In India, there are approximately 48 commercial banks that provide services to the country's billion-plus population. With this ratio and the current economical growth of India, we would need 10x the number to service the population. Hence, the emergence of fintech is nothing but simply a logical extension of banks and their functions.
The emergence of fintech
Traditional banks have various physical, regulatory, and technological hindrances to service the ever-growing population. This is especially true in the rural and semi-rural areas, which are poised to propel the next growth phase of the country. The fintech come to the rescue acting either as Digital BCs (business correspondents), Neo-banking platforms, or wallets that connect the banks with their customers via the ever-increasing smartphone penetration.
Fintechs/digital banking is changing the banking scenario across the globe as they have a lot to offer from fast services to reach in the remotest corners of the world, digital banks got it all. They have a bright future as the generation and every upcoming generation will be completely tech-savvy and by using digital banking technology as an apparatus we can achieve this smooth and faster way of banking.
The benefits
In addition to these banks being so convenient, they have other benefits like, they are paperless which means you don't have to physically go to a bank and fill out forms for services like opening a bank account, changing services, etc. Everything will be available with a few clicks in the comfort of your space.
Fintech/digital banks also provide anywhere-anytime customer services, it's available throughout the year at all times. They also have their own AI-driven chat box that helps customers solve queries within minutes. It also saves time and money for both the banks and customers when compared to traditional banking customer services.
The challenges
As of today, the biggest challenge faced by any new fintech entrant in this space is compliance with the RBI/regulatory norms. However, the RBI /Regulators work in tandem with fintech to solve this. As for the traditional banks, it becomes difficult and economically unviable to modify their legacy systems to suit today's need for doorstep/internet-based instant banking. This is where fintech, with its ultra-modern technical prowess, steps in. They connect banks to the customers with their tech intuitive and user-friendly interfaces.
In conclusion, we should see fintech and traditional banks as complementary to each other and not competing or segregated entities. The future of banking is API-based banking where all the participants work in tandem to serve each Indian.
(Finny Jose K, the Chief Executive Officer and Founder of Neofam)
