Can fin-tech revolutionise access to finance in India

Can fin-tech revolutionise access to finance in India

In the past decade, technology has taken over the world by a storm. With the incredible advent in technology there has been a monumental change in the lifestyles, living standards, economic and social standards of people. Today technology has slowly been able to touch lives of people from almost all economic backgrounds. Especially in a developing country like India, where the Digital-India campaign was undertaken at a very considerate level with the concepts of e-cash, pay-tm and online transactions in place, fin-tech finds a very promising future in this part of the South-Asian sub-continent with India’s IT sector being the largest private sector employer and currently the fastest growing e-commerce markets in the world.

Making financial services available to people can come in two ways. First is through the incumbent traditional financial institutions like banks, and insurance companies. Second, is by engaging people into the flexible online IT-solutions most interchangeably through fin-tech startups. Though both have their own advantages over the other, still it has been studied that today 95 percent of financial services seek to explore fin-tech partnerships. Traditional banks have become so inflexible towards customer needs because of lesser interests in customer choices and higher interests in their own choices, that they have ultimately caused a loss to their own system. Customer centricity needs to be put into place, and fin-tech provides the perfect platform for that. The past decade has seen a trend in shift from traditional book-keeping to online databases being the wake of the hour!

With the concepts of bitcoins and block-chains which dynamically generate an actual ledger of transactions not on a single location but multiple locations, it has been realized how technology has found its ability to ease lives and save time at such a reduced cost. Bitcoins are virtual currencies which took birth in the year 2009.This amazing concept allows a very flexible world-wide payment transaction system such that transactions take place between the users directly through cryptographic techniques without the need of an intermediary. No financial structure or a central bank governs bitcoins rather they are governed and verified by network nodes and the financial data is stored in block-chains as public or private ledgers based on user’s discretion. Another very dynamic technology used today, is IoT also called ‘internet of things’. It beautifully collects data of a single user by means of a technology that derives data from the different day-to-day gadgets that the customer uses for the daily-life purposes like data on his smart phone, laptop, tablet or his/her private organizational network and uses this data to make financial decisions most appropriate for him. This technology dynamically reduces the efforts in manually collecting such data and initializing company policies for targeting and positioning of products especially in the insurance sector. Gartner has revealed that by 2020, nearly 26 billion devices will be present on IoT and through this customer behaivour generation will be so much easy. Several newer research concepts like quantum cryptography have been worked upon relentlessly by scientists in recent years of this decade, which promise to ensure security of sensitive data to a very high extent. Through this technology data will be converted to photons. Using the basic nature of physics these photons have the property to  continuously change their states due to which it will be nearly impossible for a third party or intruder to intercept this data or even measure it. Concepts like these if widely implemented will definitely revolutionise the future completely.

Today mainly humans provide financial advice, but it is studied digital devices could provide better advices. Predictively, robo-advisors will support wealth management services in near future. Business integrated with these new technologies can create boons in the Indian economy itself topping the service sector offerings in the world right now.

Nevertheless, there always exist some trade-offs between efficiency, security and cost of high-end technology used. An example of this was in 2016, when a fraud was detected in the bitcoin repository in Hong Kong, where hackers were able to steal £49m in bitcoins. But at the same time, there is so much work going on in  the field of cyber security all over the world right now that, if, concepts like quantum cryptography could be applied on network nodes of bitcoin transactions at an optimized cost, then it has the power to become the world’s strongest and most powerful currency in near future. Another cause here to worry about, as I said, remains cost of high end technology, but it is very considerate to mention here that 15 years ago ,it would not have been predicted by anyone that today 4g technology would be any average income person’s economic way to get access to this high end online service at such an optimised cost. This is the rule of thumb with technology. Since technologies get outdated very soon with the simple example of every day Watsapp and Instagram version update notifications we get after every 2 weeks or even shorter, it can be assumed how aptly and meticulously the software development teams are working day night in order to achieve higher standards of progress.

“Change is the Need of the hour”, with clearly ‘the acceptance of risk’in order to progress, and the traditional financial services need to adopt these radical changes in order to exist in the changing environment for a sustainable growth. Though there lies every reason to go for fin-tech, there are two very important targets that need to be achieved to make fin-tech economically viable. First, is to ‘gain assets’ and second is ‘how quickly fin-tech can help gain them.’ Gaining assets to an extent that the start-up doesn’t go bankrupt and quickly gaining them can be achieved by their 24*7 availability. Both are provided by financial technology integration i.e; fin-tech. World statistics have shown how much the younger generations prefer to go for online services than the traditional ones, can go for one big support to fin-tech. With a country like India with a whopping population and more than 75% of younger generation currently using and preferring online services at a mammoth rate, it will be so easy for fin-tech to achieve these two targets for gaining assets and quickly gaining them. With the digitized databases, decision support systems, IoT (internet of things) and incredible advances in data analytics and social engineering, there will be a flexible and dynamic infrastructure in place for asset management and its easy distribution through digital channels. The possible broader problems fin-tech can encounter apart from security, and cost is from ‘the policy of the regulators’. But,if fin-tech gets a proper support from the Govt. Of India to put into place an efficient regulatory system whose policy references are in flexible correlation with fin-tech services and their availability to people from all classes and somewhat in par with other developed countries, day is not far when Indian economy can exponentially grow to transform India into a developed economy making way for equality of class and together laying a foundation to buildthe walls that have failed to build a better India leading towards progress of this nation ‘as a society’ and ‘as an economy’.

Working as an engineer, author has done BTech from University of Kashmir and MTech from Central University of Kashmir

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