Gone are the days when people stood in long queues outside banks, post offices, cooperative societies for different financial services. With the turn of the century, a lot of progress has been made in terms of how we manage our finances. The word Fintech means Financial Technology. It covers an array of software that automates a lot of financial transactions such as lending, payments money transfer, etc. and allows businesses to utilize modern technologies for such services. It is also quite appealing to the millennial customer base. These tech-savvy customers prefer digital lending platforms way more than traditional procedures due to the reduced transaction time that also offers accuracy. Fintech companies make money transfers, investments, and risky services like loan management, simple and as easy. They provide secure and scalable solutions to all financial services reducing human effort and bank visits. Businesses that once relied on agent networks are now turning to technology to make the process more cost-effective and secure for their clients.
Some of the most common examples of Fintech services we use in our day-to-day life are mobile payments, blockchains like Bitcoin and Cryptocurrencies, Mutual fund investments, and trading. Even buying gold has been digitized as many platforms such as PhonePe and Paytm are providing options to buy and sell digital gold. While established banks are trying to keep up with the competition, FinTech startups are making huge progress in making financial services flexible and fast. Not to mention the ease of access from a customer’s standpoint.
The fintech sector is constantly evolving and adapting to cater to the needs of its customers and investors. In 2016, the Government of India had put a ban on INR 500 and INR 1000 currency notes. The demonetization drive was put in motion which redefined the fintech ecosystem. More than 80% of cash was wiped out overnight which forced people to switch to online payments en masse. Even, during the early days of the COVID-19 pandemic, the use of cashless payment had multiplied. With this forced introduction of Fintech among new users, the popularity of technology and software accelerated as soon as people started realizing the ease and efficiency of transacting through Fintech companies. In other words, digital transactions are becoming very popular among people. Businesses are adopting digital transactions drastically at this time to diminish as much human contact as possible.
Fintech innovations have helped in reducing risk in businesses through accurate predictions and algorithms and most importantly it has made the end-user experience seamless. The key here is to understand the effect of blockchain technology on generating revenue and delivering process efficiency.
New and improved global money transfers through fintech companies have resulted in significant growth of this sector. This flexibility has helped a lot of people who are looking for easy ways to deal with cumbersome transactions such as international money transfers. The fintech companies now are upscaling and increasing their user base by offering multi-lingual platforms giving their consumers more power to make choices depending on their geographical location. Some companies have their websites in many different languages and have made their platforms available in many countries.
Global remittance services are usually costly and have many hidden charges. There are other factors such as FX spreads, the currency conversion rate between banks, and processing fees that contribute to higher remittance costs. Fintech solutions often provide reduced processing, modification, and cancellation fees. Many businesses utilize these options to send and receive money from their overseas accounts without having to pay hefty conversion fees. This reduces overall costs thus empowering the businesses with simpler transaction methods.
Even though Indians are well acquainted with different payment apps, but these existing players rode the crest of success. Very soon, new fintech startups started filling in and making the most of this opportunity. They have also brought technology to many sub-sectors of the financial technology sector. As this sector continues to reach soaring heights, here is a list of a few top companies.
Paytm, launched in 2010 by Vijay Shekhar Sharma, was initially a digital wallet company. They started as a DTH and recharge platform with a wallet service. Since then, Paytm has expanded their business and have conquered different segments of fintech. Paytm now provides a payment gateway, payment bank, digital gold, investments, and more. And it does not stop at that, Paytm also launched a digital trading platform called Paytm money and an e-commerce platform called the Paytm Mall.
Headquartered in Bengaluru, PhonePe provides an array of services such as payments app, recharges, e-commerce, billing. PhonePe offers one app to enable the end-users to make mobile or DTH recharges, pay utility bills, send or receive money, paying insurance premiums and credit card payments. They also provide online shopping services. The sign-up process is fairly easy as well, users just need to link their bank account to the PhonePe app through UPI (unified payments interface).
MobiKwik is an issuer-independent digital financial services platform. Their services include digital wallets, wealth management, insurance, etc. They use an inbuilt scoring model which results in quick disbursal of loans. This is one of the key reasons for MobiKwik's popularity. They were the first company to disburse a loan amount within 90 seconds.
PayU is also a payment gateway service. Their primary focus is bringing technology to simplify payments for small and medium businesses. Their services are available in over 17 countries.
LendingKart is a Non-bank financial institution that focuses on Micro, Small, and Medium Enterprises. Big data analytics is used to help lenders evaluate a customer's creditworthiness. They also make loan disbursals quicker than banks.
None of the above success stories would have been possible without any trial and error. Lucky for us, that we have been able to summarize and take away what strategies best worked and are still proving worthy. Here is a sure-shot flow of what you must do to build a foolproof and ace Fintech Company.
With handpicked industry experts onboard, Scoreme Solutions have co-created a wide range of analytics solution providing a holistic approach designed for clients in the lending space and as well as Credit Risk assessors. The cutsomization and development friendly modules devised with complex algorithms and Big Data help Banks, NBFCs, Financial Institutions and lenders quickly arrive at accurate credit assessment of the borrowers enabling risky decision making a cakewalk. The unique product offerings that make this possible are:
Some of the other tools that make Scoreme’s analytics solutions highly applicable in the lending segment are Data Aggregation, ITR analysis, Credit monitoring and its inhouse Loan Management System.