Impact of Technology On The Financial World13 Mar 2019
Financial technology in India is blooming and growing rapidly. Be it emerging or existing, every company is aiming to become a FinTech. A FinTech basically refers to technology-driven financial services that are available on digital platforms. It is about digitising money and simplifying end consumer’s life. This is widely supported by friendly government policies and regulations. The buzzword has brought in several new advancements and has disrupted the traditional way of banking and financial services.
The modern financial services have not only been adopted by start-ups and new financial companies but have also been incorporated by existing banking sectors and non-banking financial companies (NBFCs). While in the earlier days, a person solely was dependent on banks for loans, stood in long queues to pay bills, and waited long to get an answer on loan approval, technology in financial services has eradicated these inconveniences. These innovations have proven to be a big support for businesses, especially for small and medium-sized enterprises.
To catch up with the trend, banking and technology innovators are endlessly working to meet consumers’ new expectations for highest customer retention. From various software that gather data to easy access to funds through online, crowdfunding, peer-to-peer lenders to mobile payments, FinTech is only scaling upwards. In fact, NASSCOM predicts that India’s FinTech software market alone could touch USD 2.4 billion by 2020, doubling on the current rate of growth.
Below are the 6 points that elaborate on the positive impact of technology on banking sector and finance sector.
Focussed Products and Services
Innovations in payment options, loan, and growing competition has built a threat of losing customers to other companies. The FinTech innovations have made sectors realise the importance of financial services for customer retention and satisfaction. This, in turn, has encouraged all finance companies to provide the best of services for customer retention. For example, each bank’s services can be operated through an app and few of them also have their wallets. All of these efforts by companies are to increase business efficiency.
According to a recent report, 77% of financial institutions will exponentially increase their internal efforts to innovate and use technology for better services.
Strategic Use of Data
Customer data is undoubtedly the central decision-making for banking and financial sectors. FinTech companies now use this to provide customized financial information and services to individuals. Like, loans are considered on the basis of your account statement, bankers lend money based on credit score. Insurance providing companies send personalised ways to save, manage, and invest based on one’s specific needs. lf you run a small business and are prompt in replying to your customer queries and have increasing followers, then this will be counted in favour for you by traditional and finance banks. FinTech companies also consider other data points such as social profile, e-commerce/utility bill expenditure behaviour, employment credentials, and more to assess the credit-worthiness of the borrower.
Payment and Loan Options
Loans from banks against your personal assets is not the only option anymore. Financial services technology has given birth to easier loan-lending platforms like crowdfunding, unsecured short term loan, peer-to-peer lending, and more. The options have made business set-up easier for aspirants. Like P2P allows online services to connect investors to businesses or people, who repay cash with interest over a period. Similarly, with crowdfunding platforms, people can opt for either reward-based or equity-based investment. These options are a helpful source of funding for start-ups, seed-stage businesses that look for small investments.
Easier and Cheaper Business
FinTech brings in easier and cheaper ways for a person to set up and run its business. Software, instant communication, loan options, and internet provisions have made it easy. Accounting software lets team member work from different cities, different spaces. Mobile payments allow working on the move with assured security.
One of the biggest advantages is the various loan options. The under-served customers by traditional banks can now access credit and loans through P2P lending and Alternate Credit Decisioning. Also, while the traditional system focused on lending to employees of A/A+ category companies, FinTechs focus on employees of all registered companies. For business aspirants who didn’t get a loan from a bank or NBFC because of the credit history, can get one through P2P, crowdsourcing, and unsecured short-term loan options. For small and medium businesses, loan-providing NBFCs like KNAB Finance are a big help.
The traditional way of banking and finance has taken a step down now. With the emergence of FinTech, loans approval, payments, security, everything has become more convenient. This is especially a huge help in getting rid of the complex and time-consuming procedures of the transaction and availing loans. The applying, processing, verification of application, every process has become flexible. The loan procedures that once took days and months are now super easy. In a few cases, online disbursal of loan is done only in 24 hours making the application process smoother. Also, they provide transparency and continual tracking facility. These FinTech innovations have won the trust of the customer.
Detection Of Fraudulence
Whenever it comes to finance, the foremost fear is of fraudulence. Before all the advancements, investigation and identification of fraud was a task for both man and machine. However, now, banking and technology go hand-in-hand. There is proper detection of fraud money and people. Transactions are more digitised, which support greater audit capability. Also, there is transparency in payment systems along with security that reducing fraudulence risks.
KNAB Finance Business Loans
At KNAB Finance, we merge a customer-centric approach with new-age technology to provide small and medium business a FinTech approach that helps them achieve growth and profitability. Our secured digital platforms let you access your KNAB Finance account from anywhere, anytime.