Technology in finance has been around for more than half a century. With the turn of the century, it became even more critical as a key differentiator, moving up from a mere enabler. However, many financial services firms continue to struggle with their legacy tech and the need to stay relevant, mainly due to the slow creation and adoption of modern financial technology solutions. This is where the FinTech industry is playing a critical role in bringing new-age customer and business-centric innovations into the industry.
The question to ask now is- Is modern technology in finance and banking or as we call it Fintech any different from traditional banking technology and why is it positioned as a unique sector? Over the past 50 years, technology has “assisted” traditional financial institutions. However, there has not been any dramatic change in the products being offered or their target market.
FinTech- Accelerating API-driven innovation in the Banking and Financial Ecosystem
One of the key levers of the growth of Indian Fintech is its robust and scalable technology that caters to all kinds of customer segments. The development is aided by entrepreneurs who bring in innovation, supported by a pool of deep talent.
The trend that started with Fintech companies specializing in payment services, digital lending, saving accounts, wealth management and remittances space, is now disrupting the Indian banking and financial landscape in many ways.
Primary enablers of fintech growth
As we popularly call it, the India stack has been the key enabler for the growth of the fintech ecosystem. While demonetization and the pandemic provided tailwinds to the industry by increasing customer acceptance, the India Stack, regulatory support like CKYC, Video KYC, etc. made things easier to adapt to the compliance requirements. These, in turn, helped accelerate fintech innovation.
While the pandemic accelerated the global economy’s digitisation, India’s fintech sector riding on open APIs platform has ushered in a new era of reimagining financial services by prioritising customer experience and accessibility to banking services.
Post-pandemic, banks/financial institutions have started to revisit their strategy of digitizing customer experience without compromising on the quality of service delivery, regulatory compliance, and cost. We are now witnessing more collaborations between fintech that are building API-driven digital platforms and Banks. The partnership ranges from basic customer onboarding journeys to offering last-mile delivery of banking services.
This partnership has furthered the government’s stated agenda of financial inclusion. It has changed every aspect of the banking industry, including payments, infrastructure, access to financial services and distribution.
The popularity of API banking systems is driving more innovation, particularly in the fintech ecosystem. The API technology essentially allows technology infrastructure players to plug into a Bank’s legacy platform without being embedded into it. The infrastructure players, in turn, use the same API technologies to open up their solutions to fintech innovators/distributors. This is helping Banks to accelerate the adoption of API technology to ramp up customer acquisition, improve transparency and increase customer satisfaction.
There are several reasons why API banking and payments are becoming the wave of the future. The first and most obvious reason is cost reduction and faster launch of products/services. Secondly, APIs can automate customer support and other processes, improving the quality of service provided to customers while lowering costs. In turn, this allows users to have more interaction with the companies they already know and trust, making them more likely to do more business with them.
CARD91 is an API-led issuance Platform-as-a-Service company. It offers unparalleled technology infrastructure to banks, SMEs, corporates & fintech through its Switch and Card Management Solutions for Prepaid Cards, Multi-CurAPIrency Travel Cards and allied systems like Centralised System of Records (C-SOR) for prepaid cards, credit cards and Access Control systems (ACS)
The article is authored by Avendra Singh, Director, Partnerships & Sales, CARD91
