit cards also helps you to Improve your Cibil Score. With a little time spent towards strategizing your expenditure, one can rack in more cashback and reward points than ever!

Considering consumer spending across India amounting to nearly INR 22 trillion by the end of the first quarter of 2021, it is evident that Indians have a penchant for purchasing. With newer and innovative payment systems, Eg: Payment Programs in Fintech: Buy Now, Pay Later, consumers are being made well-versed with the concept and different options of a credit system. With several credit options, credit purchases seem to be on an all-time high. As a repercussion of multiple borrowings, individuals may falter in repayment which affects Credit Score, commonly referred to as CIBIL score. What is CIBIL? A Credit Information Bureau India Limited (CIBIL) score is a three-digit numeric summary of an individual’s credit history found in the CIBIL Report (alternatively known as Credit Information Report- CIR). Based on past credit behaviour, borrowing and repayment habits, a score is generated to develop an individual’s financial persona. While the score can range anywhere between 300 to 900, having a score above 750 helps in getting services from various Financial Institutions. Ways to Improve your CIBIL score 1. The Due Date Do Set reminders before the due date hits to repay the basic amount, approximately 5%, to avoid penalties & late payment charges Don’t Default on your EMIs to ensure a favourable credit score 2. Elongate Credit History Do Maintain historical data, records and accounts that have a timeline of your credit history Don’t Discontinue old accounts with a credit history 3. A Customized Limit Do Increase your credit limit as per your monthly expenditure. Your credit utilization ratio also impacts your credit score Don’t Avoid continually reaching your credit limit 4. Forms of Credit Do Consider widening your portfolio with different types of loans & tenure range to ensure better interest rates while borrowing Don’t Overlap your loans to the point of defaulting 5. Credit Report Check Do Review your credit report at intervals to mark or notify discrepancies that may affect your score adversely Don’t Delay filing for errors or disputes with your credit bureau The Bonus Advice- If you have co-signed, guaranteed or opened a joint account, remember that you are held equally liable for missed payments, defaults or negligence in payment, thereby, impacting your credit score. Therefore, while the credit system has enabled many of us to indulge in extra expenses, it is imperative one imbibes healthy credit monitoring habits.

Until a few years ago, technology used to be a support function for the back office of most financial organizations. Today, it is defining industry for bankers and traders. With the help of Artificial Intelligence, Neural Network, Big Data Analytics, Robotics, etc., Fintech has found its place in the innovation economy. The Role of Artificial Intelligence in Fintech sheds light on how Artificial Intelligence has become a core element in Fintech. The dynamicity of Fintech has led to digitization in the financial world. It has enabled impact and customer-centric services while simultaneously widening its reach to rural India as well. The given stats showcase the growth of financial inclusiveness and fall of unbanked population in rural areas driven by adoption of Fintech powered solutions. With a plethora of scope for further innovation and penetration, Fintech are slowly unboxing more opportunities. On the flip side, Fintech face various threats too that come with technology. Stated are a few significant opportunities and threats integrated Fintechs face-       Opportunities Threats 1 Rural Market- Owing to its geographical size and dispersion coupled with weak unit economics of the brick-and-mortar branch model, rural areas create a huge white space for rural centric neobanks.  Credit Risk & Collection- While Credit Risk is intrinsic to any lending proposition, rural markets come with their complications of limited collections infrastructure. 2 Expansion of distribution network- Fintech can create a unique distribution network access that offers cost-efficient market access and enables it to provide hyperlocal services.  Distribution Risk- To a large extent, distribution depends on financially weak partners, i.e., Kirana stores and this distribution channel largely depends on customer investment and hence, have a possibility to collapse without a robust customer base.  3 Financial Inclusion- With addition of new products at every level of the IndiaStack, the digital infrastructure becomes more solid paving way to more seamless services and product innovation. Technology Risk- Outdated technology, platform downtime, data leaks, and information theft have been widespread to the extent where financial institutions bore an expense of $ 16.9 billion in Identity Theft in 2019.  4 Innovative use of Data- Fintech can devise innovative methods to leverage artificial intelligence more efficiently to generate a more detailed analysis of creditworthiness, preferences, behaviour etc. Competition- At present, there are more than 2,100 Fintech in India with overlapping products and services. While Covid-19 proved unfavourable to several businesses, it opened new opportunities and markets for Fintech. Conclusion Despite the pandemic, the Fintech domain has boomed. According to a Boston Consulting Group report released March 2021, India’s Fintech market is now valued at US$31 billion, projected to grow to US$84 billion by 2025. By providing hyperlocal solutions, Fintech have only begun powering the financial inclusion.

India is home to over 1.3 billion people, out of which 850 million reside in rural areas. Major chunk of this population is underserved in terms of basic banking services. To promote financial inclusion, the GOI introduced various initiatives, most important among them was developing a digital pipeline that involved linking Jan Dhan accounts (currently standing at 430.4 million) with Aadhaar cards and mobile numbers (i.e., the JAM trinity). With the latest launch, i.e., e-RUPI, the GOI has taken another step to fill the gap towards a financially inclusive India. This digital infrastructure acted as an essential backbone for facilitating DBT (Direct Benefit Transfer) flows, adopting social security schemes, and promoting a cashless society by enabling digital payments through RuPay cards. Thus, accelerating the pace of developing an insured, digitalised, secured, and financially empowered society. However, for the rural population to shift from cash to digital modes of transaction, the need for robust interoperable cash in cash out (CICO) network emerged. Hence, in conjunction with the GOI, the RBI launched the banking correspondent (BC) model and set up new brick-and-mortar branches and ATMs in every tier to increase penetration in Rural India and expand the banking network. The challenges faced by Financial Institutions Geographical Base- Given India’s vast geographical base, large population and technological limitations, it becomes difficult for Financial Institutions to reach out to every individual. Limited Infrastructure- Setting up branches to increase touchpoints involves huge infrastructure costs. Regulatory Framework- The BC model has various regulatory requirements like settling withdrawals, complete accounting with bank branches within 24 hours of completing the transaction, etc. Impact of Covid-19 on rural India The rural economy of India is made up of both farm and non-farm industries. Millions of migrant workers send money home, contributing to the country’s non-farm economy, including formal and informal jobs in retail, construction, manufacturing, hospitality, education, and transportation. During the pandemic, the AEPS enabled withdrawals witnessed accelerated growth on the rural payment segment due to the Direct Benefit Transfers (DBT) under the GOI’s social assistance programs. Resultantly, AEPS interbank transaction volume increased by 120% in FY2021 to 0.96 billion. On the contrary, AEPS volumes decreased by 17% to 158 million in the first two months of FY2022 at the second wave. This was because of the high base of April & May 2020, when the GOI transferred money under various social support assistance schemes as a one-time measure. While the pandemic gripped the cities, the gravity was relatively lesser in rural areas. Nonetheless, this opportunity boosted and furthered the step towards digitalizing rural India. Although challenges persist, a slow and steady approach by leveraging digitization can ensure rural inclusion to a large extent, if not completely.

Fintechs have disrupted the way traditional banks have functioned to this day and paved a path for themselves. They have leveraged the estimation that only 8% of the world’s currencies exist in physical form and the rest is cached as mere digits inside computer memory. Fintechs have evolved surrounding this fact by offering integration between financial and technological resources to develop financial solutions for organizations. Furthermore, Fintechs have been enabled newer technologies by integrating Touch ID, Face Recognition, Biometric, etc. to services offered by financial circles. Considering the current pace, as per estimations, the global Fintech market will touch $330 billion by 2022. Before Covid-19, Fintechs were emerging as challengers to traditional banks but, by the end of 2020, Fintechs have progressed drastically and stand as strong contenders today. Today, Fintechs have fabricated and launched a variety of appealing services. With the help of technology, customers are given offers and payment options like never before. A widely used Fintech service- Buy Now, Pay Later (BNPL), a credit system, that has changed the landscape of credits and is swaying the market. What is Buy Now, Pay Later? BNPL is an online payment credit system that allows a customer to purchase today, online or in-store and pay at a future date, often interest-free. It is a type of credit that is transparent, seamless, quick and without any prerequisites. How has it changed the market? The new dynamics in payments has highlighted multiple limitations in the traditional payment landscape. The FinTech drive is slowly covering this inherent payment limitation. Today, a person can avail credit ranging between Rs 10 to Rs 1,00,000 with a repayment span of 30 days to 36 months. The Indian market is under-penetrated by credit cards since only 30 million people use them. Hence, Fintechs took note of this loop-hole and devised a strategy to overcome it by introducing a credit system, BNPL, without prerequisites. As of today, BNPL is the fastest growing online payment method with an estimation to reach 8% in 2024 from 3% in 2020. A survey has predicted that BNPL would grow by 65.5% in India, reaching a value of $ 11.57 billion in 2021. Furthermore, the adoption of BNPL is to rise by a whopping 24.2% CAGR from 2021 to 2028. Realizing the potential of BNPL, several merchants like Amazon Pay, PayTM Postpaid, Flipkart Pay, etc. offer services not only on their platform but also through their channel partners. The amount and duration depend upon the transaction size and vendors but this ensures an increase in their audience size. For eg: Amazon Pay has a credit limit for customers of Rs 10,000 with a duration of 20 days whereas PayTM Postpaid offers a 30-day duration and amounts up to Rs. 1,00,000. Fintechs have anchored a base with BNPL since they do not have to comply with all the lending obligations that apply to banks and other lenders. Moreover, with a boost in online transactions in Tier 2 and Tier 3 cities due to improved internet connections and shopping facilities, BNPL has also managed to widen its reach. Today, BNPL is the most sought-after service by Fintechs and as time progresses, it has the potential to uptick major payment options.

Artificial Intelligence, a key element in today’s technology has been around since the 1950s, since the same time when laptops were big machines. In the year 1951, Marvin Mushy and Dean Edmunds built the 1st Artificial neural network that acted as a base to what we call Artificial Intelligence today. If simply put, Artificial Intelligence is intelligence by machines that enables problem-solving. It works on data fed by humans and improves results by applying methods derived from human intelligence at a beyond-human scale. The seemingly simple technology holds a global market of $10.1 billion by virtue of its usage in different sectors. Together, technologies like Artificial Intelligence, Machine Learning, Neural Net Works, Big Data Analytics, Evolutionary Algorithms and many more have allowed various businesses to analyze, categorize and make use of huge, varied, diverse, and deep datasets. Formerly, computers were big machines with hundreds of wires that filled a room. Today, with progress in technology, the seemingly hundreds of wires and a big machine has given way to compact systems called laptops. Similarly, technology has also paved the way for a variety of services that we use and build upon today. Artificial Intelligence has made a big market for itself in the financial world by bringing 70% of Fintechs under its fold. Inorganics Intelligence helps Fintechs in solving human problems by increasing efficiency. Furthermore, it also reduces operational costs and makes internal processes more efficient. It is expected to further reduce operational costs by 22% by 2030 which comes as a big respite to Fintechs as they can maneuver the cost towards customer benefits. The use of Artificial Intelligence in Fintechs Artificial Intelligence is a technology that helps Fintechs in several ways to target, choose and reach their preferred audience. With its attribute of accurate decision making, automated customer support, fraud detections, predictive analysis, etc. it assists Fintechs in building their business while preventing risks and fraud associated with it. Artificial Intelligence has allowed FinTechs to bring down the risk and fraud quotient substantially. As per data, Identity Fraud costed financial institutions $ 16.9 billion in 2019. With the help of Artificial Intelligence, Fintechs decide authenticity and creditworthiness of a borrower thus, improving financial decisions. A loan is a fundamental element offered in the financial world and Artificial Intelligence can effectively analyze credit scoring systems. Based on an individual’s credit score, it identifies discrepancies and can reduce non-performing loans by 50% while boosting return up to 30% improving loan decision-making. It calculates a score based on information derived from payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%)Artificial Intelligence is a huge contributor in analyzing data in Payment Programs of Fintechs. Another interesting aspect of Artificial Intelligence is customer support. Fintechs often don’t have a physical presence unlike traditional banks and therefore, having 24×7 customer support becomes imperative. With the help of Artificial Intelligence, FAQs along with their answers can be fed into the system to assist several customers at the same time. Artificial Intelligence is also used in a number of other fields like Asset Management, Insurance, Forecasts, Personalization, etc. By leveraging the benefits of Artificial Intelligence, Fintechs have disrupted the financial world with increasingly unique and customer centric offerings and with time and enhancement of Artificial Intelligence, the dynamicity of Fintechs will also evolve.

By now, the idea of e-RUPI has taken the market by storm and financial circles are rife with opinions on the future of e-RUPI. While e-RUPI is still in its primitive stages in India, countries like the US and Hong Kong have had the concept of need-based voucher payments for quite some time now. The US successfully wields a concept similar to e-RUPI with the notion to help the homeless with food stamps, for educational purposes, to avail subsidies and benefits. Interestingly, China’s ‘Digital Yuan’ is also akin to e-RUPI by its attribute of no internet connection. e-RUPI, a noteworthy advanced payment system, does not require a bank account, smartphone or internet connection to avail government subsidies or benefits. It is a person and purpose-specific payment system wherein an individual can redeem the said subsidy or benefit from prescribed centers through an SMS code or an e-voucher. At a glance, the idea of e-RUPI seems quite similar to RBI’s design of Central Bank Digital Currency (CBDC), a digital form of government-issued currency aimed at offering cash subsidies to the underprivileged.  While a buildup on CBDC is said to be in progress, the GOI launched e-RUPI, which as per experts, addresses the reasons for CBDC’s launch. Earlier, Jan Dhan Yojana, a zero balance bank account, was introduced with an intention to cater to 190 million underbanked and underprivileged through Direct Benefit Transfer (DBT). In eventuality, it was realized that deep rural areas have little to no access to bank accounts and several beneficiaries were duped by intermediaries hence, not yielding the results GOI was anticipating. E-RUPI’s attribute worth highlighting in this scenario is the elimination of an intermediary. This virtue alone will cut down several loopholes and boost timely delivery of government welfare services. Notwithstanding the attribute, to redeem the SMS code or e-voucher, the beneficiary will require to visit nearby center approved by the government and so, a top up plan should be chalked out to mitigate the risk of fraud at this point of contact. While e-RUPI is seen as the mode for welfare services in the first phase, it ensures covering the risk on merchants as well. Being said that, a service provider will receive payment only after the transaction is complete. Hence, safeguarding the interest of the beneficiary and merchants, alike. But, a clear structure on mitigating risks of a service provider is still unclear. e-RUPI and the Financial World highlights the benefits and potential of e-RUPI from a service provider or bank standpoint. Although e-RUPI is in its pivotal phase and is catering to the healthcare sector only, to eventually branch out and cater to all sectors, RBI will robe in more entities who hold a license for prepaid instruments to issue e-RUPI vouchers seamlessly. To venture in a phased and safe manner, the RBI has capped the said vouchers at Rs 10,000 only. Along with healthcare schemes, e-RUPI has tremendous scope in serving initiatives like Pradhan Mantri Suraksha Bima Yojana, Krishi Amdani Bima Yojana, Pradhan Mantri Fasal Bima Yojana etc. Considering 1.36 billion population of India, e-RUPI has a large audience to tap but only time will tell how successful it shall be.

India, a country with innumerable opportunities, is quickly progressing towards a financially-inclusive society. While the emergence is taking its course, amongst all, the buildout of financial technology is a worthy fragment to highlight. This evolution has allowed us to envisage a cashless tomorrow without a dependency on smartphones or an internet connection. The GOI recently launched e-RUPI, a potential game-changer in the financial world, in collaboration with the National Payment Corporation of India (NPCI). It is a person and purpose-specific advanced payment platform wherein an individual can avail government subsidies through SMS codes/e-Vouchers. To ensure financial-inclusiveness, SBI in partnership with Hitachi Payment Services has designed an application that will enable the masses with smartphones and feature phones alike. The Yono SBI Merchant App, a platform to enable transactions, will ensure the subsidies are allocated to the individual without the need of an intermediary. This will boost transparency and reduce the element of risk for merchants at the time of transaction. e-RUPI and the Financial World highlights the benefits and potential of e-RUPI while keeping the untapped audience, i.e., rural population in mind. At the outset, the government has confined e-RUPI to the healthcare sector by partnering with 1600 hospitals while simultaneously preparing a launch in the agricultural sector in the next phase but, e-RUPI also poses tremendous potential in other sectors, especially the education and food segment. While a robust buildup is required before e-RUPI ventures into other sectors, NPCI is in discussion with several corporates to assess the scope of e-RUPI in terms of employee benefit and corporate social responsibility. This step will enable the government and corporates to measure the social impact of subsidies and benefits, respectively. Furthermore, as per data, Indians indulge in roughly 2 lakh crore domestic remittances a year and citing the potential it holds, e-RUPI can be deemed as a strong challenger to Unified Payments Interface (UPI) in the coming years. It may emerge as the leading payment system in India, given the population, rural and urban, it can bring under its fold. With urban co-operative banks, Fintechs and corporates coming together, e-RUPI is likely to develop further in respect to its functionality and offerings revolutionizing the way neo-banks operate today. It’ll further pave way to a technology first approach in the financial world. Although e-RUPI is in its primitive stage today, it holds and promises significant potential to transform the payment system of India. It is an introduction to a new dimension in the financial world that will ensure financial inclusiveness across population.

Much of world history is rife with stories of women fighting for their fundamental rights. Today, as we stand in the 21st century, living in a dynamic era, we see an upward curve towards women’s equality and empowerment. Although India attained freedom in the year 1947, women continue to battle the society for their rights, equal opportunities, and empowerment, especially women from economically backward classes. While the GOI has taken several commendable steps to financially secure and enable the women of India, the real change must ensue at the ground level! Earlier, women were disregarded from a financial inclusion standpoint, but today, not only are women included, but they also strongly lead their household. With the world getting smaller and a person’s reach getting wider, male members often venture out of their villages for better source of income and opportunities, leaving the women in charge of financial and social decisions. This change has enabled women to come together, organize, and build a future in solidarity. With FinTechs such as iServeU offering services like Direct Money Transfer (DMT), which allows money transfer to the remotest of areas, migrants can seamlessly transfer money to their households without the need of an intermediary. With financial independence comes decision-making power, and as per quote, women are better decision-makers than men in terms of household and livelihood. Financial independence gives them the power to make rational decisions that benefit the family, and have complete control on the overall aspects of finance and social decisions. The financial inclusion, decision-making power, and economic adaptability bestowed upon women have helped diminish economic, normative, and social barriers, empowering them to stand at par with men. It has reduced the gender gap and boosted gender equality. The women of today are strong-willed and fierce enough to stand tall amongst a crowd of men. They have come a long way fighting patriarchy and defied all norms that held them back. Women are seen as a source of power today, equaling men and standing shoulder to shoulder!

e-RUPI and the Financial World e-RUPI, a game-changer technology-driven payment method introduced by the Government of India (GOI) for the rural populace is said to benefit the target audience in abundance. It is an SMS/e-voucher based one-time payment method where individuals can avail government benefits/schemes without the need for a bank account. While it will help and enable the rural population in multiple ways, the benefits to the financial world is another interesting aspect of e-RUPI introduction. Benefits to the financial world With India’s rural populace touching 65.07%, e-RUPI will enable finance-based organizations to penetrate rural areas that were earlier untapped. Making use of its unique feature of “digital sender to the offline receiver”, banks can also cater to areas with limited to no internet connections. Banks can make use of the transparency aspect of e-RUPI and can choose specific needs they want to cater to. Since e-RUPI is government enabled, the risks on banks decrease and further gives them a sense of safety while transacting with the rural population. With the implementation of e-RUPI, intervention of multiple digital partners can be circumvented. While the first phase of e-RUPI specifically benefits masses to avail Covid-19 vaccines, it aims at catering to 190 million unbanked citizens of India. Furthermore, it also aims at providing equal benefits and opportunities across sectors. Like any other service, e-RUPI has its own set of risks involved yet, it is considered as the next big step towards an advanced and digital India.