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Role of technology in the fintech ecosystem: 2024 and beyond

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By: Atish Shelar, Chief Operating Officer (COO), Tech Fini

 

The fintech industry in India is growing at an exponential rate, with many predicting the market to reach $1 trillion in valuation by 2030. Many enabling factors, like active innovation and technological advancements in the business models, coupled with favourable regulatory environment and an extensive talent pool, have propagated the prospects for the fintech ecosystem.

The growing adoption of state-of-the-art technologies, including artificial intelligence (AI), machine learning (ML), blockchain, and cloud computing have particularly emerged as the key contributors that are helping the sector grow. These technologies serve as the backbone of the fintech revolution in India, where existing and modern players have been able to offer personalised, innovative, and secure financial experiences to their users, whilst improving efficiency, boosting productivity, and fostering financial inclusion.

However, let us understand in-depth the impact that advanced technologies have made on the fintech ecosystem and how these advancements will shape the future of the industry.

Embracing the AI-first mindset

AI has been around for quite a few years, but its recent contribution to the world of banking and financial services signifies that it could be the next big disruptor. Considering its potential, players in the industry have already transitioned or are keen to adopt an AI-first mindset. Besides performing human-like interactions through virtual assistants, AI algorithms has played a significant role in analyzing suspicious activities, thereby averting frauds. AI has also proven to be a valuable tool for Fintech players to make accurate predictions, anticipate user behaviours, and personalise solutions, merely on the basis of past data. This has helped in making precise recommendations and improve user experience.

Alleviating security using blockchain

Fintech players have found blockchain to be an effective solution to secure transactions, combat fraudulent activities, and promote transparency in their operations, while many others are unearthing its use to reduce transaction costs and improve business efficiency. This aspect enhances other key benefits like boosting the revenue by eliminating identity theft problems, managing business risks, and focusing on end-to-end user experience. Moreover, the technology’s capability to record and synchronise data using DLT and speed up money transfers by eliminating intermediaries has transformed the way financial activities are delivered and shows potential to revolutionise the entire Fintech ecosystem.

Adoption of IoT

Most players are relying on IoT to gather real-time data about user preferences, experiences, and needs, which can be leveraged to offer personalised services. The objective to provide this extent of personalisation is to reinforce user engagement and improve the quality of customer experience, making financial services secure, reliable, and user-friendly. Other use cases of IoT in the fintech industry are distinct and beneficial, including its ability to resolve transaction issues and detect frauds using real-time analytics and without any human intervention. Thus, all-in-all, IoT is being widely adopted to ascertain risks, improve security, and streamline complex business processes.

Accelerating cloud migration

Migrating to cloud computing has enabled fintech companies to offer tailored user experiences, obtain real-time feedback, strike interaction with customers, and address grievances immediately. In addition, the cloud has also stood out as a powerful ally in securing and managing data due to its automated and integrated security controls. Such efficient working not only helps to extend exceptional customer services, prevent frauds, and process payments, but also build solutions and introduce new features that can appeal to users, offering a wider scope to attain a competitive edge.

What does the future hold?

While the aforementioned technologies are continuing to transform the fintech landscape, the ongoing innovations in the industry are likely to catch pace at an accelerated rate and achieve sector-wide operational excellence. A blend of traditional methods and modern technologies will help the industry optimise its potential and rise to great heights. The future is indeed promising!

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