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FinTech
Industry

Fintech or financial technology generally refers the use of modern technologies in offering various financial services to the customers. With the increased usage of mobile technologies, internet connectivity the fintech market in India has bloomed tremendously giving rise to 23 “fintech giants”.

Company Case Studies

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FinTech Industry Case Study

TYPES OF FINTECH

  • Payment gateways: Payment gateways are services that allow businesses to accept online payments. Payment gateways encrypt sensitive information, such as credit card numbers, to ensure that information is securely transmitted between customers and merchants.

              Eg:- Razorpay, Paytm, PayU, etc.

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  • Mobile money transfers: Mobile payments are money transfers from one mobile phone to another. Mobile payments can be made via mobile apps or mobile web browsers.

              Eg:- UPI, Mobile banking, etc.

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  • Budgeting App: The Budgeting app is a tool that helps you manage your finances and plan your future spending. Track your income and expenses, set financial goals, and create a budget that fits your lifestyle. With so many different budgeting apps out there, it's important to find one that fits your needs.

              Eg:- Mint, TrueBill, EveryDollar, etc.

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  • Consumer Banking: Consumer banking is when banks serve individual consumers rather than businesses. Services offered by consumer banks include checking and savings accounts, mortgages, personal loans and credit cards.       

              Eg:- Usage of ATMs, debit cards, credit cards, online banking, mobile banking, etc.

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  • Robo-advice and stock trading apps: Robo-advice is a type of financial advice provided by computer algorithms rather than by human financial advisors. Stock trading apps are apps that allow users to buy and sell stocks and other securities.

              Eg:- Zerodha, Upstox, Stash, Robinhood, etc.

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  • Insurance: Insurance is a contract between two parties in which one party, the insurer, agrees to pay the other party, the policyholder, a certain amount in the event of a specified loss.

              Eg:- car insurance, health insurance, life insurance, homeowners insurance, renters insurance, travel insurance, etc.

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  • Blockchain and Cryptocurrencies: Blockchain is the digital ledger for all cryptocurrency transactions. It will continue to grow as the "ready" block is added with a new set of shots. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. Bitcoin nodes use the blockchain to distinguish between legitimate Bitcoin transactions and attempts to reissue coins that have already been issued elsewhere. Cryptocurrencies are digital or virtual tokens that use cryptography to secure transactions and control the creation of new entities.

              Eg:- Bitcoin, Ethereum, DogeCoin, Litecoin, etc.

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  • Peer-to-peer lending/crowdfunding: Peer-to-peer lending, also known as crowdfunding, is a type of financing that allows individuals to borrow or lend money without the involvement of traditional financial institutions. Peer-to-peer lending platforms connect borrowers with investors willing to fund loans. These platforms are usually online and use the latest technology to facilitate the loan process.

             Eg:- 12% Club, Kickstarter, Indiegogo, etc.

VARIOUS FINTECH SEGMENTS IN INDIA

  • PayTech (Paytm, PhonePe, Mobikwik)

  • LendTech ( M-swipe, Razorpay)

  • Digital Banking ( Yono, Khatabook)

  • InsurTech (Policy Bazaar)

  • Wealth Tech (Zerodha , Smallcase)

  • Others

RISE OF FINTECH IN INDIAN MARKET

  • India ranks among the top nations of the world when it comes to Fintech markets.

  • There are 6,636 FinTech startups in India and its estimated market cap is set to reach $150B by 2025.This particular domain has seen an exponential rise in funding over the last few years, with $8.53 Bn invested in FY22 alone.

  • India has produced Unicorn giants which includes BharatPe, PhonePe, Cred, etc. over the past few years.

Who are the different types of Fintech users?

1. Consumer

Consumer fintech users are individuals who use financial technology, or fintech, to manage their personal finances. This can include using mobile apps to track spending, budgeting, and saving; using online tools to compare financial products and services; or using digital platforms to make payments or investment decisions.

 

2. B2C for small businesses

B2C for small businesses fintech user refers to the process of providing financial technology services to small businesses. This may include activities such as accounting, invoicing, and tax preparation. The goal of B2C for small businesses fintech user is to help small businesses save time and money by using technology to automate financial tasks.

 

3. B2B for banks 

In this context, it refers to the relationship between banks and fintech companies. Fintech companies provide innovative financial technology solutions to banks and other financial institutions. This partnership between banks and fintech companies is beneficial for both parties. Banks can benefit from the latest technology solutions offered by fintech companies, while fintech companies can gain access to the banks' customer base.

 

4. Bank’s business clients

These user are those who use financial technology to help them run their businesses. This can include anything from online banking and accounting to mobile payments and invoicing. Fintech can help businesses save time and money, and it can also make it easier to manage their finances.

FINTECH TRENDS

1. Digital Wallets:

Fintech is an emerging industry that uses technology to provide financial services. Digital wallets are one of many services offered by fintech companies. A digital wallet is an electronic device that stores financial information, such as credit card or bank account numbers, and allows online or in-person transactions. You can use it to make purchases, send money to friends and family, and pay bills. There are many different digital wallets, each with its own set of features. Some digital wallets are linked to specific retailers or banks, while others can be used anywhere. As the use of digital wallets increases, so does the trend in this rapidly changing industry.

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2. Blockchain:
There are some important blockchain trends in fintech worth mentioning.
First, blockchain is increasingly being used to streamline financial transactions. This is because blockchain provides a secure and efficient way to track and record financial data.
Secondly, blockchain will also be used to create new financial products and services. For example, some startups are using blockchain to create new digital currencies.
Finally, blockchain is also used to secure and secure financial data. For example, many banks use blockchain to store and manage customer data.

  

3. Embedded finance:

Embedded finance is the integration of financial products and services with non-financial products and services. This integration is typically done via an API. This allows non-financial companies to offer financial products and services to their customers without building their own financial infrastructure.

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  • Providing financial products and services via chatbots and other conversational interfaces: This allows businesses to offer financial products and services to their customers in a more convenient and attractive way.

  • Integrate financial products and services into existing customer journeys: This allows companies to offer financial products and services at key points in the customer journey & when purchasing or signing up for services.

  • Offering subscription-based financial products and services: This allows companies to offer financial products and services on a regular basis. This is more convenient for customers and can generate more recurring revenue for your business.

  • Use data to personalize financial products and services: This will enable businesses to use data to better understand their customers and provide financial products and services better suited to their needs.

  • Automating the delivery of financial products and services: This enables businesses to use technology to automate the delivery of financial products and services, making the process more efficient and convenient for customers.

                                          

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4. Serving Traditionally Underserved Populations:

The fintech industry is booming, with new companies emerging every day. This is good news for previously underserved populations who have had difficulty accessing financial services. There are many fintech trends that cater well to these demographics.
First, mobile banking makes banking easier on the go. This is especially helpful for those who live in rural areas or have busy schedules.
Second, peer-to-peer lending platforms give people access to capital they might otherwise not have. This will help level the playing field for small businesses and entrepreneurs.
Third, financial education programs are becoming more popular. This helps people better understand how to manage their money and make wise financial decisions.
Fourth, biometric technology confirms identity and protects against fraud. is being used more and more for This is important for those who are often victims of identity theft.
Finally, customer service is more personalized and responsive. This makes it easier for people to get the help they need when they have financial questions or problems. All of these trends are positive and are helping to make the financial system more accessible to all.

FACTORS BEHIND GROWTH IN INDIA

India’s fintech segment is bound to show exponential growth in future with digital payment sector being the most remarkable. Certain key factors shaping the fintech revolution include the following:

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  • Hassle-free Payments: Various apps like GPay, PhonePe have made the life of people easy by introducing digital payments system which has made everyone go cashless insuring smoother transaction of payments.

  • Organized personal wealth: These super apps have also introduced the concept of digital banks which have allowed people in simple and efficient management of their money.

  • Cloud banking facility: These cloud-based banking have helped in eliminating physical servers and shifting towards cloud infrastructure which ensures faster, preciser, and smooth banking operations.

  • NLP-based chatbots : These facilities aim at improving user interaction by using AI systems to design and develop machines that efficiently read and understand human language.

  • Advanced payments security: They are vulnerable to cyber attacks, hence they offer a wide range of security parameters ranging from encryption, employing firewalls and antivirus, multifactor authentication, and many more.

FINTECH TECHNOLOGIES

Blockchain:

Blockchain is one of the most in-demand technologies in the world today which has expanded its root to almost all the sectors of the market and fintech is no exception.

  • Finance apps that are powered by blockchain help in smooth P2P transactions without any intermediate costs.

  • It provides smoother and faster transactions. Earlier, the transactions which took weeks to get transferred from one bank to another, now with the help of smart contracts, it is transferred instantly.

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IoT:

Internet of things refers to the way how the entire system is connected with each other through wireless networks, thus sharing huge amounts of data in form of signals from one server to other devices.

  • IoT provides enhanced data protection with the reduced risk of online fraud.

  • IoT also assists in analyzing huge amounts of data and information thus making the tasks easier for banks to maintain balance sheets, appraisal sheets, and financial plannings.

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AI:

  • AI has a huge scope in the fintech industry. It helps in taking decisions faster than humans by using algorithmic trading which is a pre-programmed set of instructions .

  • One of the major advantages of AI in fintech is that it can predict any irregular pattern of transactions which eventually helps in tracking fraudulent activities.

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Cloud Computing:

  • Cloud technology offers benefits to the organization by replacing physical servers with cloud computing which is cost-efficient.

  • With the increasing competition, there is a need to deliver operations more efficiently with improved performance. This can be easily achieved with the help of cloud computing.

  • Cloud technology comes in very handy when we want to ensure the backup of our private data in a safe location.

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Security:

  • Fintech companies are the go-to targets for hackers, hence fintech cybersecurity is of utmost importance.

  • To prevent such data breaches, various security measures have been taken which include cryptography, encryption, tokenization, etc.

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