Mobiles due to Technology have driven a huge growth and entered a new era of data induced solutions. For more than a decade, mobile devices have transformed based on their users’ wish lists and with the progress in this transformation our telecom industry has also undergone a drastic change in technology and entered into a new era of Data solutions. Mobile devices have evolved with the new innovations in technology. It can be said that the development in mobile devices is directly proportional to the growth and innovations in technology. The figure below shows the advancement or evolution in mobile technology.
With these evolutions, the economic growth and ease of use for mobile users took a giant leap for the finance industry too, which turns out to be the new era for transformation today. Some innovative Geeks developed an e-payment system initially with the help of debit and credit cards which were issued by banks.
As a result, innovative tech service ideas were pitched by some startups like Paytm, PhonePe etc. in India and have proved to be a game changer for economic evolution in India. The “cash to cashless movement” in India gained rapid growth due to the attraction of customers and merchants to earn cash-back.
This transformation took place with the global ecosystem which also evolved in America, Asia Pacific and the European region. This led to development of business opportunities which could be integrated and scaled. Mobile device and technology innovation working collaboratively with the telecom industry gave birth to a new era called “Fintech” or Financial Technology.
Its aim: make it easy for customers and merchants to pay or accept payments using a mobile payment solution with multiple options. NFC technology has also advanced allowing debit and credit cards to be used by placing them near the POS machine instead of inserting them into the POS and entering a password.
This results in saving around 5 minutes during each transaction. These savings would be helpful for merchants in interacting with customers. Other options for payments are UPI (Unified Payment Interface), QR, USSD, etc. These features save time for merchants in receiving a payment as payments are pushed in a single click instantly.
Initially this mobile payment option started as a platform centric service, with the advancement and support of government bodies, an unique method of payment processing with banks was adopted i.e. UPI which is interoperable across all platforms.
As per the report published by KPMG, India has the fastest adoption of different services like financial, mobile marketplace, utility and bill payments, payment containers and government’s inspirational move towards digitization.
With the fast growing mobile payment options, security of data is an important factor which may cause vulnerabilities. As a safeguard, the government has mandated the use of KYC or Aadhar Card to validate bank accounts, wallets or other interfaces of mobile payment. In rural areas, the government has launched attractive new schemes and policies to educate the people there and enroll them.
In urban areas, Fintech companies are moving to rescale the payment ecosystem. The Government in India is adopting these methods in government bodies as an example, laws relating to toll tax payment on national highways are being made either totally digital or through mobile payments.
In another innovation, the Fintech companies and the government are working on the USSD payment enabling a person in any part of the world to pay their bills using USSD. Initiatives have started for the penetration of USSD adoption. India is growing wings in the area of digital infrastructure and digital payments. For USSD payments, it is working towards global alliances with different countries. These will strengthen the UPI network all over the world.
Trending Innovation in Fintech
Financial technology is growing with a new methodology: Unstructured Supplementary Service Data (USSD). It is a mobile system for GSM technology which uses a USSD code dedicated to each sim card. The Indian Government has launched a portal (called Mobile Seva) to make it easy for citizens to make cashless payments from anywhere in the world. The portal provides complete information regarding USSD payments with security for mobile payments. The Government has started an initiative for “out-of-the-box” innovative fintech startups. These initiatives give a platform for different solutions to promote under government bodies.
Fintech is evolving and involving different technologies like AI, IoT and blockchain. It is trending and a buzz today. Fintech is revolutionizing using blockchain technology for easy and seamless transactions. It is expected that financial services would adopt this blockchain technology and these concepts which shall result in cost reductions and remove the inefficient bureaucracies in the traditional banking sector.
Blockchain and fintech: a combination which would reduce the time spent by clients and banks. Mobile Network providers have also upgraded their platforms for mobile payments for the ease of their customers. Mobile payment methods and fintech have been adopted by retail and online markets. It has a huge potential due to POS (point of sale) systems, meaning that if XYZ Retail Company sells you a product, you pay to a bank or any payment platform and that platform pays the retail company. The banking sector is adopting this to take advantage of fintech and blockchain.
Various banks are providing API’s and multiple options for mobile payments to encourage their use. This reinforces the concept of banks as a service but creates a hurdle for the finance companies. In the banking sector, fintech and cryptocurrency play an important role in adopting bitcoin currency too which is acceptable in various countries across the world except India.
In the US, acceptability of crypto-currency is growing, opening up different opportunities in the banking sector and financial technology. Banking, Fintech and blockchain also help in bridging the gap between manufacturers or suppliers and customers. Let’s take an example: Tesla Inc. (TSLA) offers its own car insurance, Greensky Inc. (GSKY) helps home improvement contractors by offering finance to borrowers, and Affirm puts credit into an e-commerce check-out experience. The consumer does not need to shop for finance, it is available at the point of sale.
In conclusion, this is a disruptive technology not only replacing many current systems across different sectors but also saving approx. 10-15 minutes for customers on each transaction. From the banking point of view, an employee saves more than 20 minutes on every interaction with customers. Fintech is here to stay and evolve, more change is coming, lets enjoy this disruption. In the end, the customer always wins!
Rajat Singhania, is the founder and Chief Visionary Officer at the SocioRAC Online LLP, a web/ mobile application company based out of India. The views expressed are his own.