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How Fintech Is Helping Businesses In a Way Traditional Banks Couldn't

Fintech is an emerging and here's quick understanding of the game. Read ON!

Fintech Out of the many FinTech players in India, there are very few players that are emerging as winners.
They create sustainable business models that have the capacity to weather the ups and downs of the unpredictable economic cycles. These business models focus on retaining customer loyalty and evolving customer expectations and customer experience.
Other key areas include strengthening IT infrastructure in an environment of exponential technology advancements, seeking appropriate funding, using data-points to their advantage, lowering cost of operations and offering value-added offerings.

Let us looks 5 key factors that lead to the success of FinTech companies

Funding Environment

Funding needs to be available to the Fintech Companies through VC and PE firms for them to grow. In the past three years, Indian FinTech has witnessed more than 120 deals worth $2 Billion.

Technology & IT Infrastructure

Technology and IT infrastructure can be considered as the foundation of the Fintech industries. The FinTech infrastructure has been strengthened significantly with the host of options available to market participants such as BBPS, Bharat QR, India Stack, UPI.

Value Proposition

A lot of FinTech companies focus on segments where the customers are the most receptive. By understanding the pain points of the customers and addressing them will help them build a sustainable business which creates and adds value. Across FinTech, three segments i.e. Millennials, small business and underbanked, offer most opportunities to FinTech businesses

Cost of Operations

Numerous FinTech companies have a cost advantage. They can leverage technology to:

- Reduce the cost of distribution

- Seamlessly onboard, thus leading to lower customer acquisition cost

- Reduce servicing cost for customers

Innovative Use of Data

Big Data and analytics offer great potential to understand the needs of the customer and offer personalized products and services. They drive operational cost efficiencies that give rise to altered business models

Quick Loans

Financial technology is changing the way money is being lent or paid. There is no need to turn to banks or relatives to borrow money in case of emergencies. Many Fintech companies are now offering apps for loan directly to the consumer.

The FinTech lenders assess the borrowers’ creditworthiness quickly and automate the underwriting process. These new models allow FinTech lenders like MoneyTap to offer loans to a range of borrowers. MoneyTap’s personal line of credit can be interchangeably used as a business loan, personal loan, education loan – whatever your financial need is, it can be easily met with MoneyTap’s credit line.

How is FinTech Driving Sustainable Goals

FinTech doesn’t just make money transactions easier but it is even helping in making our planet green. How?

- Crowdfunding is connecting investors and green initiatives. FinTech cannot be mentioned without crowdfunding. This kind of investment has shown a lot of promise for environmentally friendly campaigns.

- The new lending practices focus on helping environmentally conscious student secure loans for college.

- A new group of green finance leaders can be seen who are disrupting the form of lending. They have been able to step forward and provide sustainable solutions where their traditional counterparts could not. The technology required for achieving sustainability and green practices will require aggressive financing, which the traditional lending cannot support. This is where FinTech companies come in to change the game.

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Any facts, figures or references stated here are made by the author & don't reflect the endorsement of iU at all times unless otherwise drafted by official staff at iU. This article was first published here on 11th September 2018.

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