What do you mean by Fintech?
Fintech is generally known as Financial Technology. It is a method of using technology and other digital ways to deliver and provide support for any kind of financial services, this process helps the service providers to integrate their products or services with technology to reach end-users more reliably and efficiently.
Fintech is mostly used by Banking, Insurance and Stock Market trading sectors. Here we are discussing present scenario of these sectors having a positive impact of fintech in their business due to Covid-19. According to an estimate the worldwide fintech pie worth about 4.7 trillion dollars in 2020.
Fintech in Banking Sector Post Covid-19 Crisis in India
Indian economy is a traditionally cash-driven economy, but that tends to change day by day and the current Covid-19 crisis has given it a boost. Demographically 40% of India’s population is aged between 24-35 years. These young populations are more attracted towards the banks which are offering digitalized services of banking i.e., eBanking. About 46% of today’s bank customers are using various digital channels for their personal banking. Providing all banking services through digital platforms is both cost and time-saving.
Private sector banks are way ahead of public sector banks in using technology to reach their customers. Private sector banks are providing many additional services like Opening DMAT account, Credit cards through online mode. Public sector banks are seeing an opportunity to provide additional services.
Number of UPI (Unified Payments Interface) transactions hit the highest record of 1.49 billion in July. No. of UPI truncations is seeing nearly 10% of a hike every month. This shows that there is a clear adoption of digital payments by customers.
Before the Covid-19 crisis there were fewer services provided through digital platforms but post Covid-19 crisis we could see a lot more banking services active through online mode. Banks are aiming to enhance customer experience to retain their customers.
Fintech in Insurance Sector Post Covid-19 Crisis in India
Indian insurance industry has been followed by traditional ways of business with its clients and customers. Unlike banking sector, technological advancements in insurance industry had started late. One of many reasons for such delay can be customer interactions. Compared to banking customer interactions, insurer and insure interactions are very less. In recent years, customers’ expectations had changed and therefore the insurance companies are trying to switch from traditional to digital methods. Consumer behavior is changing day by day and companies need to cope up with it.
Since past 2 – 3 years, all the insurance companies are focusing on technological ways to make their services easy to access, Covid-19 crisis gave them both opportunities and threats to this industry business. Due to lockdown restrictions, there is a change in thinking way of people and businesses. People are encouraging more contactless tractions. This may lead to a permanent change of way insurance business works. As per insurance analyst at global data, 90% of insures new business premiums are from bancassurance and agency channels, which resulted 32.6% decline in premium as April 2020 compared to the previous period.
This decline is showing a gap between reality and needs, insurtech which seeing growth in past 4 years, can fill this gap by coming up with innovative ideas for the disruptive insurance industry.
This permanent nature of changes in people thinking due to Covid-19, leads insurance and technology advancements to take it to another level. In the coming years we may see taking insurance policy may only take few minutes and claims inspection done through drones. Whatever changes it is exciting to witness those innovative changes. We can say insurance industry and insurtech industry are positively affected by Covid-19, startups are coming with solutions and biggest industry companies funding them is speeding up the advancements.
Current scenario of Covid-19 made insurance markets with opportunities and increased competition between companies to grab the golden chance of change-makers and survive in the market.
Fintech in Stock Market Trading Post Covid-19 Crisis in India
Despite Covid-19 crisis trading in the stock market has seen a spike in activity, There can be many reasons for such spike, it can be due to discount broking apps, work from home for employees and students, etc.
Market regulator SEBI is making many efforts for the customers to open a DMAT account, they are trying to make the process of opening an account as simple as possible. The process of Authentication using Aadhar made the opening of a DMAT account effortless.
By looking at above chart we can interpret that 0.6 million new demat accounts were opened in only April 2020, this is higher than the average number of demat accounts opened in a month in FY 2020 (0.4 million accounts).
According to the SEBI report, 1.2Million new DMAT accounts were opened in March and April with Central Depository Services. Whereas only 4.2Million DMAT accounts were opened in 11 months between April 2019 and February 2020.
Many stock broking companies using technology to reach and have frequent contact with customers. Brokering companies are also providing tips to trade which is attracting customers to open new accounts and it is also helping them to retain their customers.
The chairman of SEBI, Ajay Tyagi in 17th Annual Capital Market conference asked the stock exchanges to introduce blockchain technology on a trial basis initially with real-time settlements. This shows that SEBI is urging the stock markets and stock markets brokers to use technology to deliver a smoother experience to end-users.
In today’s world of globalization, Technology plays a crucial role and is changing day by day, So is consumer behavior and everyone is gearing up to use technology relentlessly. The integration of Finance with Technology is giving better results to both companies providing financial services as well as to the customers.
By analyzing the data in the article we can understand that there is clear adoption of digital technology by people and there are a lot of opportunities for banks, insurance companies and stock market brokerage companies to explore digital technology. We can expect to see a lot more digital and innovative ways of reaching the customer in the near future.
This article is co-authored by Prof Syed Hasan Jafar, Professor, Woxsen University, Sharan Kumar Kolli & Sai Preethi Gattu, Woxsen University.