Impact of Technology in Financial Sector

A Project Submitted to
University of Mumbai for partial completion of the degree of
Bachelor of Management Studies
Under the Faculty of Commerce

By
Varun H Patel
Roll No: 421080
Under the Guidance of
Prof. VIKAS D. SINGH

UNIVERSAL MSG-SGKM COLLEGE OF ARTS, SCIENCE AND

COMMERCE
Plot No. 17, Tilak Road, Opp. Lion’s Garden, Ghatkopar (East), Mumbai 400
077
APRIL 2024
 UNIVERSAL MSG-SGKM COLLEGE OF ARTS, SCIENCE AND
COMMERCE
Plot No. 17, Tilak Road, Opp. Lion’s Garden, Ghatkopar (East), Mumbai 400
077

CERTIFICATE

This is to certify that Mr. Varun H Patel has worked and duly completed his

Project Work for the degree of Bachelor of Management Studies under the

Faculty of Commerce in the subject of Finance and his project is entitled,

“Impact of Technology in Financial Sector” under my supervision.

I further certify that the entire work has been done by the learner under my

guidance and that no part of it has been submitted previously for any Degree

or Diploma of any University.

It is his own work and facts reported by his personal findings and

investigations.

Prof. Vikas D. Singh

Name and Signature of
Guiding Teacher
Date of submission: March 2024.

Declaration by learner

I the undersigned Mr. Varun H Patel hereby declare that the work embodied in

this project work titled “Impact of Technology in Financial Sector”, forms my

own contribution to the research work carried out under the guidance of Prof.

Vikas D. Singh is a result of my own research work and has not been

previously submitted to any other University for any other Degree/Diploma to

this or any other University.

Wherever reference has been made to previous works of others, it has been

clearly indicated as such and included in the bibliography.

I, here by further declare that all information of this document has been

obtained and presented in accordance with academic rules and ethical conduct.

Varun H Patel

Name and Signature of the learner

Certified by

Signature of the Guiding Teacher

Prof. Vikas Singh

Acknowledgment

To list who all have helped me is difficult because they are so numerous and

the depth is so enormous.

I would like to acknowledge the following as being idealistic channels and

fresh dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me

chance to do this project.

I would like to thank my Principal Ms. Nawal Khan for providing the

necessary facilities required for completion of this project.

I would also like to express my sincere gratitude towards my project guide

Prof. Vikas Singh whose guidance and care made the project successful.

Lastly, I would like to thank each and every person who directly or indirectly

helped me in the completion of the project especially my Parents and Peers

who supported me throughout my project.

Varun H Patel

Name & Signature of the Learner

EXECUTIVE SUMMARY
 INDEX

SR NO NAME OF TOPIC PAGE NO

CHP-1 INTRODUCTION

1.1 DEFINATION OF FINTECH

1.2 UNDERSTANDING FINTECH

1.3 BACKROUND OF FINTECH

1.4 THE IMPACT OF FINTECH IN INDIA

1.5 CHALLENGES OF FINTECH

1.6 MAJOR TRENDS IN FINTECH

1.7 COMPONENTS OF FINTECH

1.8 MONITORING INSTITUTIONS IN FINTECH

1.9 MAJOR SERVICES AND FACILITIES AVAILABLE THROUGH

FINTECH

1.10 INDUSTRY PROFILE IN FINTECH

1.11 FINTECH IN PRACTICE

1.12 FINTECH’S EXPANDING HORIZONS

1.13 THE BIRTH OF FINTECH

1.14 THE RISE OF ONLINE BANKING IN FINTECH

1.15 MOBILE REVOLUTION IN FINTECH

1.16 THE HISTORY OF FINTECH

1.17

1.18
 Impact of Technology in Financial Sector
INTRODUCTION

1.1 DEFINATION OF FINTECH

Financial technology, commonly known as fintech, represents the

convergence of finance and technology to revolutionize the way financial
services are delivered, consumed, and managed. This dynamic and rapidly
evolving sector encompasses a wide range of innovations, leveraging
cutting-edge technologies to enhance efficiency, accessibility, and
transparency in the financial industry. Fintech is reshaping traditional
financial services and democratizing access to financial tools and
resources.The roots of fintech can be traced back to the early 21st century,
with the emergence of online banking and the proliferation of digital
transactions. However, the true transformative potential of fintech has
become increasingly evident in recent years, driven by advancements in
artificial intelligence, blockchain, data analytics, and mobile technology.
These technologies have enabled the development of innovative solutions
that address longstanding challenges in finance and create new
opportunities for businesses and consumers alike.One of the key drivers of
the fintech revolution is the rise of mobile technology. The widespread
adoption of smartphones has facilitated financial inclusion by providing
individuals with access to banking and payment services anytime,
anywhere. Mobile banking apps, digital wallets, and peer-to-peer payment
 platforms have become integral parts of the modern financial ecosystem,
offering users unprecedented convenience and flexibility.
Blockchain technology, which underlies cryptocurrencies like Bitcoin, has
also played a pivotal role in fintech innovation. The decentralized and secure
nature of blockchain enables transparent and tamper-proof record-keeping,
reducing the risk of fraud and increasing trust in financial transactions.
Beyond cryptocurrencies, blockchain has applications in areas such as smart
contracts, supply chain finance, and identity verification, promising to
streamline processes and reduce costs across various financial sectors.
Artificial intelligence (AI) and machine learning are reshaping how financial
institutions analyze data and make decisions. These technologies power
predictive analytics, fraud detection, and personalized financial
recommendations, providing a more tailored and efficient customer
experience. Robo-advisors, for example, use AI algorithms to automate
investment advice, making wealth management services accessible to a
broader audience. Fintech is not confined to retail banking; it has also
transformed lending, insurance, and wealth management. Peer-to-peer lending
platforms connect borrowers directly with lenders, cutting out traditional
intermediaries. Insurtech companies leverage data analytics to assess risk more
accurately and offer customized insurance solutions. Wealthtech firms use
technology to provide automated investment management, making it easier for
individuals to manage and grow their wealth. Regulatory technology, or
regtech, is another facet of fintech that focuses on helping financial institutions
comply with regulations more efficiently. By automating compliance
processes and utilizing advanced analytics, regtech ensures that financial
institutions stay abreast of changing regulatory landscapes. In conclusion,
fintech is a dynamic and multifaceted industry that continues to reshape the
financial services landscape. With technological advancements driving
innovation, fintech is breaking down barriers, fostering financial inclusion,
and fundamentally altering how individuals and businesses engage with
money. As the sector continues to evolve, the collaboration between
traditional financial institutions and fintech startups will be crucial to harness
the full potential of these transformative technologies. The future of finance is
 being shaped by the convergence of finance and technology, and fintech is at
the forefront of this revolution.
1.2 UNDERSTANDING FINTECH

The phrase "financial technology" broadly refers to any innovation in how

people do business, such as the development of digital currency or double-
entry accounting. The development of financial technology has exploded since
the internet revolution.
You probably make use of some aspect of fintech every day. via your iPhone
to transfer funds from your debit account to your checking account, sending
money to a buddy via Venmo, or managing your investments using an online
broker are a few instances. Two-thirds of customers use two or more fintech
services, and these consumers are becoming more conscious of fintech as a
part of their everyday life, according to EY's 2019 Global FinTech Adoption
Index.

1.3 BACKROUND OF FINTECH

The aim to implement and intervene technology in the field of finance is to

build a system that integrates the total process and makes the system much
more efficient and reliable and customer centric by making it convenient as
much as possible. The technology’s involved in the finance has led to
emerging of many key trends and this has only made it possible to provide
many and new services and facilities to the market and its customers. The
applications that have been bought by the implementation of technology in
finance are far more extent than the regular consumer banking applications
could provide to their consumers. Financial services and facilities that are
being provided have been proved and emerged as benchmark and have been
widely adopted by the market. Technology in finance has been widely
growing all over the globe. Financial technology has quickly developed over
the last decade due to the rapid advancements that have happened in the
sector. The new technology in finance has worked towards enhancing and
automating the delivery of financial services. The core and the important
feature that comes along is how it also helps companies’ various business
owners and consumers to have a track on their financial operations and
integrate all their processes by making their personal finances easy. Finance
and technology coming together innovatively has led to the rise of fintech
industry which integrates the digital technology and finance. The integration is
aimed at enhancing and automating the process of delivering the financial
services to the various consumers and different businesses. Fintech basically
uses technological tools for making the process of financial
transactions of their consumers and companies more efficient. From computer
desktops to laptops fintech services and facilities can be easily accessed
through smartphones. Not only consumers but many venture capitalists have
showed their interest in the fintech industry which leads to it huge growth and
more potential still in the future (In 2018 alone Fintech raised US$39.6
billion). It is also notable how this technology is been globally accepted in
many countries. From just a simple mobile payment app to insurance and
investment companies fintech is slowly taking over the traditional financial
and banking industries. In its early stage fintech was developed as a back-end
system for the banks and their system, but with the course of time and
innovative apps and their extensive wide applications it’s has gone totally
mainstream. Today millions of consumers have been using the services and
facilities have been enabled to them through finance that is integrated with the
technology and how the process keeps getting by more and more simplified
for the customer and businesses to make the most out of it the technology and
them for them to have the smooth experience that is desired to create with the
technology. Financial technology refers to new firms using the latest
technology to compete with the traditional banking financial banking methods
in delivering of financial services and facilities to the consumers in the
markets. Financial technology has many major and important areas which
make the process complete and makes it possible to be get done in the most
enhanced way possible. With the help of smartphones for accessing services
like mobile banking, borrowing, investing through technology available in
finance. There are a huge number of start-ups that showed interest in this field
of industry and many other established financial organisations and institutions
have collectively participated in the market of fintech.

1.4 THE IMPACT OF FINTECH IN INDIA

The Indian fintech industry has emerged as one of the fastest-growing

sectors in recent years. It is being driven by factors such as a large
population, growing internet and smartphone penetration, and a
government push towards digital payments. According to a report by
NASSCOM, the Indian fintech market is expected to grow to RS-15000
Crore by 2025, from RS-5000 Crore in 2018. This represents a CAGR of
22.7% over the period. In this paper, we will discuss the growth of the
Indian fintech industry, its key drivers, and the challenges it faces.Digital
1. Payments: The Indian government has been pushing for digital
payments to reduce the country's dependence on cash transactions. This
has led to the widespread adoption of digital payment platforms such as
Paytm, PhonePe, and Google Pay. The Reserve Bank of India (RBI) has
also introduced several measures to promote digital payments, such as the
introduction of UPI (Unified Payments Interface) and the Bharat Bill
Payment System (BBPS). These measures have made digital payments
faster, cheaper, and more convenient for consumers, leading to increased
adoption of digital payment platforms.Increasing smartphone and internet
2. Penetration: The increasing penetration of smartphones and the internet
has been another key driver of growth in the Indian fintech industry. India
is the world's second-largest smartphone market and is expected to have
over RS-100 Crore smartphone users by 2025. This has led to the rise of
mobile-based fintech applications that offer a range of financial services,
including loans, insurance, and investments.Government
3. Initiatives: The Indian government has introduced several initiatives to
promote fintech innovation and entrepreneurship. These include the
Startup India initiative, which provides funding and mentoring support to
startups, and the Digital India initiative, which aims to provide digital
infrastructure to every citizen in the country. The government has also
introduced regulatory sandbox frameworks to allow fintech startups to test
their products in a controlled environment.
 4. Growing middle class: India's middle class is growing rapidly, and this
has led to increased demand for financial products and services. Fintech
companies are well-positioned to cater to this growing demand by offering
innovative and affordable financial products and services.

1.5 CHALLENGES OF FINTECH

Regulatory challenges: The Indian fintech industry is subject to multiple

regulatory frameworks, including those governing payments, banking, and
insurance. This can make it challenging for fintech startups to navigate the
regulatory landscape and comply with all the relevant regulations.
1. Funding challenges: Although the Indian fintech industry has seen
significant investment in recent years, access to funding remains a
challenge for many startups. This is especially true for early-stage startups
that may not have a proven business model or revenue streams.
2. Infrastructure challenges: While the Indian government has made
significant investments in digital infrastructure, there are still challenges
related to connectivity, network quality, and power supply that can hinder
the growth of the fintech industry.
3. Competition from established players: The Indian fintech industry is
becoming increasingly crowded, with both domestic and international
players vying for market share. Established players such as banks and
insurance companies also have a significant presence in the market and
can pose a significant challenge to fintech startups.
The Indian fintech industry has experienced rapid growth in recent years,
driven by factors such as digital payments, increasing smartphone and
internet penetration, and government initiatives. While the industry has
significant potential, it also faces challenges related to regulation, funding,
infrastructure, and competition. Addressing these challenges will be
critical to ensuring that the industry continues to grow and contribute to
India's economic development. Financial technology, or fintech, is a
rapidly growing field that uses technology to enhance financial services.
Fintech companies leverage advancements in areas such as mobile
computing, data analytics, and artificial intelligence to create innovative
 products and services that help consumers and businesses manage their
finances more effectively. This chapter provides an overview of fintech,
including its history, drivers of growth, and major categories of products
and services. We will also examine the impact of fintech on the financial
services industry and the broader economy.

1.6 MAJOR TRENDS IN FINTECH

There are several major trends in financial technology that are shaping the
industry and driving innovation. Some of the key trends include:
1. Digital Transformation: The financial industry is undergoing a digital
transformation, with the adoption of new technologies such as mobile apps, online
platforms, and APIs. This is changing the way that customers interact with
financial institutions and opening up new opportunities for innovation and growth.
2. Data Analytics and AI: Data analytics and artificial intelligence (AI) are being
used to analyse large amounts of data and provide insights into customer
behaviour and preferences. This includes predictive analytics, machine learning,
and natural language processing, which are being used to create more personalized
and targeted financial products and services.
3. Blockchain: Blockchain is a decentralized digital ledger technology that is
being used to create secure and transparent records of financial transactions. This
includes applications such as cryptocurrencies and smart contracts, which are
being used to streamline transactions and reduce costs.
4. Open Banking: Open banking is a regulatory framework that requires financial
institutions to allow third-party providers to access their customers' financial data,
with the customer's consent. This is enabling fintech companies to create new
products and services that are based on customer data, and is also driving
competition and innovation in the financial industry.
5. Insurtech: Insurtech is the use of technology to create new insurance products
and services that are tailored to the needs of individual consumers.This includes
applications such as online insurance marketplaces and usage-based insurance,
which are providing customers with more flexibility and choice in their insurance
coverage.
6. Atificial intelligence and machine learning: One of the most enthusiastic early
adopters of AI has been the financial services industry, where its use in
automating monotonous tasks, assessing risks, and preventing fraud is well
established. Due to Covid-19 during the pandemic, nearly half of us significantly
altered the way we bank. This indicates that as we approach 2022, there will be a
rise in use cases including understanding and adapting to shifting client behavior.
Established banks are seeing greater competition than ever before as clients sign
up for services that would typically have been their domain from fintech startups,
major retailers, and internet giants like Google, Amazon, and Apple. AI and
intelligent, data-driven technologies are a crucial tool for.
7. Improving customer experience with technology: We are aware that financial
services firms have embraced all of the aforementioned trends to successfully
automate and streamline back-office processes including transaction processing
and fraud detection. Since businesses are now at ease using these technologies,
they will grow more confident in using them to address issues involving their
most valuable asset their customers.

1.7 COMPONENTS OF FINTECH

Financial technology (fintech) is a broad term that encompasses a wide range

of technological components and applications that are used in the financial
industry. Some of the key components of fintech include:

1. Digital Banking: Digital banking refers to the use of digital technologies

such as mobile apps, online platforms, and APIs to provide banking services
to customers. This includes services such as checking and savings accounts,
loans, and credit cards.

2. Payment and Transfer Solutions: Payment and transfer solutions are

tools that allow users to send and receive money electronically. This includes
mobile payments, peer-to-peer (P2P) transfers, and online payment platforms.

3. Data Analytics and AI: Data analytics and artificial intelligence (AI) are
used in fintech to analyse large amounts of data and provide insights into
customer behaviour and preferences. This includes predictive analytics,
machine learning, and natural language processing.

4. Blockchain: Blockchain is a decentralized digital ledger technology that is

used in fintech to create secure and transparent records of financial
transactions. This includes applications such as cryptocurrencies and smart
contracts.

5. Insurtech: Insurtech refers to the use of technology to create new insurance

products and services that are tailored to the needs of individual consumers.
This includes applications such as online insurance marketplaces and
usagebased insurance.
1.8 MONITORING INSTITUTIONS IN FINTECH

In India, there are several institutions involved in monitoring financial

technology (fintech) and ensuring that it operates in a safe and secure
manner.
Some of the key institutions include:

1. Reserve Bank of India (RBI): The RBI is the central bank of India and
isresponsible for regulating and supervising the banking system in the
country. The RBI has established a separate fintech regulatory sandbox to
facilitate testing and experimentation of new fintech products and services.

2. Securities and Exchange Board of India (SEBI): SEBI is the

regulator for the securities market in India and is responsible for
promoting fair and
transparent trading practices. SEBI has also established a fintech sandbox
to
 test new products and services related to securities markets.

3. Insurance Regulatory and Development Authority of India

(IRDAI):
The IRDAI is the regulator for the insurance sector in India and is
responsible for promoting fair and transparent practices in the sector.
The IRDAI has established a regulatory sandbox for testing new fintech
products and services related to insurance.

4. Ministry of Electronics and Information Technology (MeitY):

MeitY is the government agency responsible for promoting the use of
information
technology in India.it has established a fintech hub to provide support and
guidance to fintech startups and entrepreneurs.
5. National Payments Corporation of India (NPCI): NPCI is a not-for-
profit organization that manages and operates the country's payment
systems, including the Unified Payments Interface (UPI). NPCI is
responsible for ensuring the safety and security of the payment systems
and has established guidelines for fintech companies operating in this
space.
1.9 MAJOR SERVICES AND FACILITIES AVAILABLE THROUGH
FINTECH

Financial technology (fintech) offers a wide range of services and facilities

that are transforming the way people access and use financial products and
services. Some of the major services and facilities available through fintech
include:
1. Digital Payments: Fintech has enabled the development of new digital
payment systems, such as mobile wallets, peer-to-peer payments, and
contactless payments, which are faster, more convenient, and more secure than
traditional payment methods.

2. Online Banking: Fintech has revolutionized online banking, enabling

customers to open accounts, apply for loans, and manage their finances online.
This has made banking more convenient and accessible, especially for those
who live in remote areas.

3. Personal Finance Management: Fintech has also made it easier for

individuals to manage their personal finances by providing tools for
budgeting, saving, and investing. These tools can help people make better
financial decisions and achieve their financial goals.

4. Insurance: Fintech has disrupted the insurance industry by providing

innovative solutions such as on-demand insurance, peer-to-peer insurance, and
automated claims processing. These solutions make insurance more accessible
and affordable for consumers.

5.Wealth Management: Fintech has also disrupted the wealth management

industry by providing low-cost investment platforms and robo-advisors. These
solutions make it easier for individuals to invest and manage their wealth.

6. Crowdfunding: Fintech has enabled the development of crowdfunding

platforms, which allow individuals and businesses to raise funds from a large
number of people. This has made it easier for entrepreneurs and startups to
access capital.Overall, fintech has enabled the development of new services
and facilities that are more convenient, accessible, and affordable than
traditional financial products and services. By leveraging new technologies,
fintech companies are creating innovative solutions that are transforming the
financial industry and changing the way people access and use financial
products and services.

1.10 INDUSTRY PROFILE IN FINTECH

The fintech industry is a rapidly growing sector that has been transforming the
way financial services are delivered and consumed. Fintech companies use
technology to provide innovative solutions and services to traditional financial
institutions and consumers. Here is a brief profile of the fintech industry:
1. Types of Fintech Companies: The fintech industry encompasses a broad
range of companies, including payment processors, lending platforms,
investment and wealth management services, cryptocurrency exchanges,
insurance, and banking services.
2. Market Size: The global fintech market is projected to grow from RS-
55000 Crore in 2019 to RS-160000 Crore by 2025, with a compound annual
growth rate (CAGR) of 12.8%. Major Players: Some of the largest fintech
companies include PayPal, Square, Stripe, Ant Group, Robinhood, SoFi,
Coinbase, and Klarna.
3. Emerging Trends: Some of the emerging trends in fintech include open
banking, decentralized finance (DeFi), artificial intelligence (AI) and machine
learning, blockchain, and digital identity.
Challenges: Despite the tremendous growth and innovation in fintech, the
industry faces challenges such as regulatory compliance, cybersecurity threats,
and access to capital.
4. Impact on the Financial Industry: Fintech has disrupted traditional
financial institutions by offering more affordable and convenient services,
enabling financial inclusion, and providing more personalized customer
experiences. Investment and Funding: Fintech has been attracting significant
investment and funding from venture capital firms, private equity, and
corporate investors. According to CB Insights, global fintech funding reached
RS-10000 Crore in 2020.
5. User Adoption: Fintech has been gaining widespread adoption among
consumers and businesses, particularly among younger generations who are
more comfortable with digital technologies.
6. Regulatory Environment: The regulatory environment for fintech
companies varies across countries and regions. In some cases, fintech
companies have faced regulatory challenges, while in others, regulators have
been supportive of innovation in the sector.Future Outlook: The future of
fintech looks promising, with continued innovation and growth expected in the
coming years. Some of the key areas of focus for the industry include digital
payments, open banking, blockchain, and artificial intelligence.The fintech
industry is transforming the financial landscape by introducing new and
innovative solutions that are more efficient, accessible, and affordable than
traditional financial services. As the industry continues to evolve, it is likely to
have a significant impact on the way we bank, invest, and manage our
finances. the fintech industry is a dynamic and rapidly evolving sector that is
transforming the financial industry by leveraging technology to drive
innovation and change.With the post-pandemic impact of high growth via
greater consumption of digital services, equity investing into Indian FinTech’s
has climbed at a CAGR of 26% over the last four years, but more quickly so
from 2020 onward. With 150 deals every quarter, the Indian fintech boom
narrative is still going strong.Although the Payments and Alternative Finance
segments accounted for more than 90% of the sector's investment flows in
2015, there has been a significant shift towards a more equitable distribution
of investment across sectors, including Insure Tech, Wealth Tech, etc. There
are 23 fintech in India that have achieved "Unicorn Status." Fintech makes up
one in five Startup Unicorns. In Q3 2022, India recorded over 23 billion
digital payments totalling INR 38.3 lakh Cr. The number of UPI transactions
in semi-urban and rural India increased by 650%. In 2022, there would be an
increase in aided financial transactions across semi-urban and rural retail
counters in the country of around 25% and 14% in value and volume,
respectively.By 2025, the value of the digital investing market is projected to
reach $14.3 billion, up from $6.4 billion in 2021, with a 5-year CAGR of
22.4%. Tax benefits for money moving to GIFT City's IFSC have been
extended till March 31, 2025. The market for digital payments in India is
predicted to more than treble from $3 trillion now to $10 trillion by 2026.

1.11 FINTECH IN PRACTICE

The most well-known (and well-funded) fintech startups all have one thing in
common: they aim to compete with and ultimately replace established
financial service providers by being nimbler, catering to underserved
populations, or offering faster and/or better service. For instance, banking
business Affirm aims to eliminate the role of credit card issuers in online
shopping by providing customers with a mechanism to get quick, short-term
loans for purchases. Although the rates may be high, affirm asserts that it
provides a way for people with bad or no credit to obtain credit and establish a
credit history. Similar to this, Better Mortgage aims to speed up the house
mortgage procedure with an online-only service that can provide users with a
confirmed pre-approval letter in less than 24 hours hrs of application. Through
its zero-interest promotional periods, GreenSky aims to connect home
improvement borrowers with banks by assisting customers in avoiding lenders
and saving money on interest It provides microloans to customers in the
developing world who have bad credit or no credit by thoroughly analysing
the data on their smartphones to look at factors like their transaction history
and seemingly unrelated things like the mobile games they play. In
comparison to regional banks, unregulated lenders, and other microfinance
organisations, Tala aims to provide these customers with better options. In
conclusion, fintech probably has (or tries to have) a solution for you if you've
ever pondered why a certain area of your financial life was so unpleasant (like
applying for a mortgage with a traditional lender) or seemed like it wasn't
quite the right match.

1.12 FINTECH’S EXPANDING HORIZONS

In its most basic form, fintech unbundles financial services into individual
offerings that are often easier to use. The combination of streamlined
offerings with technology allows fintech companies to be more efficient
and cut down on costs associated with each transaction. If one word can
describe how many fintech innovations have affected traditional trading,
banking, financial advice, and products, it’s “disruption” a word you have
likely heard in commonplace conversations or the media. Financial
products and services that were once the realm of branches, salespeople,
and desktops are now more commonly found on mobile devices.For
example, the mobile-only stock trading Robinhood charges no fees for
trades, and Peer-to- sites like Prosper Marketplace, Lending Club, and On
Deck promise to reduce rates by opening up competition for loans to broad
market forces. Business loan providers such as Kabbage, Lendio, Accion
and Funding Circle (among others) offer startup and established businesses
 easy, fast platforms to secure working capital. Oscar, an online insurance
startup, received $165 million in funding in March 2018. Such significant
funding rounds are not unusual and occur globally for fintech startups.

1.13 The Birth of Fintech

Fintech may seem like a recent phenomenon, but its roots can be traced
back several decades. In the 1950s and 1960s, the introduction of credit
cards and ATMs marked the beginning of the digitization of financial
services.

These innovations allowed individuals to access their money and make

payments more conveniently. However, the true birth of fintech came in
the 1970s with the birth of electronic fund transfers (EFTs). EFTs enabled
the transfer of funds electronically, eliminating the need for paper-based
transactions and introducing greater efficiency and speed in money
transfers.

1.14 The Rise of Online Banking in fintech

The advent of the internet in the 1990s brought about another major shift in
the fintech landscape. Online banking emerged as an alternative to traditional
brick-and-mortar banks, allowing individuals to perform banking transactions
from the comfort of their own homes.

This convenience and accessibility soon gained traction, and banks started
offering online services such as balance inquiries, fund transfers, and bill
payments. The introduction of secure online payment gateways and encryption
technologies further increased confidence in online financial transactions,
paving the way for the rise of e-commerce and digital payments

1.15 Mobile Revolution in fintech

The introduction of smartphones in the late 2000s took fintech to the next
level. With the ability to carry powerful computers in our pockets, we gained
access to a whole new world of financial services.

Mobile banking apps allowed us to check our account balances, transfer funds,
and even deposit checks by simply taking a photo. Mobile payments also
gained popularity, with services like Apple Pay, Google Wallet, and Venmo
allowing individuals to make transactions with just a tap of their phone.

The convenience and ease offered by mobile fintech solutions made them
increasingly popular, challenging traditional banking models and ushering in a
new era of financial inclusion and accessibility.

In the 1990s, the internet began to change the way people access financial
services. Online banking and brokerage services emerged, providing
customers with greater convenience and control over their finances. This
period also saw the introduction of the first online payment systems, such as
PayPal.

1.16 The history of fintech

The history of fintech has been characterized by a series of

technological innovations that have transformed the financial services
industry. Fintech has grown rapidly in recent years, driven by mobile
technology, cloud computing, big data analytics, and blockchain.
However, the industry also faces significant challenges, including
regulatory compliance and cybersecurity. Despite these challenges, the
future of fintech looks bright, with continued growth and innovation
expected in the years to come.

1.17 VISION AND MISSION OF THE INDUSTRY

The vision and mission of financial technology (fintech) are closely tied to the
transformation of the financial industry through innovation and technology.
The fintech industry seeks to improve financial services and make them more
accessible, efficient, and user-friendly for individuals and businesses.
A. Vision: The vision of fintech is to revolutionize the financial industry by
leveraging technology to create innovative solutions that transform the way
financial services are delivered and consumed. This includes making financial
services more accessible and affordable, increasing efficiency and
transparency, and creating new revenue streams for financial institutions. One
of the primary goals of fintech is to democratize financial services by
providing access to banking, lending, and investment services to individuals
and businesses that were previously underserved or excluded from the
traditional financial system. This includes offering services such as mobile
banking, digital lending platforms, and cryptocurrency exchanges that allow
users to easily and securely manage their finances. Fintech also aims to
improve financial services by leveraging technology such as artificial
intelligence (AI), blockchain, and big data analytics. These technologies can
be used to automate processes, reduce costs, and provide more personalized
customer experiences.
B. Mission: The mission of fintech is to create a more inclusive, efficient, and
transparent financial system that benefits individuals, businesses, and society
as a whole. This includes:

1. Financial Inclusion: Fintech seeks to provide access to financial services

for all individuals and businesses, regardless of their location or
socioeconomic status. This includes creating new and innovative services that
meet the needs of underserved populations, such as small businesses, low
income individuals, and those living in rural areas.

2. Efficiency and Transparency: Fintech aims to make financial services

more efficient and transparent by leveraging technology to automate
processes, reduce costs, and provide real-time data and insights. This includes
creating platforms and tools that allow users to easily manage their finances
and make informed decisions.

3. Innovation: Fintech is driven by a culture of innovation and creativity, with

a focus on developing new and disruptive technologies that transform the
financial industry. This includes exploring new business models, creating new
revenue streams, and developing new products and services.

4. Collaboration: Fintech recognizes the importance of collaboration and

partnerships between traditional financial institutions and fintech companies.
This includes working together to create new solutions and services that
benefit customers and drive innovation in the financial industry. Overall, the
vision and mission of fintech are focused on using technology to transform
the financial industry and create a more inclusive, efficient, and transparent
financial system. By working together to achieve these goals, fintech
companies and traditional financial institutions can create a brighter future
for individuals and businesses around the world.

Fintech has the potential to create a more equal financial system, by

providing access to financial services for those who have been left out of
traditional banking. This includes individuals and businesses in emerging
markets, as well as those in developed countries who have limited access to
credit, banking services, or investment opportunities.

Fintech also has the potential to increase financial literacy, by providing

educational resources and tools to help individuals and businesses better
understand their finances. This includes financial planning, budgeting, and
investment advice, as well as resources for understanding financial
regulations and compliance requirements. In addition, fintech can help to
reduce financial fraud and cybercrime, by providing secure and reliable
platforms for financial transactions and by leveraging technologies such as
blockchain and biometrics for authentication and verification.

1.18 STRUCTURE OF FINANCIAL TECHNOLOGY

The structure of financial technology (fintech) can be broadly divided into

three categories: B2B (business-to-business), B2C (business-to-consumer),
and B2B2C (business-to-business-to-consumer). These categories describe the
target customer base and the type of services offered by fintech companies.
B2B Fintech: B2B fintech companies provide services and solutions to other
businesses, such as financial institutions, banks, and payment processors. This
includes software and technology solutions for banking, insurance, lending,
and investment services. B2B fintech companies focus on improving
efficiency, reducing costs, and enhancing customer experiences for their
business clients. Examples of B2B fintech companies include: Stripe: a
payment processing platform that provides tools for businesses to accept and
manage online payments Plaid: a financial data network that allows businesses
to securely connect to customer bank accounts and access financial data
Adyen: a payment processing platform that provides global payment solutions
for businesses B2C Fintech: B2C fintech companies provide services and
solutions directly to consumers, such as digital banking, personal finance
management, and investment platforms. B2C fintech companies focus on
improving accessibility, convenience, and affordability for consumers, and
often leverage mobile and web-based technologies to provide these services.
Examples of B2C fintech companies include: Robinhood: a commission-free
investment platform that allows individuals to invest in stocks, ETFs, and
cryptocurrencies Acorns: a micro-investing platform that helps individuals
invest spare change from daily transactions Venmo: a digital payment
platform that allows individuals to send and receive payments from friends
and family B2B2C Fintech: B2B2C fintech companies provide solutions that
bridge the gap between businesses and consumers, such as digital lending
platforms and financial management tools for small businesses. B2B2C
fintech companies focus on providing solutions that benefit both businesses
and consumers, and often rely on partnerships with other businesses to provide
these services. Examples of B2B2C fintech companies include: Square: a
payment processing and financial management platform that provides
solutions for both businesses and consumers Kabbage: a digital lending
platform that provides loans to small businesses Wealth front: a robo-advisor
investment platform that provides personalized investment solutions for
individuals and businesses Overall, the structure of fintech is diverse and
constantly evolving, with new companies and solutions emerging to meet the
needs of businesses and consumers around the world

1.19 SERVICES AND FACILITIES IN FINTECH

Financial technology (fintech) provides a range of financial services and

facilities to individuals, businesses, and financial institutions. These
services and facilities include:
1) Digital Banking: Fintech companies provide digital banking solutions
that allow individuals to manage their finances online or via mobile
devices. This includes digital wallets, online banking platforms, and
mobile banking apps that allow customers to access their accounts, pay
bills, transfer funds, and deposit checks. Examples of digital banking
fintech companies include: Chime: a digital banking platform that provides
fee-free checking and savings accounts, as well as early direct deposit and
a roundup savings feature Ally Bank: an online bank that provides
checking and savings accounts, as well as CDs, mortgages, and auto loans
Simple: an online bank that provides fee-free checking and savings
accounts, as well as budgeting and saving tools
2) Payment Processing: Fintech companies provide payment processing
solutions that allow businesses to accept and process payments online, in-
store, or via mobile devices. This includes payment gateways, merchant
services, and mobile payment apps. Examples of payment processing
fintech companies include: PayPal: a payment gateway that allows
businesses and individuals to send and receive payments online Square: a
payment processing platform that provides point-of-sale solutions for
businesses, as well as online and mobile payment options Stripe: a
payment processing platform that provides tools for businesses to accept
and manage online payments
3) Investment and Wealth Management: Fintech companies provide
investment and wealth management solutions that allow individuals to
invest in stocks, bonds, and other assets. This includes robo-advisors,
investment platforms, and portfolio management tools. Examples of
investment and wealth management fintech companies include:
Betterment: a robo-advisor platform that provides automated investment
advice and portfolio management Wealth front: a robo-advisor platform
that provides personalized investment solutions for individuals and
businesses Robinhood: an investment platform that allows individuals to
invest in stocks, ETFs, and cryptocurrencies with no commission fees
4) Lending and Financing: Fintech companies provide lending and
financing solutions that allow individuals and businesses to access credit
and loans online or via mobile devices. This includes peer-to-peer lending,
digital lending platforms, and invoice financing. Examples of lending and
financing fintech companies include: Lending Club: a peer-to-peer lending
platform that connects borrowers with investors SoFi: a digital lending
platform that provides student loan refinancing, personal loans, and
mortgages Blue Vine: a fintech company that provides invoice financing
and lines of credit for small businesses
5) Insurance: Fintech companies provide insurance solutions that allow
individuals and businesses to access insurance products online or via
mobile devices. This includes digital insurance marketplaces, on-demand
insurance, and usage-based insurance. Examples of insurance fintech
companies include: Lemonade: a digital insurance company that provides
homeowners, renters, and pet insurance Metromile : a usage-based
insurance company that charges customers based on the miles they drive
Policy Genius: a digital insurance marketplace that allows customers to
compare and purchase insurance products online Fintech provides a wide
range of financial services and facilities that leverage technology to
improve efficiency, accessibility, and affordability for individuals,
businesses, and financial institutions.
 CHAPTER 3
REVIEW AND LITERATURE

Fintech brings about a new paradigm in which information technology is

driving innovation in the financial industry. Fintech is touted as a game
changing, disruptive innovation capable of shaking up traditional financial
markets. Financial technology is recognized as one of the most important
innovations in the financial industry and is evolving at a rapid speed, driven in
part by the sharing economy, favourable regulation, and information
technology. Respected to development technology, Fintech promises to
reshape the financial industry by cutting costs, improving the quality of
financial services, and creating a more diverse and stable financial land-scape

(The FinTech Revolution, ‘2015, Lee & Shin, 2018). Development Research
Project (2013) attempted to understand the financial needs of poor in long-
term and short-term by exploring, how the surplus fund is used to meet short-
term, long-term and emergency requirements to develop strategies for
financial inclusion and designing financial products. The rural households
follow their own strategies of cash management for their daily expenditure and
thereby taking advantage of this, several informal financial institutions and
instruments are serving this section of society. A growing body of evidence
suggests that financial literacy is among the most important determinants of
financial well-being.1 Informed financial decisions have been shown to be a
key factor in making effective financial choices

(Lusardi and Mitchell 2014). Differences in financial knowledge acquired

early in life explain a significant part of wealth inequality during retirement

(Lusardi, Michaud, and Mitchell 2017). Kavuri, A. S., & Milne, A (2018)
new financial technologies (Fintech) have erupted around the world.
Consequently, there has been a considerable increase in academic literature on
Fintech over the last five years. Research tends to be scantily connected with
no coherent research agenda. Significant research gaps and important
questions remain. There is much work to be done before this area becomes an
established academic discipline.

Thakor, A. V (2019) This paper is a review of Fintech and its interaction with
banking. Included in Fintech are innovations in payment systems (including
International Journal of Future Generation Communication and Networking
cryptocurrencies), credit markets (including P2P lending), and insurance, with
blockchain-assisted smart contracts playing a role.

Allen et. al (2020) Fintech, particularly the blockchain, has the potential to be
disruptive to financial systems and intermediation. Our aim in this paper is to
provide a comprehensive Fintech literature survey with relevant research
studies and policy discussion around the various aspects of Fintech.

(Zhang et al., 2018). Peer-to-peer (P2P) lending platforms have gained

significant attention in recent years. Studies have shown that P2P lending
offers an alternative to traditional banking systems by connecting borrowers
directly with lenders through an online platform

(Zhang et al., 2018). This trend has transformed the lending landscape by
enabling individuals and businesses to access loans without the need for
intermediaries.

(De Filippi & Hassan, 2016). Blockchain technology, with its decentralized
and immutable nature, has disrupted the financial industry. Research has
highlighted the potential of blockchain in various areas, including secure
transactions, smart contracts, and decentralized finance

(De Filippi & Hassan, 2016). The rise of cryptocurrencies, such as Bitcoin and
Ethereum, has further demonstrated the transformative power of blockchain in
fintech.

(Chen et al., 2020) Artificial Intelligence (AI) and Machine Learning (ML)
have revolutionized financial technology. These technologies have been
widely adopted in areas such as fraud detection, credit scoring, and
personalized financial advice

(Chen et al., 2020). The use of AI and ML algorithms has enhanced

efficiency, accuracy, and customer experience in various financial services.

(Schuhmacher et al., 2018). Robo-advisory services have emerged as an

automated and low-cost alternative to traditional financial advisors. Research
indicates that robo-advisory platforms utilize algorithms and data analysis to
provide personalized investment advice and portfolio management
(Schuhmacher et al., 2018). These platforms have democratized access to
financial planning and investment management for individuals.credit markets
(including P2P lending), and insurance, with blockchain-assisted smart
contracts playing a role.

Allen et. al (2020) Fintech, particularly the blockchain, has the potential to be
disruptive to financial systems and intermediation. Our aim in this paper is to
provide a comprehensive Fintech literature survey with relevant research
studies and policy discussion around the various aspects of Fintech.

(Zhang et al., 2018). Peer-to-peer (P2P) lending platforms have gained

significant attention in recent years. Studies have shown that P2P lending
offers an alternative to traditional banking systems by connecting borrowers
directly with lenders through an online platform

(Zhang et al., 2018). This trend has transformed the lending landscape by
enabling individuals and businesses to access loans without the need for
intermediaries.

(De Filippi & Hassan, 2016). Blockchain technology, with its decentralized
and immutable nature, has disrupted the financial industry. Research has
highlighted the potential of blockchain in various areas, including secure
transactions, smart contracts, and decentralized finance

(De Filippi & Hassan, 2016). The rise of cryptocurrencies, such as Bitcoin and
Ethereum, has further demonstrated the transformative power of blockchain in
fintech.
(Chen et al., 2020) Artificial Intelligence (AI) and Machine Learning (ML)
have revolutionized financial technology. These technologies have been
widely adopted in areas such as fraud detection, credit scoring, and
personalized financial advice

(Chen et al., 2020). The use of AI and ML algorithms has enhanced

efficiency, accuracy, and customer experience in various financial services.

(Schuhmacher et al., 2018). Robo-advisory services have emerged as an

automated and low-cost alternative to traditional financial advisors. Research
indicates that robo-advisory platforms utilize algorithms and data analysis to
provide personalized investment advice and portfolio management

(Schuhmacher et al., 2018). These platforms have democratized access to

financial planning and investment management for individuals.