The future of payments will be like a sci-fi movie where NFC and facial recognition will enable payments. Currency notes will become a thing of the past, branches will become lesser even as robot advisors, virtual assistants and chatbots will be your new banker, wealth advisor and cashier.
Am inside the Bombay Stock Exchange chatting on the future of trading with a few tech entrepreneurs. The building which was established in 1980 and is named after the Parsi businessman Phiroze Jeejebhoy who was the chairman of BSE for over a decade.
Trading and broking firms line up each floor of the 29-storeyed BSE building. Located on the Dalal Street, the building is also one of the tallest in 'South Bombay.' A typical trading shop looks like a small cabin area housing 4 to 5 desks with computers. During market hours, traders can be seen glued to the computer monitors and TV. However, there is something happening on the 18th floor of the building which could impact the jobs of these trading houses.
On the 18th floor overlooking the Mumbai skyline, dozens of young tech entrepreneurs inside startup accelerator Zone Startups are developing apps, tools and chatbots which can potentially make the businesses of each of these middle-aged traders and investment advisors disappear in future.
Welcome to the world of artificial intelligence, robot advisors, chatbots, machine learning, biometric transfers, analytics and blockchain. The technologies are going to change remittances, B2B cash transfers, user authorisation, loan processing and credit risk profiling in future.
The world of robot advisors
"A few years from now online trading and investments will be guided by chatbots, online tools and robot advisors,” Nitin Vyakaranam, founder and CEO of Arthayanatra tells me at Fintegrate 2017, an event organised to gauge the future of technologies that will change banks, insurance companies and share markets.
"I started the company because I was sold bad ULIP plans by a friend when I returned to India. A robot advisor would never do that," adds Vyakaranam.
The mobile phones or devices of the future will automatically alert you on the apps if you are going to make a costly purchase. A holographic image or a USSD text would pop up if you're likely to make a bad investment. You will be advised by an AI-based virtual assistant, if the flight fares are going up and you are still to book a return flight. They may even enter your details and just ask for your fingerprint, iris scan or a selfie to authorise the transaction.
Multiple virtual assistants would correlate their own advice and even counter each other informing you on based upon their algorithms.
Apps such as Walnut already keep a record of the purchases and balances of users via recording their SMSes. They can alert you if a cheaper hotel deal is available on any other site, when the phone alerts them about your upcoming travel schedule. The apps already inform people of nearby ATMs with cash.
Wearables will become the defacto payment mechanism where a tap by an NFC ring on your finger will enable payment at a coffee shop. Companies such as Mumbai-based Seven have developed such prototype rings and wearables that can have unlimited used cases.
“Remittances business will also change even though it has a strong offline connect. It has a very emotional connect when a mother withdraws cash from one of our branches sent by her son working overseas,” says Sohini Rajola, MD and regional Vice-president, South Asia at Western Union.
Companies such as ApnaLoans, SelfiePay and MasterCard are already using selfie based facial recognition to authorise the banking transactions. Selfies generally carry an 80% accuracy level, which is pretty significant when you compare with other biometrics. Banks such as HDFC Bank, SBI, ICICI Bank and Axis Bank have already started pilots for innovation in selling newer products to their customers.
Technologies such as blockchain — which allow encryption that is hard to decode — will play a big role in making the transactions secure. Already a few companies such as Mahindra Finance have started experimenting with blockchain in supplier to manufacturer trade financing in rural India.
Removing the human bias
"Financial tech startups also remove the anomalies of the human bias,” says Mohit Gang, an ex-HNI financial advisor who has cofounded Moneyfront, a web app for mutual fund transactions. “When funds guarantee a commission on a plan, a human could be liable to a bias of selling a bad plan to a customer. Chatbots and robots will remove these bias,” he explains. And if they don't an intelligent virtual assistant will.
Moneyfront is targeting the young investor who wants to start in investing in mutual funds through analytical tools and does not want to interact with a human for small ticket investments.
As a result, governments have started realising the power of fintech.
States such as Andhra Pradesh are establishing a fintech valley in Vizag where large financial companies such as Paytm, HSBC, Visa, Franklin Templeton have promised to set up an innovation base.
"We are also starting an IIDS (Indian Institute of Digital Services) in Tirupati where the courses will focus on blockchain, financial tech, artificial Intelligence and machine Learning," says JA Chowdary, IT Secretary, Government of Andhra Pradesh.
India is at a precarious juncture where the JAM (Jan Dhan, Aadhaar and Mobile) economy is going to make financial tech a mainstay.
With Aadhaar users and mobile usage crossing the critical mass of a billion users, time is ripe for the emergence of financial tech startups. It will change the way we handle our money and bots will simply guide us through.
(This is an opinion piece)