A few decades ago, traditional bank with clunky machines and hefty paperwork was the reality of banking system in India. The FinTech sector is new and developing while Banks enjoy a well-established legacy that has been functional and trusted by customers of all demographics for the past several decades. Although the potential for growth and scale of FinTech sector is immense and rewarding, with technology driving the progress and innovation. The crucial trust factor and goodwill that legacy banks have in abundance, earned over decades of service to the communities, is a forte that FinTech as a nascent sector is yet to achieve.
Why FinTech & Banking System needs to Co-exist?
The rapid digitization fueled by the pandemic made the collaboration between Banks and FinTech sector vital for the advancement of technological innovations to support banking and financial services. Customer behavior is evolving with impactful global developments resulting in increased willingness to use FinTech Services. According to the Economic Survey 2022-23 tabled in Parliament on 31st Jan 2023, India currently leads in FinTech inclusion with an adoption rate of 87% compared to the global average of 67%.
Does FinTech & Banks share a common goal?
Banking and FinTech sectors have become highly interdependent as both the legacy institutions and emerging FinTech businesses share a common goal of improving ease and speed of services and facilitate mass personalization and customization that end-users have evolved to expect in the marketplace. Building solutions for India and its digital future depends on mutually beneficial and inclusive growth of both banking and the FinTech sector.
What does FinTech offer to benefit the Banking System?
According to Bank for International Settlements Report, the traditional banking system needs to expand its horizons with financial inclusion that improves access to under-served consumers, cuts down transaction costs, provides greater transparency with simpler products, and clear cost disclosures with enhanced convenience and efficiency.
FinTech sector provides the right tools to the Banking system to allow market incumbents to diversify their suite of products and monetize the client base. This proves, both sectors working in tandem help create a more stable, efficient, and well-regulated financial ecosystem for the consumers. Here are 2 ways FinTech Sector can further benefit the Banking System in India.
- Scaling & Cost Optimization
- Data Security & Regulatory Compliance
Legacy systems are prevalent in Banks that have been in existence for decades with traditionalistic approach to regulations and business. The digitization of banking services has gradually caught on with the banking system in India as their customer base increasingly opt to use digital banking services.
To support growth and enable integration with emerging technologies at a massive scale requires pivotal shift from maintenance of Legacy systems to build capability for supporting scalable agile business model that uses new Financial Technologies such as API’s. FinTech sector enables legacy institutions to integrate digital solutions at scale which supports growth and cost optimization for banking systems.
For legacy institutions and emerging FinTech sector alike the data security and regulatory compliance are of paramount importance. Protecting sensitive data requires secure network, vulnerability management, access controls, monitoring & testing, and robust security policies.
FinTech sector aids in establishing and navigating key data security and regulatory compliance mandated by law with advanced technological innovations providing secure systems with improved efficiency and ease.
Banking and FinTech are mutually exclusive but inter-dependent sectors. Driven by rise of digital ecosystems, regulatory changes, and increasing customer adoption necessitates the collaboration between Banks and FinTechs. Pay10 is a Payment Service Provider with innovative FinTech services. Explore our ultra-efficient Payment Gateway with reliable security features, supporting several payment modes, and powers an analytical dashboard; Payment Links, Billing service, Reseller services, Payout services, and more.