2020 has been quite a challenging year for the financial industry in India and abroad. Business activities took a very severe hit due to the pandemic. The pandemic has underscored the importance of digital and firms are now looking for ways to transform their business to operate seamlessly in such events – especially the very risk averse finance industry. Firms want to maximize their customer outreach while keeping their employees safe. This has led to an unprecedented demand for rapid and scalable digitization.
This rising demand has provided the fintech sector with new & diverse opportunities as we move on to 2021 and beyond in a post-Covid world. With our deep technology expertise, we at Decimal, look forward to a year of innovation and rising market sentiments. In our estimation, some trends that are set to dominate the fintech market this year, are listed below.
1. Solutions to support financial literacy
Awareness is the primary factor that drives demand and demand in-turn drives innovation. As per EY’s latest survey, consumer awareness about FinTech services is reported to be less than 25%.
Source: EY
This leads to a concern for limited demand which will lead to limited innovation, creating a vicious cycle. Fortunately, Fintech’s are now taking a step towards resolving this, by building products aimed at resolving this financial illiteracy. This leads to loyal customers who like to leverage the different features provided by a solution and demand more from the same. Such products need not necessarily be standalone but can be built into existing applications.
Decimal Technologies, in its effort to create better awareness about the existing technologies, has created a video tutorial section within its newly launched lending platform for DSAs, the Saarathi platform. The section keeps the users and customers up to date about the new features and technologies being used in the application.
2. Biometric security systems
Security has always been the biggest concern in the FinTech industry. As mobile banking and other technological services become popular, concern for security remains paramount. The coming year marks the beginning of post COVID-19 era – where it is expected that firms would move away from touch-based biometric systems to non-touch-based systems. This includes both physiological and behavioural biometrics. Examples of physiological can include Facial features, Iris based, retina pattern etc. while behavioural includes written signature recognition, keystroke dynamics and voice patterns. Firms are expected to invest in both these type of new-age biometric systems.
At Decimal, we remain committed towards providing the complete gamut of such services to our clients and have already pre-integrated such services on our Vahana. We already have AI and ML-enabled signature recognition and face recognition, and other enhancements are under-way.
3. Autonomous finance (AI and Machine learning)
The latest trend in the Fintech space is Autonomous finance. This refers to bots that leverage AI and ML technologies for planning the customer’s finances towards specific goals. For example, you could put-in a requirement for manging a specific amount of money marked for a holiday trip, 1 year down the line. The bot will ensure that you get maximum benefits for the one-year period, from the provided money, considering all possible investment options available. Or a more popular option can be loan management – suppose you want your student loan to be paid back most optimally i.e. with minimum early payment charges and as fast as possible – the same can be managed through an autonomous finance bot.
4. DEPA
DEPA stands for Data Empowerment and Protection Architecture. It is designed to democratize access of data, while ensuring complete control to the actual owners. DEPA’s technology architecture is an interoperable, secure, and privacy-preserving framework for data sharing through:
- A technology standard for a machine-readable Consent Artefact;
- Open APIs for data sharing; and
- A standard for Financial information.
DEPA is the technology philosophy behind Account Aggregators or Consent managers – a new role in the FinTech space. These, account aggregators, will not be able to access any user data themselves, but will be responsible for handling encrypted data flows, as per the DEPA architecture.
This latest addition to the India Stack (after UPI, DigiLocker and Aadhar eSign) is opening new possibilities for financial firms and FinTechs alike. Needless to say that Decimal is already partnering with AAs in the market to provide the services to its customers.
5. Digital-only banks
Digital-only banks are not new to the Indian market – Paytm started this trend way back in 2017 itself and has been a market leader since. However, it is reported that customer visits to the bank would drop by 36% between 2017 and 2022 and mobile transactions will rise by 121% within the same period. These figures would spiral upwards in the post COVID-19 era. With the advent of better and new biometrics systems, open data sharing protocols and KYC APIs, digital banking is sure to realise its true potential. These technologies are now allowing FinTechs and banks to develop mobile applications going beyond the traditional mobile banking experience that banks offered.
Decimal will keep on top of this game with its partners and service providers, by creating an unprecedented eco-system of technology options that banks and NBFCs can choose from, to create the next level of user experience for their end-customers.
6. Video Banking
Throughout the pandemic struck months, financial institutions have been looking at innovative ways of connecting customers with the relationship managers, agents, and their feet-on-street personnel. Although customer acquisition channels have seen a shift to customer self service applications supported by Video KYC, banks are now looking to build a more seamless and touchless experience for the customers centred around Video KYC. Video Banking, where customer acquisition and service will be handled by a video banking agent while on a video call with the customer is emerging as a new frontier to enhance a customer’s relationship with the bank.
7. Voice Assistant Integrations
Over the last few years, voice assistants and search has taken over a large chunk of the overall mobile searches being done. Voice searches are easy, quick, and convenient. It makes typing and multiple taps redundant. Deployed in solutions such as mobile banking application, voice assistants can prove to be a boon, specially for the customers who are new to digital banking solutions. It removes the product familiarization phase where the customer has to navigate through the application to perform a simple task like balance check and service requests.
