Compiled By: Ashish Goyal, Co-Founder and CFO at EarlySalary
About Ashish: As CFO, Ashish oversees the overall strategic direction of the company and focuses on building the funding profile to ensure that it is diverse and deep. In this role, he is responsible for building EarlySalary’s business, strengthening EarlySalary’s position. He oversees the integration of EarlySalary’s overall growth strategy with Co-Founder Akshay Mehrotra
India is one of the world’s biggest FinTech markets. With China, India has the highest FinTech adoption rate in the world. The $65 billion we processed in digital payments in 2019 is projected to rise at a CAGR of 20% until 2023. According to the Worldline India Digital Payments Report, UPI transactions increased by over 82 percent in volume and 99 percent in value in the second quarter of the financial year 2021.
Let’s check out 5 trends of 2021 that will shape the FinTech industry in a “path-breaking year”.
The introduction of the Open Credit Enablement Network (OCEN) has been a powerful catalyst by the Government in India’s progress toward credit and financial inclusion. OCEN is a collection of APIs that enable lenders, Loan Service Providers (LSPs), and account aggregators to communicate. OCEN is bound to make MSME credit easier once it is fully functional. It is as powerful a revolution as Aadhaar once implemented successfully. The cost of getting information, accessing it, and providing it will fall dramatically.
An Account Aggregator (AA) can be considered as a manager of consent for sharing all information related to finance. The Reserve Bank of India (RBI) licenses Account Aggregator (AA) services, and an AA cannot retain any user’s data, eliminating the risk of data leakage and exploitation.
AA is expected to disrupt the way we can manage our finance, share information, tax filing. It can actually make us lazy! (in good ways) by taking care of money management.
Wealth management services companies will be the biggest winners from AAs, as their products would improve dramatically. This would increase their scope and enable them to analyse client needs and financial situations more quickly, lowering costs.
Our financial system has seen a massive migration to digital as companies and consumers adjusted to the Covid-19 crisis. Despite the long road still, ahead the future of digital finance appears bright, with the FinTech sector pushing progress across verticals. FinTech has opened up many possibilities for tapping into a vast database of consumers, enabling a solid digital base. We at EarlySalary have launched the nation’s first end-to-end digital card, SalaryCard, with remarkable features:
- Enjoy flexible term choices.
- Shop on EMIs with any retailer.
- Save up to 12,000 INR a year, all with no subscription charges, yearly charges, or renewal charges.
New Age Technologies
New-age technologies, along with VKYC (Video KYC), CKYC (Central KYC) will ease the process and provide the best services to customers. The task of onboarding new customers has become more complicated in recent times, as people are wary of visiting bank branches for fear of catching the virus. Financial firms have implemented KYC solutions that make the onboarding procedure more comfortable for consumers without requiring them to leave their homes.
- VKYC – Video-KYC (VKYC) is an alternative to the complete in-person KYC procedure that banking customers must go through before receiving services like account openings or loans. Customers would no longer be expected to follow up with physical document authentication under the newly approved Video-KYC system, which aims to fully replace the old KYC structure.
- CKYC -The Central Know Your Customer Registry (CKYC) is a centralised repository for KYC information from consumers that use financial services. CKYC aims to make sending KYC documentation easier when beginning a relationship with a new finance firm.
ML and AI changing the game
Big data and the ability to build algorithms powered by ML will create exciting opportunities. Fraud identification, model validation, stress checking, and credit scoring are some particular areas that will be majorly influenced by AI and ML. Since machine learning algorithms can execute larger amounts of data in near real-time, they are more successful at fraud detection than humans. When someone purchases something with a credit card, machine learning algorithms check it right away to see if it’s a fraudulent payment. Banks can use AI and machine learning in banking and data science acceleration to improve their customers’ portfolio offers.
The FinTech industry looks promising in 2021. Payments and the banking industry have evolved in tandem with the growing requirements and demands for financial transactions. The best possible customer experience and fast responses to changes would be the most important factors of evaluating how successful the trends have been in shaping the FinTech industry.