Fintech Disruption: Impact of Digital Transformation in Financial Services
In the financial services industry these days, many factors are accelerating digital transformation.
Financial companies have generally relied heavily on traditional, product-centric technologies but are quickly moving towards providing smooth, consumer-centric, personalized solutions.
It’s important to note that the digital transformation of this industry is more than just digitization.
To survive, businesses need to continually adapt to changing customer preferences to provide a frictionless digital experience.
Future of Financial sector with Digital Transformation in India:
Covid-19 has completely changed the way people do their jobs in their lives, from shopping to working, especially in banking. Many evolutionary changes are expected in the future of digital banking.
In India, financial sectors had started the digital transformation journey, long back.
While on one hand, certain events like Demonetization & GST reforms have helped the Indian population to understand the benefit of becoming digital, Strong Infrastructure like the availability of India Stack (Aadhar+ UPI + eKYC + Digilocker + eSign) has helped various stakeholders to roll out solutions. These solutions are getting rolled out to fulfill various needs of a society like
- Various Digital Wallets & Payment Apps for the touchless, frictionless, cashless society
- Easy onboarding on the marketplace for e-commerce,
- Digital Apps for Micro-loans
- Digital Apps for personal investment in Wealth Management
As per the website of India stack, its mission reads as: “India Stack is a set of API that allows governments, businesses, startups and developers to utilize a unique digital Infrastructure to solve India’s hard problems towards presence-less, paperless, and cashless service delivery”
With this, we can dream of ‘full financial inclusion in India, in the coming years.
Impact of Digital Transformation in Financial Services:
To remain competitive, businesses need to keep up with today’s pace of innovation.
Digital transformation processes typically focus on the needs of the people, processes, and tools, and it is important to consider the needs of the customer as well.
The full business of a bank has to go through holistic digital transformation, to remain competitive.
The way financial services companies’ employees manage their activities or transactions has changed dramatically, but so has the customer’s expectations of how they will receive these.
- Pay, Receive and Send money easily:
The digital transformation of the banking sector provided a wide variety of services through time-limited model reception.
It also reduced the disparity between rural and concrete areas.
You can send money from one bank branch account to another account anytime, anywhere via digital payment mode or e-Banking.
You can do so by using modes such as USSD (Unstructured Supplementary Service Data, dial *99# for services in English), Digital Wallets, UPI, and other banking applications.
- Well Kept Record:
It allows you to manage your records and track your spending and budget plans. Using an online application, we get a record of each transaction.
The application will automatically record the transaction in your passbook or simply keep a record within the Digital Wallet app.
Thanks to digital transformation, bank can collect & store more data.
Banks can use digital analytics to make sound, data-based decisions, and increase cashless transactions and reduce the threat of counterfeit currencies.
- Easy and Convenient:
Digital transformation has created a simple and convenient lifestyle for buyers and financial institutions.
Very little use of real cash has eliminated the need to carry large amounts of cash in one place.
The risk of human error is minimized, and consumer loyalty is increased.
Services such as NEFT (National Electronic Fund Transfer) RTGS also facilitated very convenient and fast transfers of money from one bank to another.
- Fuelling next set of entrepreneurs:
Digital payments can make financial transactions with customers, suppliers, and governments more convenient, secure and cheap, and increase the profitability of entrepreneurs.
Paying wages benefits digital employees and is safer and more cost-effective for employers than traditional banking.
Digital Payments automatically provides credit history to Users, which can improve credit access for entrepreneurs.
Digital payments give female entrepreneurs greater income control and potentially give profits to the entire furniture, especially children.
- RIPE model: Now each one of us is looking for a ‘personalized experience, which is provided with real-time data.
I call this RIPE ((Real-Time, Instant Gratification, Personalized Experience) model. Now with Digital transformation, the financial sector can provide RIPE.
- Easy, frictionless on-boarding on customers.
- Risk & Credit analysis to arrive at loan amount suitability & ability to disburse loan amount (including un-secured micro-loan) accordingly
- Ability to engage with customers is his overall journey, from on-boarding to loans/fund transfer & later business performance appraisal to loan amount repayment
- Flexibility in offering ‘modified loan scheduled payment’
- Ability to offer personalized investment advice & construction of a portfolio, based on each customer’s spending & saving habits.
- Ability to offer financial & investment plans for each member of the family. This can include, a personalized student loan, loan for marriage, holiday or for purchase of a new vehicle, house
- Ability to offer BNPL (Buy now Pay Later) offer
- Ability to do any financial transaction, anytime, anywhere …Instant gratification
The digital age is revolutionizing the way we do business.
For example, in the last few decades, many banking transactions have gone digital.
In the digital age, people who are business owners can use various technologies to manage their financial transactions.
The financial sector is leveraging the ACID (Artificial Intelligence, Cloud, Internet of thing, Data) to power digital transformation.
These technologies have given rise to Fintech. Fintech is a new financial services industry that is made of people and companies that are transitioning from the brick and mortar of the traditional banking market to software that can be accessed anywhere, anytime, and from any device.
It is this technology that is disrupting the traditional banking industry and enabling individuals and businesses to have more control over their assets.
Conclusion:
Fintech Disruption: Impact of Digital Transformation in Financial Services
Digital innovation allows current business practices to be a major upgrade of customer relationships and products.
With Digital Transformation, the financial sector is moving from ‘brick & mortar’ to ‘brick & click’ avatar.
The existing physical building will become CAFINANCIAL ( CAfeteria + FINANCIAL). Though some segment of the population will keep on visiting these CAFINANCIAL buildings, many other will literary want the power ‘to do the financial transaction’, in their hands (by way of doing transaction through smartphone, tablet, laptop etc).
Also, they will move away from institutions, which try to fit/offer one product for one segment. Customers don’t need choices; they want what they need. No plethora of offers, thrown at them.
They want a ‘totally personalized’ offer, which is made for them, in their context & can be availed immediately …Instant gratification.
