What is Fintech ? What is the future of Fintech?

 The world is going through a significant transformation from the way we produce products and services to the way we reach consumers. This phase is known as Industry 4.0. 

The fourth revolution in industry is focused on automation and digitalisation from production processes to finance. This revolution aims at erasing the line between physical and digital world. Finance 4.0 is the inclination of finance sector towards digitalisation, automation, cloud computing, mobile accounting, etc. Financial technology (FinTech) is disrupting the financing industry. In 2018, it was valued at $127.66 billion. According to EY FinTech Adoption Index, 2017, India’s adoption to Fintech products is at 52%. According to Raj Phani, Founder & Chairman of Zaggle, demand for virtual cards has shot up by 600% during COVID-19 pandemic. People have become risk averse as a result demand for contactless cards has increased. This will boost the Fintech industry further. Global FinTech market is expected to be $309.98 billion by 2022. Fintech sector is currently in developing stage in India. Paytm and Ola (Ola Money) have found place in top 10 companies in KPMG 2019 report Fintech100.

Facilities under Finance 4.0

·       Artificial Intelligence

Artificial intelligence brings the digitalisation to financial institutions like banks. According to a joint research conducted by the National Business Research Institute and Narrative Science (The Rise of AI in Financial Services, 2018) Around 32% of financial service providers are using AI technologies like Voice Recognition, Predictive Analysis, etc. Artificial intelligence helps in combatting fraudulent transactions and also help in improving compliance. It also helps in providing advanced data analytics. It also helps Banks in managing huge data at less cost and time. Features such as AI bots, digital payment advisers and biometric fraud detection mechanisms help banks to provide higher quality of services to customers spread across the world. All the above advantages of artificial intelligence translates to increased revenue, reduced costs and higher profits. Artificial Intelligence also helps in enhancing customer experience, predicting future outcome and trends, cognitive process automation (this helps in increasing ROI as it automates a variety of tasks), robotic automation of process, interactive interfaces and effective decision making.

·       Blockchain

Blockchain refers to a form of technology in which a set of computers can access and change the data using a key. Blockchain depends on encryption technology. Only those with access to the proper encryption keys can add information or change data to the ledger or retrieve encrypted data. In blockchain all parties have access to the ledger or the data at the same time. This infers that all parties have the same information. Some blockchains are open or public. In such kind of blockchains anyone can access them, and individuals can add data to the ledger or data anonymously. Others, including blockchains which are mostly implemented by financial services organizations, are private or “permissioned,” meaning only certain parties ( like employees) have access to the ledger, and the identity of those who add data is known. Blockchain helps as it helps in sharing the accurate data, automating transactions (we can buy certain insurance online by agreeing to certain condition mentioned online), security and reliability.

·       Cloud Technology

Cloud computing is the delivery of computing services which are crucial for organisation. These services include servers, storage, databases, networking, software, analytics, and intelligence. These services are offered over the web or cloud. This offers faster innovation, flexible resources, and economies of scale. Cloud computing eliminates the capital expenses like buying hardware and software, etc. The finance industry generates unbelievable amounts of data due to various activities taking place like millions of card transactions, stock market transactions, loans, and insurance documents and payments. Unlike the traditional IT setup where funds are required for constant up gradation and maintenance, Cloud computing provides unlimited storage to ensure businesses so that businesses never face problem regarding storage of increased data. Cloud computing enables employees to work anywhere, anytime, as per their convenience. They can use their personal smartphones and tablets for working at any time for monitoring and analysis. They can also access company emails, proprietary business applications, and CRM tools when they are not in the office or outside of business hours Cloud computing very easily scales resources so that the work is performed smoothly without the requirement of any intervention to make sure the duties are performed without any glitches.

·       Robotic Process Automation

RPA robots are capable of mimicking many of the tasks done by human being. They can do various tasks like they can log into applications, copy and paste the data, move files and folders from one location to another, extract structured and semi-structured data from the documents, scrape browsers, etc. RPA helps in achieving ROI due to its fast implementation. Reduce back office work and increase the effectiveness and efficiency of other employees.