Financial Technology & Traditional Banks also known as the buzzword fintech, refers to a range of innovations and technologies that compete with traditional financial methods for the delivery of financial services.
FinTech Firms & Traditional Banks Are Moving in the Right Direction
Finance seeps into our everyday lives, both for individuals and companies. Therefore, it is only right that financial services and banking keep up with the times and integrate technology into almost all, if not all, of their processes. India is home to the third largest FinTech community in the world. Indian FinTech market is second only to China and the US. Its value is $31 billion, or roughly Rs. 2,40 600 crores) by 2021- the Indian FinTech market, which is valued at $31 billion (roughly Rs. FinTech is projected to grow at a Compound Annual Growth Rate (CAGR) of 22 percent in the next five years. In 2021, FinTech companies in India received 3x more funding from private investors. These numbers tell a powerful story, but we are just beginning.
It’s natural to wonder what these numbers will mean for India’s market, given the promising results and the direction that the market appears to be heading. How will it impact the economy, how money is spent and how do banks work? FinTech offers an attractive proposition to India’s economy and is essential to understanding the nationwide restructuring in this sector.
India was very underdeveloped in terms of bank services prior to digitization. Traditional banks were primarily focused on a small group of customers – wealthy individuals and large corporations – but this has changed. A number of FinTech firms have entered digital lending to capitalize on the vast potential Indian market. This will likely solve the problems of chronically undereducated segments.
Understanding FinTech’s Rise
FinTech refers to the enhanced and digitalized delivery of financial services. This includes education, retail banking as well as non-profit fundraising, and investment management.
The growth of digital payments has opened up new opportunities for credit democracy. This trend is expected to continue as the digitization of merchants, corporates, and consumers creates a vibrant digital payment ecosystem.
The payments industry is constantly changing and continues to attract last-mile customers and those who cannot access branch banks or ATMs.
Customers can now enjoy a seamless, easy-to-use, and rewarding digital payment experience thanks to the widespread adoption of smartphones.
Trends in MSME digitization
Recent structural changes have affected the way Micro, Small & Medium Enterprises, or MSMEs, conduct their day-to-day operations. MSMEs have been able to optimize both their front-end as well as back-end operations by using digital payment options.