Even as the financial pressure consolidated earlier this year, the fintech sector was there to ensure that businesses don't crumble under it by extending a steady supply of capital to SME businesses.
As we are about to part ways with 2017, the year has pretty much offered what everyone expected, maybe much more than that. In the wake of demonetisation late last year, the country was literally standing in the middle of a financial flux, leaving customers stranded without cash and businesses without capital. But, India successfully managed to deliver despite this overwhelming hiccup.
The credit largely goes to an army of fintech startups that were relentlessly at play in the background. Even as the financial pressure consolidated earlier this year, the fintech sector was there to ensure that businesses don't crumble under it by extending a steady supply of capital to SME businesses.
The change in the tax regime was also another milestone and engraved the role of the fintech sector more prominently in the new India that's coming to fore.
The year has pretty much offered what everyone expected. It has cemented the significance of the fintech sector in India. From increased momentum behind digital payments to product innovation in digital loan disbursement platforms, the entire sector is leaving no stone unturned to ensure that the nation functions the way it does and achieves the two-digit growth rate that it has persistently been longing for.
2018 promises to be a great year for FinTech industry with increasing digitization and data availability. Here's what else we can expect from the fintech sector in the year to come and the top trends that will dominate this rapidly evolving space:
The fast-paced digitization has unlocked fresher avenues for fintech players, especially the ones associated with SME-based lending.
With the increased digital adoption by business owing to demonetization and the rollout of GST, both of which have exponentially increased the business-centric data, 2018 will be the year of action for SME lending-based fintech players. Policy support towards small business lending will ensure greater capital flows to alternate lending platforms. This will be matched with product and demand side innovations.
With everything going digital, loan officers can't be too far behind. Enhancement of customer experience is further being taken to another level by deploying advanced virtual agents, both text, and voice-based. OCBC Bank, Singapore, launched a chatbot 'Emma' in collaboration with an Indian AI-based platform CogniCor in January this year.
Within 4 months, the self-learning AI chatbot was able to log 20,000 conversations and more than 10% of these became mortgage loan sale prospects, which translated into $10 million in home loans. Two months further into operation and the self-learning chatbot was able to successfully close home loans worth $23 million. Such intervention will be more ostensibly seen in India as the deployment has already begun for the automated customer and business-centric lending.
Machine Learning and user experience
2018 will also be the year for adoption of new regression models driven by Machine Learning. Machine Learning, which is a branch of Artificial Intelligence, will be leveraged by fintech players to discover an in-depth understanding relating to customer behaviour, expectations, and responses. Machine Learning will, additionally, be leveraged in tandem with Big Data to forecast consumer demand and cater to it in a customized manner.
What's it like when you enter a café and the café owner sends your favourite drink to the table without you even asking? Now, relate the same experience to when you order Short Macchiato and get a Cappuccino instead? Makes a difference, right? Great difference. Fintech start-ups are aiming to give you an experience somewhat similar to the former. They're bringing a higher degree of personalization by leveraging as much of the customer-centric information at their disposal as possible.
All of this is being done through automated algorithms that scrape everything from historic transactions, preferences, and supply chain partnerships, down to critical metadata embedded into user information. This helps them to extend an evolved customer experience and we are going to witness substantial improvements in this sphere in 2018.
Our nation has taken a giant stride in the realm of technology by developing its own blockchain network. For the uninitiated, blockchain is a distributed ledger system that makes data manipulation virtually impossible through verification by other stakeholders in the network.
A brainchild of NITI Aayog, IndiaChain will be the largest blockchain network across the nation. Not just across the nation, once operational, IndiaChain will also be the largest blockchain implementation led by any state in governance across the globe.
It will offer Indian fintech players the benefit to leverage this network to their advantage while competing with their global counterparts. This will speed up contract enforcements, minimize the frauds, and increase transparency while bringing higher efficiency and precision in operations.
UPI (Unified Payment Interface) and AEPS (Aadhaar-enabled Payment System) have paved the way for an open banking channel in 2018. The government's impetus on UPI and Bharat QR Code has also changed the game for multiple fintech start-ups and made it more rewarding for them to add more weight to their merchant solutions in comparison to retail customer-facing services.
Clearly, merchant-centric services will become more prominent for fintech players betting big on state-of-the-art technology. What will transpire is an evolved experience!
Physical and Digital Merger
In India, despite a commendable effort to bank the unbanked, a majority of the Indian population is still deprived of access to banking services till date. Businesses, on the other hand, have enough data to prove their creditworthiness but fail to acquire credit because of conventional scoring mechanisms that banks use.
Lately, fintech startups have begun collaborating with banks and helped them in making good use of their data and increasing precision in their lending. Both, customers as well as businesses, experience the best of both worlds through a unique confluence of physical and digital services of banks and fintech startups. This collaboration will promptly amplify in the year to come.
In a nutshell, as the roaring-new engine of the economy has been firmly fixed at its place, the fintech sector will be the one fuelling growth and driving India to new economic heights in the coming year.