As advancements in technology are significantly impacting every industry and domain in the global landscape, the financial space has emerged as one of the biggest beneficiaries. An erstwhile traditionally managed segment, the robustly changing scenario has paved way for innumerous new innovations, products, and services. With modern-day technological tools bringing about newer trends every alternate day,players of the financial space have been adapting to and leveraging these interventions to cater to the rise in digital penetration and smartphone ownership leading to an unprecedented demand for augmented user-friendly experience. In an innovations-driven country like India, FinTech has been steadily treading towards financial inclusion in both urban as well as rural segments, making payments and credit easier. Following are the technological tools that play an integral role in making FinTech all encompassing, thereby redefining the financial space in India:
Artificial Intelligence (AI)
Acknowledged as one of the most beneficial interventions for the financial space, AI has the potential to substantially improve the wayfinancial transactions take place at present, thereby personalizing and augmenting end-customer experience. With facilities like transaction search and visualization, client risk profile, underwriting, pricing and credit risk assessment, automated claims processes, and digital financial coach, AI has been elevating customer experience by making the process as easy, convenient, and hassle-free as possible. With such offerings, AI has emerged as one of the most significant game-changers in the financial space.
Machine learning is another major technological tool that has brought about a major change in the financial space by minimizing human intervention. Because of this, the possibility of human errors in tasks like data input and calculation etc. gets removed, which further helps in increasing the overall productivity of a firm, and of the domain in a broader sense. For instance, machine learning makes the process of credit underwriting easier by evaluating risks at the margins and providing a more nuanced view than traditional models, thereby producing a more accurate assessment. This leads to scenarios like more approvals with no added risks or less risks with constant approval rates. Both these cases are beneficial to the financial space in addressing challenges of the present credit models.
Driving several key innovations in the financial space, big data has now become a significant part of the domain. Financial institutions are now leveraging the immense power of cognitive technologies like relationship analysis and language comprehension under big data to generate new revenue streams and manage all their financial data including references, trade and market information, and transactions in one place.For instance, the segment of lending and credit scoring has been one of the biggest beneficiaries of big data, with its cloud-based model of credit decision engine that helps institutional and individual lenders in improving their credit quality and acceptance rates.
One of the most promising tools redefining the financial space in India is the widespread adoption of integrated payment systems like UPI. Unified Payments Interface, or UPI, is gradually transforming the financial sector in India by revolutionizing how payments take place, making the country go cashless.Driven by such a powerful tool in the digital era, India is steadily moving towards a paperless future with reduced chances of challenges like money laundering and tax evasions.
Blockchain has emerged as one of the most impactful technological intervention in recent times, accelerating financial inclusion on a global scale. This technology has the potential to provide a decentralized account which would relieve the unbanked segments from the exhausting and oft-inaccessible process of setting one up with formal financial institutions. Furthermore, it has the ability of a distributed infrastructure, facilitating the sharing of information that is secure and provision of unalterable transfer of data to ensure data integrity. With inherent strengths like asset creation, asset transfer, and data reconciliation that blockchain entails, the financial space is undergoing a major transformation, as the industry is gradually shifting from exploration to application.
The dynamically developing FinTech domain has emerged as an impactful solution for all the major challenges faced in the present financial landscape along with leading the charge for promising future opportunities. Given the current scenario of rapid acceptance, traction, intense competition among players, and subsequent rate of innovations, the financial space is undoubtedly going to continue evolving at a robust pace. Driven by technological advancements, FinTech has the potential to unlock newer possibilities for all the stakeholders including traditional players, startups, and customers, thereby redefining the future of the financial sector in its entirety.
Nikhil Prabhakar, Head of Marketing & Products, RupeeCircle