Fintechs have made a name for themselves by solving complex problems of money management. At this rate, the vertical seems poised to give the World India’s first tech giant. Here’s BankBazaar CTO Murari Sridharan’s take on it.
What makes a company truly world-class and its products universal? I would say there are broadly five factors.
At the heart of these companies lies the need to identify real-life problems and to solve them through solutions that can be put in the hands of common people.
These companies have a culture that they swear by. A mindset for growth is part of this culture, helping companies evolve and flourish. They aren’t afraid to innovate, experiment, fail, and learn.
Great companies hire high-caliber people who are then empowered and encouraged to innovate.
Great companies are not scared of technology, nor are they emotionally attached to one technology. They go where the customer, product, and data take them.
Great companies have world-class processes for compliance and information security standards, privacy, data protection, and intellectual property. No jugaad. Some things need to be done right. When you set high standards for product, compliance, and processes, it becomes easy to set up and scale up in any geography.
India is home to about 850 million millennials and Gen Z-ers (those born after 2000). In the age of smartphones and fast internet, the young customer demands an Amazonification of services: find it, compare it, buy it, and get it in a matter of hours.
Financial services in India have kept pace with technological innovations in the world. Today, we have a digital ecosystem comprising cutting-edge platforms like IndiaStack, UPI, Aadhaar, eNACH, and DigiLocker.
India also now has over a billion mobile connections, with a 300-million smartphone user base that’s poised to hit 500 million in a few years, with a corresponding increase in internet penetration and broadband speed. The vast number of Gen Z-ers – the born-in-the-cloud generation – will soon grow up and be in charge of their financial decisions. They will circumvent legacy systems of money management entirely and go straight to digital platforms.
Fostering this rapid growth are government and regulatory support. The Government of India, the Ministry of Finance, the Ministry of Electronics and Information Technology, NITI Aayog and the industry are working closely to make finance digitised and accessible for the masses. The regulator is encouraging a paperless, presence-less, and cashless model of personal finance, which helps in increasing financial inclusion, reducing paperwork, fraud and bureaucracy, improving efficiencies, and reducing costs.
Lastly, India’s household debt to GDP ratio of 11 percent (September 2017 figures) is low in comparison to countries like USA (78 percent), China (49 percent), and Brazil (21 percent). This reveals the possibility of growth in appetite for credit, wherein lies the opportunity for fintech to enable the efficient delivery of credit.
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In the financial services business, the cost of acquisition is extremely high. The game changer in reducing the cost of acquisition is digitisation. It is cheaper and more easily scalable than traditional models. Fintech today is trying to provide customers a simple, frictionless experience. With the help of great UX and categorisation, products can be easily researched and compared, or serendipitously discovered just like on an e-commerce website.
Fintech also does deeper analytics, alternative credit scoring, and incorporate the customer’s digital trail to augment his credit score. It helps connect more people to the financial products they require.
There’s also the responsibility to manage privacy and safeguard customer data, whose use needs to be limited and proportional, and ensuring the customer is informed and in control of the use of his data. Today, banks can partner with fintech companies and do all of this in a more cost-effective manner. This isn’t a problem in India alone. It’s true for foreign markets, too.
So, there we have it. Fintech today finds itself solving complex problems of money management with the help of high-calibre talent with a mandate to innovate rapidly, working in tandem with the regulators, ensuring the highest levels of compliance and data security while delivering the highest levels of satisfaction by connecting customers to the best financial products.
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With the above foundation, international expansion becomes much easier and that’s where this isn’t just a Make in India story but is really a world-class fintech play.
Disclaimer: The article was first published in yourstory.com