How Fintech is reshaping banking in India!! Here’s how

Written by- Yashika Singh Rathore

FinTech is reshaping the banking sector completely. FinTech or Financial Technology is the technology and innovation that aims to compete with traditional financial methods in the delivery of financial services. It is an emerging industry that uses technology to improve activities in finance. At its core, FinTech is utilized to help companies, business owners and consumers to better manage their financial operations, processes, and lives by utilizing specialized software and algorithms that are used on computers and, increasingly on smartphones.

The FinTech sector is booming, with a record of $91.5 billion in global funding so far this year; that’s almost twice as much as what the sector collected in the entirety of 2020. Forty-two FinTech companies became unicorns in the third quarter alone, making up a third of total unicorn births, according to CB Insights’ State of Venture Report.

The reason behind FinTech’s success is simple, as FinTechs offer services available via non-traditional channels such as social media, and various online services empowering customers to a greater extent, by prioritising its 24/7 access. They act as a threat and a challenge to laid back traditional financial services providers by being easier to access, serving an underserved segment with providing faster and/or better service.

The very simplicity that underlies banking products and processes for savings, lending, and business services renders the sector ripe for disruption. Majority of the financial sector executives, i.e., around 73%, agrees that consumer banking is most likely to be disrupted by FinTech.

Traditional players (like banks) are still in their early stages of customer-oriented solutions, when compared to what FinTechs propose. Only half of the respondents from the banking sector (53%) believe that they are consumer-centric, as compared with over 80% for FinTech survey participants.

India is amongst the fastest growing FinTech markets in the world. There are more than 2100 FinTechs in India today and over 67% of them have been setup in the last 5 years.

The Indian FinTech market has been growing rapidly and its value has reached around $31 billion and is estimated to reach $84 billion by 2025. Paytm is a major example of growth in the sector. Paytm’s listing grew 370 times from Rs.120 crores in 2010 to Rs.16,600 crores 11 years later.

Since, FinTech is growing with a rapid success rate, major challenges than what they’re facing today awaits the banking sector, if they don’t adapt modern methods used by FinTech in coming future.

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