#4thIndFintech – Making Finance Faster, Stronger, Higher – Together?

Bengaluru: CFA Society India, in collaboration with CFA Institute, the Global Association of Investment Professionals, hosted its 4th India Fintech Conference 2021 during September 24, 2021 – September 25, 2021. The theme of this year’s conference was ‘Fintech: Making Finance Faster, Stronger, Higher – Together?’

The virtual conference provided an excellent opportunity for around 200 registered delegates to learn and network with some of the best minds in the industry and fellow CFA® charterholders. In the 4th edition of CFA Society India’s Annual Fintech Conference, we delved deeper into how technology is making finance more agile, increasing its reach and also becoming more inclusive.

The history of finance goes back hundreds of years and is anecdotally associated with the Knights Templar and the creation of Switzerland. The rules and regulations created over centuries led to the Medici Bank and the modern banking system.

The advent of technology is changing the old order across industries. Finance is no exception and Fintech has the potential to enhance or automate financial services and processes. The lines of payments, banks, ecommerce, chats, smart phones, telecoms, technology are all blurring. The power of increased distribution and creation of platforms is immense. Stripe which is recently valued at $95 billion is essentially seven lines of code. In roughly a decade, Ireland’s Collison brothers have built a company that’s worth more than Barclays and Deutsche Bank combined.

The fintech revolution in India has been driven by the India Stack with Unicorns, such as Zerodha, relying on various aspects of India Stack for account opening and payments says Nikhil Kumar, Co-founder & Chief Evangelist, Setu, in his session “Account Aggregators & Implications for Indian Financial Services”. Account Aggregators (AA)  will revolutionize investing and credit as it aims to streamline financial data flow. There will be a 10x shift in consumer experience as an end-user once AA framework comes into play. The framework will compile all the digital impressions of the customer at one place and make it easy for lenders to access it. It would aid individuals and small businesses in securing loans from Banks by sharing financial data digitally with ease across institutions. On one hand, data cannot be shared without the consent of an individual, and on the other, AA does end-to-end data encryption, thereby ensuring complete data privacy.

The rise of Fintech has opened up a gamut of possibilities for the businesses as they can offer more services than ever at a reduced cost. During his session on ‘Emerging Canvas for Entrepreneurs’, Abhishant Pant, Founder of The Fintech Meetup, opined that though peer-to-peer (P2P) lending was expected to disrupt the consumer lending business, but like the U.S. and China, it is struggling to take off in India too. As part of the Fintech sector, the P2P platforms were expected to create a change in the lending market, similar to that of digital banking, but plays only a minor role owing to multiple reasons, emerging right from the profile of the borrower to the restrictions that Reserve Bank of India has put on the businesses to prevent it from creating any undiversifiable risk to the economy.

With the boom of technology in the Financial Services domain, our data is vulnerable to ‘Social Engineering’. RBI’s move from Card-on-File solutions to Tokenization comes as a rescue says Abhishant Pant. The tokenization could be a key to drive blockchain implementation in the future. Start-ups are using tokenization to bring varied benefits to the companies, including raising capital, expansion and diversification. He even stated that early stage start-up M&As are missing in India and has a great potential to contribute back to the ecosystem.

Chaitra Chidanand, Co-Founder, SALT, Simpl in her session ‘Fintech-The Bridge to Inclusion’ shared her insights on Fintech and Economic Inclusion, especially for women, stating that the key to inclusion is to break the inertia. There is a lack or inhibitions in women to discuss financial matters. Most of the current Fintech solutions are on supply side and that leads to pushing of products that are the most profitable but not tailor-made. Innovation is required to make financial products flexible to accept non-linear income stream, the need of the new generation.

Salt is providing a platform that helps them to take the initial first steps. The firm is focused on aligning the financial products with the demand side of its customer base rather than the supply side that is profit-oriented.

Technological innovations can bring technology reluctant people within the financial curve and help to surpass the digital divide. Credit underwriting models focusing on the “intent to pay back” are highly successful in some cases in the recent past, as compared to traditional underwriting, and solutions similar to these needs to be focused upon.

Sameer Singh Jaini, Founder and CEO, The Digital Fifth, shared valuable insights in his session ‘Indian Fintech Ecosystem and Future of Jobs’. He opined that Indian Fintech ecosystem is getting deeper and richer, thereby, generating a lot of rewarding career opportunities. Newer Neobanks are expected to come up with a sharper focus on retirees, women, specific regions, inclusion, and MSME segments. While smaller banks are collaborating with Fintechs/Neobanks for business, the large ones are attempting digital banks.

It is to be noted that Fintech is not posing a threat to Banking, instead, a change towards Open Banking mindset is something that needs to be brought in. The Traditional banking mindset of “Inside-out” is now moving towards “Outside-in” mindset in the Open Banking said Sameer Singh Jaini. The new banking ecosystem needs to be evolving and focus on consumption-based model rather that product-based.

To summarise the entire two-day session, the house believes that Fintech has the potential to transform other financial services like lending, investment, insurance and remittances.  The current COVID-19 pandemic has changed the dynamics of the financial landscape. Nowadays, all segments of the community have access to e-commerce and internet banking. Fintech Innovations is the way forward. While innovations such as mobile money, embedding finance, etc. can facilitate acceleration of financial inclusion, technologies like Artificial Intelligence (AI) and Machine Learning (ML) will further bridge the financial divide in India.