Table of contentsSummaryIntroductionInvesting in FintechIs it Fintech or Techfin? Who will win the race?Blockchain will revolutionizeThe new mainstream: digitalConclusionSummary The evolution of the Internet has disrupted and even broken some of the conventional industries throughout the 1990s and the 21st century. Just think of the recording industry that was completely wiped out by online streaming, or the high street fashion stores that were taken over by online retail stores. However, it is believed that the only sector that will resist change is the financial sector, but this has also been proven to be false. Today, this sector is evolving faster than any other sector. These days, we often come across the word “fintech”. What does that mean? Fintech = Finance + Technology. It is an innovative technology that competes with traditional financial methods. The financial sector is considered a complex sector, but in the 21st century it has changed and continues to change. Fintech can evolve as a powerful tool by leveraging consumer spending habits, lifestyle, and addressing customer pain points using BIG Data Analytics. For example, Fintech has the power to change the underwriting procedure in the banking sector by taking into account the customer's daily activities to approve their loan proposal, which will not be visible in their banking transactions. We have seen how the Amazon credit card has helped increase the credit score of people with bad credit history. This article is designed to explain how fintech can enable greater access to finance and the disruption it is and will cause. Say no to plagiarism. Get Custom Essay on “Why Violent Video Games Should Not Be Banned”?Get Original Essay Introduction “Money” is a primary factor in any industry and in our daily lives, it is natural to consider fintech as seemingly endless. This has become important today, starting with providing digital services for transferring money, facilitating the banking process and storing money in our digital wallets. The competition in this sector is increasing day by day. Many companies are coming up with new innovative solutions by integrating advanced technologies such as AI, Big data, Blockchain and more to get ahead of their competitors and provide their customers with the most advanced solutions to their problem. This helps people make informed decisions. compared to previous eras. It also increased credibility through transparency. For many years, banks benefited from government regulations for the financial industry that prevented newcomers from easily entering and starting their businesses, but that all changed after the stock market crash of 2008. Banks created a deep hole in consumer trust and support. The mix of distrust sparked by banks and technological advancements such as encryption, cloud computing, AI, blockchain, etc. has created a perfect storm for Fintech companies to rise to the occasion. Demonetization has also been one of the main reasons for the recent growth of fintech in India. Before the demonetization announcement, Paytm and the digital payments sector did not have much growth, but after demonetization, their growth increased by 3 to 4 times. The p2p lending sector, which is a booming sector growth, has also been accelerated by fintech. Due to high interest rates and difficulties in obtainingbank loans, many people have started to turn to p2p. These changes have not only attracted startups but also the most innovative companies in the world like Apple, Google, Amazon, etc. who have created their own mobile payment systems such as Apple Pay, Tez, Amazon Pay. Many companies have started investing more in fintech companies. Global investments in fintech increased tenfold between 2010 and 2017. The reasons for the rapid growth of fintech are rising customer expectations, abundance of venture capital financing, decreasing barriers to access to financial technologies. entry and acceleration of the technological revolution. These forces create a scenario in which customers are increasingly comfortable with fintech. Globally, more than 50% of the population uses at least one form of non-traditional financial technology. Fintech success is not about money, i.e. it is not about focusing on money but about deciding who their target customers are and how to clearly define how they considered as target customers. Let's say, for example, that Millennials (those born between 1981 and 1996, who will currently be between 20 and 30 years old) will care about different things than Generation X (those born between 1965 and 1980, who will be between 40 and 50 years old). . . Millennials and Gen Z are not interested in high-end luxury cars like Ferrari or Rolls Royce. They don't even give importance to brands, but they give importance and look at the purpose and values ​​that these service providers provide to them. Millennials and Generation Z behave differently than Baby Boomers or Generation X in digesting and retaining information about products or services. We need to remember that those in their 20s who grew up playing video games still perpetuate the habit. This gives us an idea of ​​how companies should satisfy them. For example, most grandfathers and great-grandfathers focused on wealth creation, which resulted in a large amount of generational wealth. But at this stage, people are less focused on wealth creation. They simply inherit wealth. We see the change in behavior. Fintech can provide services to these types of people by acting as an intermediary. There are many opportunities to monetize, it just depends on how we approach the problem and solve them and most importantly how we portray our target customer. The financial sector has undergone such an evolution that some banks now only exist in the form of applications. Like Flipkart and other e-commerce spaces where everything happens in the virtual world, even banks have started operating in this mode. Although the appeal among customers is very less, this model could dominate the market in the future by reducing the number of physical banks. Investment in Fintech Indian fintech has seen a higher level of capital infusion than before in the industry. Several macroeconomic factors, such as India's fastest growing economy, large population and increasing digital penetration, etc., have fueled the growth of investments in this sector. According to NASSCOM, India's fintech market will reach $2.4 billion in 2020. There are many new generation fintechs. with cutting-edge technology that is more valued than traditional banks. Several global financial technology hubs are being created around the world, such as London isconsidered a hub for open banking solutions, while China has mastered the field of facial recognition and Israel is well known for its cybersecurity. The number of transactions concluded in India is increasing compared to China. The number of venture capital investments in China fell from 49 to 29 in the last quarter of 2018. The number of fintech deals increased by 61% in early 2019. According to data from CB Insights, Venture Capitalist invested approximately $890 million in approximately 130 fintech deals. in the Asian market. Is it Fintech or Techfin? Who will win the race? More non-traditional companies are successfully capturing the market faster than traditional financial institutions. And now, both have understood the synergies they can create by collaborating. At the same time, tech giants have also started offering financial services, e.g. Apple Pay, Google Pay, Amazon Pay, etc., and creating solutions in the Techfin space. What is fintech and techfin? Do both convey the same meaning? Is there a big difference between them? Not much difference. Depending on their underlying organization, it is classified as fintech or techfin. Companies that offer financial services efficiently using digital technologies are called fintech. For example, a mobile banking application by respective banks are a great example of fintech in traditional businesses and in non-traditional businesses we can say venom, billdesk, paypal, etc., on the other hand fintech are the businesses whose core business is technology, but they also provide financial products as part of the service. business. The best example is Google Pay, Alipay, PhonePe, etc. Collaboration will bring greater benefits to both sides of the court. The logic behind this is that most fintech startups will have a spirit of innovation, they will be more customer oriented, etc., but what they lack is the scaling and strong brand recognition that are available in traditional companies. It will therefore be a win-win situation for both parties involved in their collaboration. According to the World Fintech 2018 report, most fintechs focus on narrow segments or that are not served by traditional companies, but the problem for them is growing. With the kind of legacy of traditional companies and the technical support of fintech startups, they will create value for both. The major challenge is to establish an ecosystem where everyone can benefit from others. Jack Ma, founder of Alibaba, said: “In the future, the financial industry will have two big opportunities. First, traditional businesses will go digital, such as online banking. A second Internet bank will be created and will be entirely managed by third parties. In both cases, success depends on how the company uses customer data, learns from that information, and delivers an offering tailored to customer needs. An important point to note here is that big tech companies already have enough of a customer base, or we might even be bigger than traditional banks, but what they lack is the TRUST created by these banks. It is reserved for them only. Without gaining trust, it becomes difficult for them. That too, in the tension over their data privacy, it becomes extremely difficult for them to gain people's trust. So to fill this gap, they definitely need help from traditional banks, where traditional banks haveneed high-end technologies. As we said before, it will be a win-win situation for both parties if they collaborate. Companies that increasingly focus on experience and make things easier will succeed in a competitive environment. This is the secret mantra of disruption. Most fintechs have understood this very well. Banks have the knowledge and heritage, but fintech challenges them technologically. It is time to rethink the banking value chain. There are few things that are important to maintain in this emerging fintech sector. Collaboration is key, or in other words, the sharing economy will be integrated into every part: In the near future, people will need banking services, but it will not be in its current form. Sharing will start slowly in the financial sector, like Ola, Uber, etc., sharing here means decentralized assets and effective use of this information to find the service providers rather than automatically going to the bank. Most of us think of financial services companies as the ones that take care of the end-to-end process of transactions. But they only act as intermediaries or take care of part of the process. Similarly, some fintech companies based on peer-to-peer transactions lend people money by partnering with traditional banks. This type of business model exists in the United Kingdom, China and the United States. As mentioned earlier, many fintech companies focus on specific and particular problems in the value chain. According to the survey conducted by PwC, the result shows that 44% of people who earn less than $75,000 per year would trust technology companies more than traditional financial companies for p2p loans and this percentage is increased to 68% for the category. of people who earn more than $100,000. There are a number of companies that act as facilitators. This allows people to raise funds or, in other words, borrow money for various purposes. Bankers are the ones who connect the dots between people who have money and who need it. But in the future, as we point out, this will not be the case. Apple has filed a patent for p2p money transfer using mobile devices. If this happens, it will disrupt the retail lending format. People use it more than traditional banks because of the high costs associated with commissions and other fees etc. This is enormously expensive for traditional banks who also maintain branches in less densely populated areas. These banks are trying to partner with domestic fintech companies to create an alternative distribution channel. M-pesa in Kenya would be the best example of this, where it accepts deposits and payments through mobile phones and agents. Even in India, the postal department aims to apply for a small finance bank license. This is because the postman knows every corner of his neighborhood. It will be easy for him to reach customers. So, initially, it appears that the Postal Service has an excellent market base. For example, people who want to deposit can hand their money over to the postman who will collect it from their doorstep. This makes the process easier for people. Even ING is testing the transformation of the mobile phone into a point-of-sale terminal as part of a pilot project in certain regions of the world. In this informal, tech-savvy world, the informal segment will not pose a big hurdle for fintech startups as a larger number of people.