The Future Of Fintech: Cloud Gives Industry Wings To Scale Up, Securely.

India boasts the highest fintech adoption rate in the world, at 87 percent – significantly higher than the global average rate of 64 percent. Growing computing power, increased internet speed and coverage, inclusive financial services, and the business need to reduce costs while providing faster, safer, and more reliable services are some of the key factors shaping the fintech revolution in India. With more than 2100 fintech companies in India, out of which more than 67 percent have been set up in the last five years alone, the fintech industry has demonstrated exponential growth.

CNBC’s Mangalam Maloo caught up with industry insiders and leaders to discuss major trends shaping the future of fintech in India. In an informative webinar, Murari Sridharan, CTO of Bankbazaar, Japan Doshi, Head Product & Technology at Rupeek, Ashish Anantharaman, Co-founder and CTO at Zest Money, Neeraj Chauhan, CIO at PayU, Matangi Sri Ramachandran, Chief Data Officer at CredAvenue, Ankit Sinha, VP, Searce, and Rohit Verma, Principal Architect Financial services at Google Cloud, came together to discuss challenges and opportunities, and share insights in this arena.

Engineering The Perfect Storm in Financial Services

BankBazaar’s Murari Sridharan feels that the Indian fintech industry has benefited from what can only be called a perfect storm: high adoption of technology, a strong regulatory environment and a pandemic that pushed the boundaries on what is possible online. When Indian regulators allowed acceptance of video KYC just 2 months before the pandemic hit, it proved to be both a lifesaver and a trigger for innovation. It pushed the industry to be an end-to-end digital service and people have realized that portfolio quality can even be better this way.

With fintechs utilizing Cloud technologies, time to market for startups have reduced. Rupeek’s Japan opines that compared to the early days where it would take upto six months just to setup the hardware and software stack for a business; today’s startups can hit the ground running by building their apps, software and services stack and spinning it up in just a matter of days, with lower costs to boot. He attributes a lot of the innovation in this field to the support of the big Cloud players and the Cloud infrastructure that exists today.

A level playing field 

Fintech is abundant with new players. The barriers to entry are disappearing: access to data is democratic, and Cloud infrastructures and technology are available to all. PayU’s Neeraj opines that while the availability of data and the tools to process the data are abundant, the way each company analyses and processes that data is the key differentiator: these insights drive strategy, winning or otherwise.

Matangi from CredAvenue agrees and mentions that there are three key factors that determine how likely a product is to succeed: speed (how quickly can the transaction take place), transparency (giving the customer a clear view of the process and dependencies) and relevance (is this the right product at the right pricing?).

The support of the regulators has proven to be crucial, according to Rohit from Google. The regulators have looked at the fintech space with a lens of financial inclusion. With video KYC and the growing India stack, it is possible for a fintech company based in one of the bigger cities to provide loans to customers in tier 2, 3, 4 cities, without investing in physical infrastructure first. It creates a level playing field by solving for both financial inclusion and challenges of geography, through digital means.

Is Security King?

Fintech data privacy is a hot topic, and while the Cloud continues to be viewed as “lacking security” by the layman, fintech firms are leveraging the Cloud’s built in security frameworks, along with their own bespoke security strategies to create far stronger, layered approaches to data security and fraud prevention.

Searce’s Ankit highlights that regulatory compliance is essential when it comes to data security.  For example, financial data has to remain within the confines of the country and that in itself allows for a lot of Indian companies to compete with global players.

According to Zest Money’s Ashish Anantharaman, it is very important that every organization define their data security strategy very clearly, and right at the start. Fraud detection, for example, needs a proactive strategy rather than being reactive.

Rohit from Google Cloud agrees that fraud detection is paramount as any slippage has a big impact both reputationally as well as financially. Google Cloud services are secure by design and have the benefit of scale: The ability to ingest data, interpret it, and provide insights in real time is critical;  so that action can be taken in time to stop fraud as it is happening, rather than post facto, when the damage is already done.

For more insights on the future of fintech, and the full webinar visit The Cloud Enterprise.

Moneycontrol journalists were not involved in the creation of the article.