#4 Fintech Trends to Watch Out for in 2018
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India has been soaring ahead in the technology space with products in financial technology taking the lead. With many government interventions and implementations like demonetisation and GST, 2017 has been a crucial year for the financial technology space. The introductions of policies and programs such as Jan Dhan Yojana and UPI or even the controversial linking of Aadhar with most financial institutions has clearly shown the government’s interest in digitizing the sector.
Reports even suggest that India’s rising stance in the fintech space could see it soon surging ahead of China.
As the year wraps up, fintech is still not the one to bow down as its ready to enter 2018 with a larger impact. Entrepreneur India spoke to experts as they shared the top trends that they believe will further shape the future of fintech in the upcoming year.
Data Will Reign Supreme; Telecos to Hop on for Revenues
With a continuation to the credit line onboarding the digital trend, the next year will see more and more people borrowing using data, believes Vikram Sud, former APAC operations and technology head of Citibank and also ex-group COO of Kotak Mahindra Group. From small businesses to small proprietors, people will even turn to borrowing more as things get digital. According to Sud, the positive effects of GST will be seen as the whole process is now documented along with tax credits.
Another industry that will take advantage of the financial advancements will be the telecom industry. “They are running out of revenue opportunities but they have access to huge reserves of rich data. This data can be used in a way that’s not an invasion of privacy and along with the right kind of disclosure, can see the telecom industry offering a lot of services in the lending and borrowing segment,” said Sud.
Algorithm-based Investments Will Find a Following
With the growing interest and investments in Mutual Funds, the sector will also see a rise in the number of automation and easier management of these investments. Algorithm-based investments will see a hike, interactive brokers too will grow in numbers, while the cost of availing them will keep dropping. “Today brokerage is not cheap and price discovery too is difficult,” said Sud.
Investment services can be divided into two tracks – operational convenience and advisory prudence, commented Srikanth Meenakshi, co-founder of FundsIndia, a roboadvisory platform for investments. So, most developments in the investment space can be viewed through these dimensions.
Srikanth believes that the operations side of things, with the launch of the likes of UPI 2.0, will get better. “There will be easier adoption of existing technology to make executions and set-up of products better. With eKYC and banks too getting serious about Aadhar linkage, it will soon become much easier for service providers while also making the process smooth for consumers,” he said.
The advisory side however, might not see easy adoption but the advancements of AI will help in the identifying newer ways of investment products that are quasi-static, believes Srikanth. Innovation will continue to happen with asset management, along with AI, further boosting the investments space.
Prepaid Instruments for Payments will become Obsolete
This one’s a bit tricky. While the majority of fintech users today rely on wallets and prepaid investments for transactions, many in the industry believe that that is set to change. Another contributing factor to the same is that hardware for these transactions is expensive, forcing merchants to opt for more cost effective ways like QR codes. However, they take care of only payments.
Citing a 360 degree financial inclusion and a future of uniform payments globally, Himaghna Dey Sarkar, Chief Expansion Officer, ToneTag spoke about how they are enabling sound-based payments. The app listens to the frequency of tones in the existing EVC machines, and enables transactions directly to the merchant’s bank account. This inclusion of transferring data over sound that can even be applied to existing infrastructures is a patented technology by ToneTag.
Talking about the future, he said, “The idea is to make customer experience smoother. So far, the prepaid instruments have only been taking care of payments, but our product looks at also engaging with the customer, guiding you through the store you are in, informing you about discounts and more.” They are building a strong client base in Europe and the Middle East.
Customer will Still be King
Sud believes that we are moving closer to a stage where the cards business is at a risk. With more and more retail lending options like buy now and pay later, Sud said that the line of credit will become more prominent. “Card is a very rich form of payment and borrowing where the buyer and seller pay a lot for interchange and also interest rates,” said Sud.
Agreeing with Sud, Dey Sarkar believes that developments will take place in order to suit the consumer needs. In order to change the consumer behaviour where they are accustomed to cash, the alternative has to be one that’s great and convenient for the consumer.