Would Fintech Proliferate Under the Shade Of the Pandemic In 2021?
The digitization of the financial services sector will intensify in 2021, and consumers will benefit from quicker, more robust offerings
Financial technology is a concept that over the next few years is likely to attract fast followers. Fintech—as it is generally referred to the use of digital technologies by financial services so that businesses can expand—simplify, and boost the delivery of their services. In terms of integrating technology, it is used for back-end processes for customer-centered services to make the overall process effective, so that there can be a steady progression.
The Covid-19 pandemic has transformed the fintech industry's whole scenario. Technology has been the base of India's fintech growth. Significant changes that have been implemented in recent years, such as GST, Aadhaar, and UPI, can only be developed because of the latest available technology. Fintech systems have played an important part in allowing artificial intelligence and machine learning financial access and transaction management for end-users.
The future of the fintech industry is bright and rising increasingly on the back of the growth of startups in the fintech industry, the proliferation of smartphone apps, the build-up of digital networks, and the streamlining of financial processes in many industries are continuous.
As of March 2020, India and China accounted for the highest fintech adoption rate of 87 per cent, as per a recent study by Research and Markets.
Challenges in adopting AI for fintechs
It can be difficult to incorporate AI solutions in a legacy setting that was built to run more or less in a bubble. Mass relocation to cloud environments has been motivated in implementing the technologies needed to become more flexible and exploiting all the substantial technical instruments at the disposal of financial institutions. At the same time, inaccessible legacy networks, migration to the cloud free the data that has been tucked away.
New-age innovations to support businesses
Innovations that promote holistic financial services over a common smartphone app for Indian consumers worldwide will also appear in the fintech landscape. New-age fintech networks are now providing customers consolidated fintech applications, allowing them to carry out a variety of practices such as saving, banking, trading, conversion of money, etc. Another functionality that new-age fintech can provide to Indian consumers in the post-lockdown is e-commerce support on existing B2B2C platforms.
The effervescent fintech ecosystem in India is expected to be the greatest spoiler of the outgoing decade-COVID as it rings in 2021. A double-edged sword for the industry has been the effects of the pandemic. As it stirred up digital payments to further transition from a trend to a normal across layers of markets facing both customers and companies, it was able to slap the brakes on the sector's lending or credit side to an equal degree. Rising defaults and loss of creditworthiness contributed to the double whammy of failing to repay current loans to gain new credit sought by consumers or companies.
Steps of government to support businesses
Via its numerous financial institutions, the government of India has aimed to establish a 'cashless' culture. Yet this is a hope that is going to take some time to fulfill. At the same time, multi-company technology officers would play a key role in implementing technology to drive productivity and development, effectively contributing to increased profitability. Collaborations between technological innovators and financial institutions will go a long way to create a seamless ecosystem that will help all stakeholders.
Fintech is built to revolutionize the industry and provide consumers with a customized experience, where customers are genuinely hailed as rulers. The evolving customer behavior has somewhat driven every financial institution to disregard the surge of technology consuming this industry, which can no longer be overlooked. At this point, the position of government regulators will be equally crucial in promoting a robust fintech framework to encourage healthy market competition.
At this point, the role of government regulations would be equally crucial to promoting a robust fintech framework to foster healthy market competition.
It could be tempting to wait until after the dust settles to make some moves, as the pandemic remains a key problem in the near term, but dereferencing action may leave slimmer pickings. In the present sense, the adage that fate favors the bold might be very fitting.
Caution should be practiced, and due diligence attempts may need to be updated to account for the particular effect of COVID-19 on the nature of assets and competitiveness in the market.
Future framework of the fintech industries
In major respects, the financial services sector is evolving. To promote ties with fintech and third-party financial data aggregators, financial institutions move to the cloud and sets via APIs, to remain competitive in an environment fraught with legitimate challenges to their market share. In reducing costs and expanding product lines as well as back-office productivity, AI can play a significant role. The digitization of the financial services sector will intensify in 2021, and consumers will benefit from quicker, more robust offerings.