Financial Technology: a challenge or opportunity for Indian banks?
Fintech is a booming now. In the finance sector, this “Fintech” term has gained significant momentum and the industry is booming nowadays. There have been new innovations with the Fintech, for example, the new technologies like Artificial Intelligence, Block chain, Quantum Computing, Robotics, Cloud Computing, etc. To know more about Fintech technologies and application, visit NBL.
Fintech firms like Paytm offer mobile wallet for online payment. These wallets have become the preferred mode of payments as people walking into branches have decreased. Indian Banks are now afraid of such fintech companies. Banks are worried about their businesses because of these mobile wallet fintech firms.
Earlier, Fin tech was only used for the back-office operations in the banking sector. However, now the banking sector has adopted the innovations of Fin tech. These innovations of Fin tech have completely changed the operations in the banks. An advanced computer program like “chat boat” is being used in the banks to handle the customer queries. Also, fraud detection (using AI), biometric security, and digital transactions.
Although Fintech has helped banks a lot in different operations, there might be some areas where Fintech is a challenge for Indian banks are facing now. Some members in the financial sector recognize that banks have started competing with Fintech start-ups like payment service providers. So, they feel that Fintech is a challenge for the traditional banking industry. On the other hand, others believe that this is a chance for the Indian banks to turn that challenge into an opportunity.
The State Bank of India endeavoured to turn the challenge into an opportunity by launching its integrated digital banking platform called “Yono”. Yono stands for You Only Need One. SBI integrated almost all its services into this application to provide its customer's true digital experience. Similarly, HDFC bank also started ane-Wallet app called “PayZaap”. It’s actually linked with the HDFC savings account.
To collaborate with FinTech's and deliver truly transformation value, banks need to be clear about the innovation model, the scope and mandate for innovation, procurement and retained technology functions. Banks also need to determine how best to engage with FinTech's, given the contrasting sizes and cultures of their respective organizations.
Conclusion It is important for both the banks and the Fin tech firms to work together in partnerships in order to obtain the full benefits of innovation. So, Banks should partner with the Fin tech firms instead of competing with them.