"FinTech: Practicality and effects of integrating technological innovations in

financial processes and enhancement of conventional management systems."

FinTech : a composite reduction of Finance & Technology, indeed is the buzz word as the world
moves on towards digitalizing our lives and of course the daily chores. The global digital payments
in 2018 had reached the whopping $3,403,168 million and are further projected to grow at 13.2%.
None can gainsay the fact, that FinTech perhaps is the single largest influencing sector, on how
the world is transacting today. This growth is propelled by quick solutions, convenience and ease
of management with optimum cost effectiveness coming as a package !
The paradigm shift on the retail industry from the glittery shopping malls and city streets to the
lap tops and cell phones of the avid buyer is one big example that has been enabled by the
emergence of FinTech alone. Supply & delivery chains of both the products n’ services too have
undergone a major shift in their business models hence, we find a swarming growth in the form of
Swiggy, Zomato, Oyo, Trivago etc; all incumbent and attributing to their rapid rise to the
development in reach & access powered by the information technology. What’s more, even
political startup like AAP, sourced most of it’s crucial early days logistic support, through “crowd
funding” measures online.
Yes ! you got it right there’s always one B2B, P2P, Cloud Computing or E-Aggregator FinTech
solution provider behind their success.
The flurry is causing uncertainty, even if not being scary – and leaves one groping as to what kind
of financial landscape would the rapid emergence eventually lead us to. It is then perhaps only
natural to follow that a critical study be made on something with such swooping effect on our lives
in general & financial sector in particular.
As the common adage goes, “high growth is conducive to high risk” and it applies in absolute
conformity to FinTech as well. Not only is it giving the regulatory authorities, supervising the
financial movement a severe headache, but even keeping the vigil on sensitive issues like security
& cyber frauds has become a looming threat.
FinTech has indeed enhanced the reach of the service providers far & wide, cutting across the
boundaries of nations ~ to almost global proportions. Hence they extend way beyond the situation
to put them under governance or legitimate control of any one taxonomy. While categorization of
such service providers is being made to implement such regulatory controls by nations in alliance,
yet no comprehensive system appears to be in place. Besides the enormity in spread & speed of
effecting transactions there’s always a very pragmatic possibility of a non-banking or financial
entity, such as web or mobile based entity, playing a major intermediary and integrating role
towards facilitating the customer experience, and it’s only common prudence, that such entities
are not bound or controlled under any statutory provisions or laws - even in their own country of
existence.
Formulation of Crypto & Bitcoin kind of virtual currencies have created yet another frontier where
most nations of the world have yet not ventured to. Global technology players such as Google,
Facebook, Apple & Amazon carry out innovative financial services packages everyday.
Apart from the numerous challenges FinTech has thrown up to the financial regulation and
supervising authorities, it is not a path of roses for the FinTech entities by themselves as well.
While the rapid growth, ease & efficiency they have created in the financial world may be
breathtaking but the truth for their own existential security is in absolute contrast to the glitz. Their
own mortality rate is very high and it’s less than 10% of the FinTech start-ups that have survived
or are continuing to struggle for sustenance is this benign & brisk but brutal fast paced market,
which is bubbling with newer ideas & service extending platforms by the day.
What do you reap when you invest in and/or nurture a system with expectations of riding a boom
in several sectors – namely “technology” – but with a fast expiring shelf life? Tech rightfully has
been giving handsome returns to investors in many a sectors but finance. Finance is inherently a
very slow moving sector itself while providing the necessary resource to several others. Hence,
the tech savvy business managers while extending the possibility of tapping the technology for
finance had put a rosy picture to the promoters , but as competition gathered around them they
were compulsively constrained to take riskier decisions. Extending loans & services to
undeserving clients, just to sustain in business :
This is exactly how they work –
Problem > Reaction > Solution
Solution offered by those who engineer the problem is always a more dangerous problem ~ So, by
introducing FINTECH, we have created so much vulnerability to an otherwise fool-proof process,
while not adding adequate checks, either in the process or during drafting the regulations. This has
left us desiring yet more towards building comprehensivity.
Nevertheless, the breaking technology has already surpassed several expected benchmarks, and
with 57.95% FinTech users, India currently ranks second globally in terms of FinTech adaptability.
Lending sector tops the usage of Fin Tech services while Insurance sector is close second, to be
followed by the Payments and Banking sectors. Growing need for smart spaces, transactional
procedures and finance movement has propelled the fast growth despite many a setbacks.
Silver lining is that with the advent of truly world class services and necessary parity with the
global standards, a plethora of regulations have in recent times been introduced into the system –
both for the banking & non-banking segments…. and are further being continued to be
implemented by the day. I truly feel there is ample hope to see much more in the coming days
only to see the process becoming more robust, user friendly and SAFE !