To have easy and fast access to money and credit - this may have seemed like an exclusive privilege up to the last decade. The fintech revolution has changed that - with just a few swipes on smartphones, anyone with a credit history can access money or credit to fulfill their needs and aspirations.
The fintech revolution didn’t crop up overnight. Its growth story can be majorly attributed to several factors such as mass digital adoption, booming economic growth, technological evolution and of course, the entrepreneurial wave that inspired people to kickstart their businesses. With the pace and scale at which the fintech sector is thriving, it is expected to become a $31 billion market by 2020.
From speed and convenience to safety and security, fintech has covered almost all the aspects to make traditional financial processes like lending, payments and investments a hassle-free experience. Over the years, the sector has not only introduced ground-breaking financial tools and solutions but has also attained financial inclusion across India. Here’s looking at some trends that the sector may witness in 2020.
The power of artificial intelligence (AI) is no more limited to marketing experts but has also reached fintech players. Using AI, financial institutions can gain deeper customer understanding by collecting various data points from several mediums - social media, app usage and browsing & payment history. This data can be leveraged to create personalised one-to-one financial products, tailored to specific needs and interests. This results in driving meaningful customer engagement and helps players in this space build long-standing customer relationships.
Algorithmic Trading for stocks and funds
Considering the fluctuating nature of the stock market, not only is it crucial for investors to stay mindful but they also need to be future-ready to face losses more than gains. This challenge can, however, be solved by using the right technological tools that fintech players are leveraging at the moment. For instance, with the help of AI and machine learning, several leading players are creating chatbots as an advisory service to investors, thus eliminating human intervention. These bots are not only specialised in clarifying basic customer queries but are also experts in answering stocks and share market-related questions. By leveraging AI and ML-based algorithms, they analyse factors such as the customer’s financial health and on-going market trends and then formulate investment strategies to help customers make the best investment decisions. This process is also called the decision as a service (DAS).
AI and ML for better fraud detection
Using AI, financial institutions can collect, analyse and compare past evidence of customers – mainly present in the form of fraud attempts or similar incidences – with present behaviour. With these insights, they can manage claims more efficiently and make accurate predictions of the customers who are planning to make more such attempts. With this practice, financial institutions can save a lot of money, improve their ROIs and strengthen their security mechanism, ensuring that such frauds never happen in the future.
Targeting the first-time credit users
First-time credit users usually comprise new-age millennials and Gen Z customers. This cohort, in the wake of their aspirational needs, prefers spending over saving. Fintech players are thus striving to bank on this opportunity by giving these people access to instant mobile-based short-term loans, usually ranging from INR 5,000 to INR 1 lakh. The digital nature of such loans coupled with other benefits like easy repayment options, quick disbursals, zero collateral and no physical visits at affordable price points, making them a lucrative and responsible credit instrument for the modern workforce.
Integration of IoT in Fintech
From being just a network of documents to becoming a unique platform, IoT is one of the most disruptive innovations of the present times. The greatest example of IoT is a smartphone that can be connected to almost every other electronic device that we use in our daily life – be it a washing machine, refrigerator, television or music system. Financial institutions can, therefore, rely on these devices to gather customer data in real-time to understand their behaviour and accordingly create customised products and offerings. This data can also be used by these institutions to conduct credit risk management for various businesses and help them efficiently manage their assets. The number of devices is more than the number of humans that are online; this shows the power of IoT.
As technologies evolve, the fintech sector will evolve too. Now imagine the kind of disruptions it will bring to the table in the near future if it has already done so much in the present.The author is Coo and Co-Founder MoneyTap