Digitalisation in the finance sector offers the opportunity to enhance customer interactions.

Although the increase of digital players in the financial industry in the past few years has eased the common man's struggle to get access to funds, digital transformation has created an overwhelming buzz since the coronavirus (COVID-19) outbreak. Digitalisation in the finance sector is crucial to thriving in this competitive world. In this case, fintech has emerged as the most effective lending channel, transforming the traditional way of banking and the end-to-end customer journey.

Financial technology or fintech has unlocked numerous opportunities for tapping the massive substantial database of customers allowing a robust digital foundation. It digitalizes business operations, improves production capabilities, resource management and employee efficiency. It also delivers enhanced customer experience by getting deeper behavioural insights and introduces an additional level of transparency.

The global fintech market is predicted to reach US$460 billion by 2025.

Digital Transformation is shaping the Finance Sector

Transformation with Fintech

Fintech combines all the modern technology that banks and financial businesses employ to improve the delivery of financial services. It includes services like the use of ATMs and electronic cards to digital banks and blockchain technology. Financial technology has revamped the finance sector by using automation and machine learning techniques to escalate customer experience. Future fintech money-makers include the use of automated chatbots that are available 24×7, online budgeting tools to regulate money spending, and spending tracker to monitor funds.

At each level, integrating automation technology and machine learning (ML) addresses all pain points in financial business operations. Fintech concentrates on fixing operational issues such as budgeting and customer service. Unusual financial activities that typically elicited a phone call from a bank representative can now use robocalls to verify purchases. Although this strategy is controversial, its usefulness must not be questioned.

Fintech will no longer have an ephemeral presence in the future of the financial sector as all financial institutions like banks and MSMEs are openly embracing fintech and foresee it as an investment opportunity.

The Impact of Fintech Platforms on Indian Economy

India is one of the fastest-growing economies, where fintech platforms have accelerated greater proposition, especially during the COVID-19 pandemic. Digital lending has reached its potential, not entirely though, to catapult the Indian MSME's productivity, offering a meaningful market opportunity for both innovative start-ups and traditional lenders. "Fintech companies have been providing innovative personalised high-end solutions for easy and smooth transaction processing," states Raj.N, Founder and Chairman at Zaggle. "MSMEs have now understood the importance of accepting technological interventions in their day-to-day operations and Fintech has acted as a strong catalyst in driving smooth businesses processes devoid of disruption."

MSMEs are the backbone of the Indian economy contributing to India's employment and its gross domestic product or GDP (29.7%).

Coronavirus outbreak and worldwide lockdown have pushed several industries including MSMEs to embrace digitalisation to stand in the digital world. Fintech platforms enable individual to have easy and transparent accessibility in achieving financial requirements to cater to their needs, by sitting at the comfort of their homes or offices, avoiding visit branches and long queues. "Covid-19 has compelled SMEs and MSMEs to adopt digitization and that has seen demand for products and services from FinTech's rise," expresses Raj. "A new paradigm in the form of a contactless world has opened up immense opportunities for companies in the Fintech space."

Future Prospect of Digital Technologies in the Finance Sector

It is no longer an option to stick to old analogue ways and manual habits for any industry, including the financial sector. And for those who are looking to improve efficiency and competitive appeal, adoption of digitalisation is a must.

Maximising Data Use

The financial industry is one of the first industries to begin collecting consumer data, and consequently, is a goldmine of customer information. However, this data has very little value without the analysis and interpretation that can turn it into a valuable business asset. Digital transformation is the connection between the raw data and intelligence that can be used in everything, from business strategy to improving customer relationships.

Enhancing Product Delivery

Financial services products benefit massively from digitalisation. Digital products help create efficiency and process savings, and extensive appeal. Millennials are a key generation for the financial industry right now, and expectations among that demographic are focused on appealing products that are easily accessible, flexible and low cost- digitalisation helps financial sector businesses to develop by enabling these features.

Customer Interactions

Digitalisation in the finance sector offers the opportunity to enhance customer interactions. From customer service bots to clear and concise applications and social ads, through digital transformation this industry can serve a wide range of consumers, speaking a language that they understand. The outcome of ongoing relationships adds a higher business value.

Adopting digitalisation starts with operational structures and processes. It could help with delivering data analysis and reporting to incorporation with other systems. Thereby, fintech is a comprehensive upgrade for financial institutions and to meet businesses requirements.