What is Fintech?
Fin-Tech or Financial Technology is simply any technological innovation or service based in the financial sector, covering banking, investment, lending, payments, asset management and insurance.
Evolution of Fintech
‘Fintech’ might be a new term to hear for us, but actually Fintechs have always been in the backend of finance and innovation. Fintechs counter traditional banking or lending solutions to provide alternate financial solutions to today’s consumer.
Fintech in India
According to a NASSCOM report, India has about 400 Fintech companies of which 120-150 companies operate in the Digital Lending space.
- Digital Lending Fintechs focus on categories such as micro finance, consumer loans and commercial loans.
- Technology convergence is likely to make Digital Lending faster and safer in India. With UPI already in India, Blockchain is expected to be the next game changer in the Digital Lending environment.
- Key issues to address in India towards Digital Lending are 1. Requirement of funds for Lender protection 2. Capital structure 3. Infrastructure and 4. Regulations to break the barriers that prevent Digital Lending to be adopted freely.
Fintech around the world
- According to the same NASSCOM report, key Fin-tech markets either adopt a Market Driven Approach or a Collaboration Driven approach towards Digital Lending.
- In the Market Driven Approach, Financial Institutions emulate features offered by Fin Techs to improve their current offerings to the consumer. To do this however, a capable IT leadership is required among the Financial Institutions.
- In the Collaboration Driven Approach, Financial Institutions work with Fin-tech Startups to prepare solutions combined off the innovation at startups with the guidelines of Financial Institutions.
- Some of the Digital Lending Fintech companies around the world are Lending Club, Prosper, UpStart, Kiva, PeerForm, Zopa etc
Fin-tech companies are striving to make it easier and faster for the common people to engage in lending, payments and asset management. Apart from offering stiff competition to traditional financial institutions, Fintechs give borrowers a better option for quick access to funds
The ultimate objective of a Digital Lending Fintech company is to ensure seamless processing from information processing to disbursement and repayment.