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India's fintech journey
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Fintech and banking
Banking in India had been manual and a tedious affair right up till the early 2000s. That’s when online banking was introduced by ICICI Bank. However, even after the introduction of internet banking, many banks continued to operate manually for a few more years. It took another decade or so for that to change.
However, it didn’t take long after that for the banking sector to get completely revolutionized. Today, thanks to the introduction of technology into banking and finance, there are many fintech solutions being integrated every passing year.
So much so, that the Reserve Bank of India (RBI) has even set up a dedicated fintech department to promote innovation, identify and solve challenges, and address opportunities.
The many ways in which fintech is transforming the Indian banking industry
There’s no doubt that fintech has completely changed the entire banking landscape in India through the use of multiple innovative solutions. Here are some of the few crucially important changes that fintech has brought about in the banking industry.
Online transaction support
This has been one of the biggest changes that fintech has brought about in the banking space. Earlier, individuals used to transact primarily through cash, cheques, and other negotiable instruments. And when it came to transferring funds to individuals situated in far off places, the options were little to none.
However, fintech has made it possible for individuals to conduct online transactions within just a few minutes. Thanks to the integration of technology and the internet, an individual can send money to any Indian bank account instantly right from their own smartphone. This has led to the burgeoning e-commerce sector, where people can shop from the comfort of their own home.
Continuing on from the previous point, branchless banking is another major advantage that came out of the collaboration between fintech and banking. Remember how you had to visit the particular branch of the bank where you held your account to get your job done? From checking your bank balance to withdrawing funds, everything had to be done through the branch.
All of that has changed thanks to fintech. With more and more banks opting to transact via digital channels, you won’t have to visit any branch of a bank to conduct your operations. Soon, the concept of cheques will also slowly vanish as an increasing number of individuals turn towards online fund transfers.
After the introduction of internet banking, the next logical step for fintech and banking was to introduce mobile banking. Considering the fact that India is one of the largest consumer markets for smartphones and mobile internet, fintech banks started the trend of banking through smartphone applications.
These applications came with all the features that you can typically find in internet banking, but condensed and presented in a way that was ideal for smartphone use. And as with online banking, even traditional banks hopped onto the bandwagon of mobile banking, albeit much sooner than the previous time.
Customer service bots
Another major revolution that the association of fintech and banking brought about was the significant upgrade in customer service. Traditionally, banking customer service has always been slow and unresponsive. However, with the introduction of fintech in the banking sector, customer service has received a major boost through the implementation of robo advisors, artificial intelligence, and machine learning.
Almost all private sector banks in India have now introduced automated customer service chatbots that you can use to get more information and get your questions answered. An increasing number of banks are also looking to integrate artificial intelligence and machine learning into their voice support systems similar to Google Assistant and Alexa as well.
Earlier, when it came to lending, the entire process was too rigid. This led to many loan applications being rejected. However, with more and more businesses cropping up year after year, the need for funding started to go up significantly. To solve the funding crunch, many fintech banks and entities came up with solutions powered by robust and cutting-edge technology.
This has led to the rise of the digital lending sector, where individuals in need of funds can get it within 24 hours by simply making an application through their smartphone. The entire application process from start to finish is now online, enabling customers to apply for loans right from the comfort of their own home. Since there is no extensive paperwork involved, the approval process is also faster than ever, with extremely quick turnaround times of less than 24 hours.
The Neobanking system is also one of the many advantages that the association of fintech and banking brought about. Until a few years ago, the entire concept of banks revolved around physical branches. However, fintech has changed all of that. Currently, there are many digital-first and digital-only banks in India that operate remotely without any physical presence whatsoever. These are neobanks.
These fintech banks are referred to as neobanks and seek to provide the same or nearabout the same set of features and services offered by traditional banks. However, with the Reserve Bank of India (RBI) requiring full-fledged deposit taking banks to have physical presence, neobanks have suffered a setback. That said, they’ve circumvented this issue by partnering with traditional banks to offer banking services.
With this, you must now be aware of the kind of impact that fintech has had on the Indian banking industry. Not only has it revolutionized the way the industry operates, but has also made it even more accessible to individuals from all strata of society.
A quick recap
- Fintech has completely changed the entire banking landscape in India through the use of multiple innovative solutions.
- Thanks to the integration of technology and the internet, fintech has made it possible for individuals to conduct online transactions within just a few minutes.
- With more and more banks opting to transact via digital channels, there’s no need to visit any bank branch to conduct your operations.
- Fintech has enabled banks to offer a whole gamut of banking services through smartphone applications.
- With the introduction of fintech in the banking sector, customer service received a major boost through the implementation of robo advisors, artificial intelligence, and machine learning.
- Fintech and banking has led to the rise of the digital lending sector, where individuals in need of funds can get it within 24 hours by simply making an application through their smartphone.
- Fintech has made many digital-first and digital-only banks possible. These banks operate remotely without any physical presence whatsoever.
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