There is no better example of evolution than what we have seen in the financial world. From traditional in-person banking to internet banking which eventually moved from your desktop to the comforts of your palms through mobile banking. The strides that technology has taken have further changed the way we bank today introducing us to digital banking.

Improvements in hardware in terms of new improved gadgets, higher bandwidths of data at minimal prices and software in terms of e-commerce platforms has completely revolutionised the payment Industries. In areas where traditionally banks enjoyed a monopoly once, they have come to realize the competitiveness that tech-enabled processes have brought in. High-end technologies backed excellent services to customers and add on services moving away from mere transaction processing have made things better for both sides of the spectrum.

A recent report from Finch Capital, a venture capital firm, suggests that the pandemic could ultimately end up benefiting the fintech industry by accelerating the rush for digitization. COVID-19 is expected to change how society behaves and make digital-only the new norm for financial services. As the fintech sector struggles through the economic fallout of the pandemic, the crisis could ultimately end up benefiting the fintech industry by providing opportunities of growth amid the adversity.

The report further observes that the fintech industry has been serving the needs of banks across the board providing rapidly advancing technological innovations from robotics to artificial intelligence and machine learning. It has offered banks newer ways to transform their businesses without replacing core banking systems, which has ensured good growth and has also witnessed higher investments in the banks.

Technology in finance was hitherto, relegated to be the back-end support system for many companies. Venture capitalists too had not seen the importance of it and barely invested in the sector. However, over the last decade everything has changed. Venture capital has ensured a good amount flow to the sector. Investments by VCs have increased from 5% to 20% in fintech firms. As fintechs grew, global banks rolled up corporate venture arms and digital incubators, investing, acquiring, and improving solutions from emerging start-up companies.

The coronavirus crisis is literally changing the way we transact, deal with, record, and use money. This fast emerging new normal which is a new paradigm of ‘low-touch, high-tech’ economy is literally driving enterprises to migrate their businesses online. Fintech’s are poised not just to grow but will boom. While previously, both traditional companies and laid-back customers had reservations about innovations like digital banking, the pandemic has quickly got them off the fence.

New technologies such as machine learning, Internet-of-Things, artificial intelligence, blockchains, and cloud computing are the major drivers of growth for fintech companies today. These new technologies are driving consumer preferences and decisions today ranging from purchases to how they manage their money. Traditional banking and financial services players consider fintech as a disruptive phenomenon in the financial world. Few of them are embracing the latest technological innovations and are transforming the industry outside in, succeeding in areas traditional players have failed in. Fintech companies are now leading the industry by focusing on the major purpose of making money management easier and more effective.

Getting access to funds has become much more transparent and less centralized, and the traditional way of borrowing money from a bank via loans and mortgages is being complemented by options like crowd funding and peer-to-peer lending.

Fintech companies are developing good business propositions at lightning speed. We have only begun to scratch the surface of what is possible and likely to happen in the next few years. Fintech startups need to instil greater confidence among Indian customers who are very cautious in accessing financial transaction processing options digitally. Overcoming a few challenges in the financial sector, especially in the regulatory and data protection space can help to win consumer trust.

When it’s all about going cashless fintech’s have already made it easy with wallets and online payments. Today most of the banks are living in the same old model of surviving on CASA whereas consumer needs have moved much beyond; they want to see a consolidated dashboard and no single line items. With the increase in competition in the offerings, with the AA model, (account aggregator) banks will have to provide the information of the account holder. Fintech companies are being nimble and will be able to access the information and build better products for consumers. The onset of challenger banks is another area of challenge for the functioning of banks. Fintech companies are going to be fast on the innovation front making Banks the custodian of the money and taking over the remaining functions. Open banking platforms is another area which will further help fintech companies to have a greater control over the customer. Management of other requirements like investment management by helping invest in mutual funds, fixed deposits, insurance, alternate investments, etc., from a single account will add strength to what fintech companies can do going forward. The times are changing for the better.

By Raj N., Founder, Zaggle, Entrepreneur