Why Fintech Revolution is going to change the way Banks work

Aug 2018 | Team Rubique

Traditional banking services finally seem to be catching up with the disruption, and look ahead to incorporate “fin-tech” in the way they function. Often regarded as the legacy industry with little room for innovation, the risk of obsolescence in this digital age, especially in India has forced them to change for good.

Digital wallets, one of the pioneer ideas towards making a “digital India” has seen a tremendous response with much more users than a traditional credit card. Fin-tech start-ups which often witnessed skepticism from the investors are now talk of the town has raised a record $1.2 billion funding in 2015 up from $145 million in 2014.  As a result, personal finance services offered by fin-tech start-ups have seen a massive surge in the number of users and caused a disruption in basic financial services from the banks. One primary reason for this is the customer-centric approach of the start-ups delivered at suboptimal price unlike cumbersome processes of the traditional banks.

Many banks have recently started showing interest in such start-ups with SBI and RBI launching their start-up dedicated banks, and ICICI engaging themselves with three start-ups. YES Bank and HDFC to have tied-up with three and five fin-tech start-ups respectively in the recent times. Let’s explore the cause of this sudden change.

Fear of being taken over

Countless small fin-tech ventures are striving each day to optimize areas such as distribution, payments, building financial products, and analytics, that is, traditional strongholds of banks. This has introduced a wave of panic among the banking think-tanks. However, more often than not, competition in businesses brings out the best products, and there’s always a gain for the consumers.

Customers’ love for technology

Digital age goes alongside with cutting age technology. It was about time banking sector realized this and incorporated software into their services. Apps like Paytm and Rubique are already doing that and delivering a highly optimized user-friendly solution to your daily banking needs. This in return, forges a personal bond with the customer.

Start-up India initiative

Another viewpoint to this is participating in the soul made by our Prime Minister Narendra Modi. With the development of 40%, India is in the third position in the number of new businesses. Thus, this appears to be just about the perfect time, if not somewhat late, to get going. Furthermore, this inclusion is for monetary profits yet the aggregate development of the nation.

Clarifying the change, they can bring, Arundhati Bhattacharya, Chairman of the State Bank of India said at the dispatch of their start-up devoted branch – InCube in Bengaluru, “We believe we will be very useful to the startups even though we are not giving them financing, because financing is not the only thing startups need. In fact, they really and truly need a lot of financial management advice, they need to understand how to manage their companies, and they need to be free of these things to concentrate on what they do best.”

Correspondingly, HDFC Bank has propelled SmartUp, a devoted answer for new companies, to satisfy all their monetary assistance and services. The bank said that SmartUp is custom fitted to meet every one of the necessities of a start-up, offering to manage an account and installment arrangements, alongside warnings and forex administrations. Smita Bhagat from HDFC Bank said how the bank went for creating solutions that evolve as the company grows’.

Likewise, a great stage for the new businesses, these schemes will give new companies the introduction they require. Furnishing them with their believability and market linkage, these organizations are probably going to scale up quicker than they would have something else. This is an extraordinary brand push with regards to permeability in the market. Also, pitching your plan to the entire administration of the bank is a colossal arrangement in itself.

Benefit for the banks

The same thing that has caused the disruption might be the thing to look out for the banks. In a nutshell, the traditional banking system which has failed to keep up with technology can now benefit from the tech start-ups develop. The aim of this is not only to improve the efficiency of the payment gateways but also, to enhance the user experience which has long been neglected.

Great case of this is HDFC’s tie-up with five start-ups dealing with five distinct areas. Senseforth technologies, an AI-based start-up will give a discussion stage where the bot will answer hundreds of inquiries the banks get ordinary; NotifyVisitors will computerize pop-ups and push warnings, customizing client encounters crosswise over stage; NetVigil Software will deal with cash-less transactions presenting QR code-based portable installments where the shopper doesn’t require an internet connection on their telephone.

Bug Clipper is an in-application reporting tool that helps report bugs sharing screen captures and screen accounts; and ultimately, with Tapits Technologies, a biometric installment arrangement, a customer can shop just with their unique biometric finger impression, without requiring any money or credit card.

Conclusion

With the rapid development of fintech in India, banks and digital payment companies can look forward towards a smooth merger. We don’t see the entire banking industry obliterating. Just its financial services have been disturbed yet it will stay to be a store for cash and loaning. Wallets, in any case, will change itself from simply being another way to take advantage of the ledger.

Additionally, we see a great deal of tutoring occurring here however a hole of financial speculation still lies. Remarking on the same Dharmaji included, “The banks will, in the end, need to alter procedures and items to oblige new businesses.” It implies that the main banks to survive this disturbance will be the ones who turn out to be acceptable to change. What gives us help is that the odds of that are not happening are low.