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CIOs Will No Longer be the Most Influential Technology Decision Makers

Fintech companies need to invest in developing their cyber security frameworks and ensuring safer and more secure digital payments experience for their users.

Harshil Mathur, CoFounder & CEO, Razorpay

The year 2016 registered an impressive impact on the Indian economy and therefore was a landmark year for fintech and banking industries. This year, 2017 started out to be an exciting one for Financial Technology which will spell out a future of continued scale and disruption for the industry, especially after India’s digitalisation movement. With the proliferation of cloud and mobile technologies advancing and customer demand for better digital banking experiences growing, Fintech firms will continue to innovate faster and offer new services with richer user experiences.

Fintech firms will position themselves at the center of customer’s financial universe.

Harshil Mathur, CEO & Co-Founder, Razorpay feels, “Fintech in 2017 may still be in its early stages in India but it’s about to get even better this year.”

We asked Harshil Mathur to list out five trends for 2017 and explain how P2P lending and cyber security contribute to Fintech.

Top 5 Trends to watch out for: 

I) Mobile Everything: The traditional banks and fintech solution providers have been putting resources into improving their mobility. More importantly, the focus on mobile-first is enabling FinTech companies to become more customer-driven, which equals better experiences for consumers.

II) Chatbots, machine learning & AI: One of the most common cited trend to watch this year is the rise of chatbots in banking, powered by increasingly intelligent systems based on artificial intelligence (AI) and machine learning. The chatbot is not a new innovation, but implementing this in business context is new. This can make a real difference for banks when they interact with customers. Instead of queries being handled by IVR (Intelligent Voice Recording) which customers typically don’t enjoy, chatbots will offer real-time interaction on a mobile device which helps save cost and increase customer satisfaction. User cases of chatbots in fintech extends to messaging apps such as Telegram who has recently rolled out digital payments and integrated with Razorpay for chatbot payments, wherein users of Telegram 4.0 and later updated versions can pay for goods or services through bots, which will include a Pay button to their messages.

III) Banks & Fintech firms to partner: Over the past few months, we’ve seen a dynamic shift in the relationship between fintech and more traditional bankers. Both are now reliant on each other’s respective advantages to build better customer experiences. For banks, fintech partnerships offer a fast and iterative approach to innovation without the need for massive capital expenditures -- and they can also help to promote a higher standard of trust with customers. For fintechs, banks come to the table with deep pockets, massive customer bases, vast amounts of real-world infrastructure and big data. According to a recent Business Insider report, 87% of banks that have partnered with financial service providers (fintech companies) have been able to cut costs. Additionally, the same study found that 54% of partnerships increased revenue.

IV) Blockchain moves out of the labs into the real world: Block-chain has received a lot of hype, especially through the lens of bitcoin. 2017 will be the ‘year of the pilot’ for blockchain in financial services, as it moves from proof-of-concept into production and we start seeing operational success, not on a large scale but at least in the early stages. We should see this in particular in cross-border payments and trade finance. Overall, however, blockchain will still be restricted to the ‘low hanging fruit’ in banking.

V) Reforming Digital Leadership: CIOs will no longer be the most influential technology decision makers. With the continued rise of the Chief Digital Officer and in many cases the Chief Marketing Officer will help financial institutions usurp the IT team in implementing ‘digital’ throughout the organisation. Technology success is as much to do with organisational structure as it is with technical know-how.

On Peer-to-Peer (P2P) Lending 

This is one area where technology has made a significant contribution and will emerge as the most prominent alternative investment opportunity, both for customers and organisations. SMEs and MSMEs who have been squeezed hard from demonetisation and bank loans may have come to a halt, they would be the biggest beneficiary of P2P lending due to faster and cheaper access to credit. However there is one grey area for this sector - lack of guidelines and regulatory provisions from the government. Last year RBI had put out a discussion paper on P2P lending in India and proposed registering P2P lending platforms as non-banking financial companies (NBFCs). The guidelines are progressive and does a lot to safeguard the interest of everyone involved. We hope that sometime this year, the guidelines can become regulations, which will then give a major fillip to the sector.

Credit lending in India is still in nascent stages. It is no doubt a huge opportunity in a credit starved country like India but there are no big players so far. Anyone who can solve out for the lack of data, using technology and flow information to build good lending profiles will lead the space. There are lot of companies trying to solve this out, we will have to wait to see which ones end up leading it.

On Cyber Security 

With more data now available in digital formats and penetration of online & phone banking services increasing, it makes it easier for enterprises to gather enormous amounts of customer data to analyse and generate insights but also makes the data more susceptible to security breaches.

Fintech companies need to invest in developing their cyber security frameworks and ensuring safer and more secure digital payments experience for their users. Companies need to raise the awareness about secure digital practices, both within their organizations and their consumer base. The lack of knowledge about cyber security and threats can often give rise to security vulnerabilities.

Further, cyber security concepts like data labelling, selective data sharing and identity-aware data sharing hold possible solutions to this problem. Also embedding security as part of the initial design phase by identifying business use cases and developing threat models and associated controls is one possible method to ensure the development of secure technologies. According to business chamber Assocham, fintech companies would increase their spending on this to around $100 million.


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