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Jose Thattil

Jose Thattil is CEO & Co-founder at Phi Commerce.

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How Digitisation is Changing the Face of BFSI Segment in India

With use of artificial intelligence, data analytics and block chain for risk assessment, claims management and sales, the Insurance sector is witnessing massive transformation, especially in areas of fraud control, faster on-boarding and improved consumer experience.

While financial technology or FinTech is not a relatively new phenomenon for the Indian economy, it gained renewed attention and impetus only post the massive demonetisation drive in 2016. Evidently disruptive in its approach, the technology has revolutionised finance and banking services, redefining the roles of transactions and re-establishing a more innovative, seamless, multichannel and efficient system, almost shattering the traditional banking system. Backed by several government initiatives across sectors, the FinTech segmenthas become a strong force leading the revolution for the traditional financial services, emerging as a flag bearer of a confident and progressive national economy.

Viewed as a millennia phenomenon and crafted out by the new age start-up revolution, digitisation has transformed the nature of all financial interactions across platforms, sectors, and consumer & business segments. Some of the key sectors leading this transformation include:

1. Payments

Although plastic money has been around for quite some time, the digitisation on Payments through the introduction of mobile wallets, P2P transfer applications, smartphone and point of sale technologies has made payments one of the most revolutionary of all FinTech offerings. Supportive policy framework combined with ease of operations and accessibility across multiple platforms is further set to drive acceptance of digital payments. A hybrid and innovative ecosystem that is agileand offers solutions to consumers and merchants which are easy to use, have universal acceptability, most apt payment mechanism and highly secure are becoming part of mainstream retail digital payments.

2. Marketplace Lending

Also known as alternate lending, this refers to the un-conventional mode of data analytics for establishing credibility of consumers for lending. The online lending platforms (P2P, MSME), now buzzwords among the FinTtech circles, drive intelligent data collection and analysis to facilitate informed and accelerated decisions on the credit worthiness of the borrowers, thus cutting down drastically on time and cost, while enhancing customer experience, agility in offering solutions and brand loyalty.

3. Insurance Technology

Digitisation is driving growth of the Insurance segment by cutting down on risks, costs and time, and creating an efficient and shorter insurance value chain. With use of artificial intelligence, data analytics and block chain for risk assessment, claims management and sales, the Insurance sector is witnessing massive transformation, especially in areas of fraud control, faster on-boarding and improved consumer experience.

4. Wealth Management

Wealth management, a crucial forte once considered to be the privilege of the few intelligent bankers, is undergoing a makeover globally with a unique hybrid automation approach – a combination of robot advisory and human intellect driven service. Creating a fine example of human values of empathy, understanding and assurance, backed by robotic data analysis and competent risk assessment, the sector is set to further expand with innovations in AI and ML technologies.

Evolving relationship between FinTech & traditional BFSI Players 

Traditionally the BFSI segment has been known for its tough regulatory framework, meticulous documentation and lengthy and often cumbersome processes. Riding high on the wave of the IT revolution, the FinTech segment offered an alternative to consumers and corporates alike, transforming consumer experience, simplifying processes and re-creating a much faster and integrated format of financial transactions across platforms. Viewed as a competition to the traditionally rooted banking and financial segment in its earlier days, today, FinTech has become a strong backbone of the BFSI segment, working in a collaborative ecosystem that is redefining consumer experience through intelligent innovation.

Future scope: 

One of the key factors arresting the growth potential of FinTech in India is thedigital readiness of the economy that is plagued by lack of a uniform and consistently operational infrastructure, absence of superior connectivity, lack of technologically skilled manpower, lack of digital literacy among consumers and a larger, wide spread lack of trust and awareness about the evolved digital platforms for transactions.

However, focused government initiatives, under the ‘digital India’ campaign are slowly but surely creating a difference in bridging this gap. Further, initiatives that interact at the grass root level with citizens, like the Digilocker, eSampark, eLearning, Aadhaar linking etc., are acting as effective catalysts in both digital literacy and awareness of benefits among citizens.

Upcoming Technology Trends in FinTech to look out for:

- Artificial Intelligence (AI) & Machine Learning (ML)

AI is set to rule the FinTech segment, bringing in intelligent automation and strongly supporting data analytics driven functions. Largely a part of AI, Machine Learning (ML) is a more agile format that responds promptly to analytics with reliable solutions and approach. Together, for the FinTech segment, these technologies will be responsible for creating prompt and personalized customer experiences, backed by data driven insights.

- Block chain

The new buzzword in FinTech circles – Block Chain, is fast gaining acceptance in the Indian Financial services sector. Based on the principals of Distributed Ledger Technology (DLT), the concept has promising potential to create a transparent and trustworthy transaction environment. Although nascent in India, the Block Chain can be expected to take over 3 key segments of financial services in India, namely Payments and Funs Transfer, Smart Contracts and digital identity.

Focus on Data Analysis and integration

While financial institutions and FinTech start-ups are bringing about a significant change in the financial services segment through collaborative effort, the future lies in integration of these services which are focused strongly on accurate and efficient data analysis. As Mr Jose Thattil, CEO, Phi Commerce Payment Solutions envisions, “The current FinTech environment, with its multichannel digital platforms, offers a unique advantage to access meaningful customer data and insights. Banks and financial institutions have woken up to the massive potential of this data to identify specific customer requirements, create better opportunity for customer delight and explore scope for innovative services. If leveraged efficiently, data analytics will drive the future of FinTech to ultimately create a seamless and integrated Omni channel service approach which further opens newer revenue models.”

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house

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