How fintech is accelerating growth of the digital economy - Expert explains

The accelerated development of fintech players has facilitated in speeding up financial inclusion and new-age advances in technologies such as AI (Artificial Intelligence) and ML (Machine Learning) will additionally animate digital adoption or reception in the nation, helping both the business industry and the consumers shortly. Digital innovation could drive a range of industrial organisation outcomes. Ankit Agarwal, Managing Director, Alankit limited, explains how fintech is accelerating growth of the digital economy.

"On one hand, digital technology enables niche providers to reach a target customer base and be economically viable. On the other hand, customer acquisition, funding, “assembly,” and switching costs tend to favour larger providers of digital financial services. In the past decade, fintech has already driven greater access to and convenience of financial services for retail users," Ankit Agarwal said.

"Indian digital economy is projected to grow exponentially. According to the report by App Annie (a mobile app analytics platform), in 2021, smartphone users in India used their devices for an average of 4.7 hours per day. This indicates that the daily average smartphone usage has increased for the third year in a row, showing a growing reliance on smartphones amid the ongoing coronavirus pandemic. India ranked second in the top 20 mobile markets in terms of app downloads this year, reckoning for nearly 27 billion downloads in 2021. Finance apps also gained popularity in India, with over 1 billion downloads last year," Agarwal added.

He adds, "In the last decade, emerging Fintech solutions are transcending the business landscape at an inconceivable pace. The all-encompassing changes introduced by fintech start-ups are likely to have an impact that outspreads beyond the confines of the traditional financial services industry. The contribution from all stakeholders i.e. government, regulators, financial institutions, start-ups, and investors have become a key enabler to constructing a robust Fintech ecosystem."

"Many key fintech themes are changing the composition of the economy," he opined.

Artificial Intelligence

"Most of the new age Fintech companies long with some Wealth Management platforms are also subscribing a self-service model to Clients by minimising or eliminating the human intervention to offer exceptional digital client experience. BOTs have been a common site on various websites," he said.

Web 3.0

"Web 3.0 is the next iteration of the internet that emphases on decentralisation. It aims to create a level of transparency, where smart contracts will control user data and transactions as a replacement for centralised organisations," he added.

Big Data Analytics

"On a broad scale, data analytics technologies and techniques give organisations a way to analyse data sets and gather new information. Business intelligence (BI) queries answer basic questions about business operations and performance," he explained.

Blockchain

"The innovation with a Blockchain is that it guarantees the fidelity and security of a record of data and generates trust without the need for a trusted third party. Many countries are also assessing and testing digital currencies to adapt to the changing consumer needs and ensure a more cohesive solution without affecting the existing macro-economic framework," he added.

Machine Learning-Extreme Customisation of Customer Offerings

"Numerous Companies and Startups are investing their time and capital to study the dynamic consumer behaviour to enable them to adapt the customer offerings as per the requirements of the customers. The various financial institutes need to get acquainted with the new transactional patterns of Clients and are capable of converting the data into actionable insights by proving niche services such as pre- approved loans, OD limits, Investment ideas, and more," he said.

Data is new Gold

"In the financial services sector, Credit rating agencies are enhancing the Asset quality by sharing the Creditworthy Clients’ data that further reduces the risk of lending institutions," he said.

Payment Solutions

"New-age payment solutions are renovating the unorganised into the organised economy like Wallets, UPI, IMPS, and Paylater," as per him.

Neobanking

"Neobanks are changing the face of fintech and could one day eclipse traditional banks. They influence technology and artificial intelligence to offer personalised services to customers while minimising operating costs," he opined.

Digital Banking/Finance

"Even the traditional banking and financial institutions are titivating themselves by positioning as Fintech firms. Additionally, many financial institutions are transforming into either hybrid or completely digital models to reduce the associated fixed or variable cost," he concluded.

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)