Technology is our engine and fintech the journey to our future!

In the words of Peter Drucker, "…The best way to predict the future is to create it…”. And indeed, our world today has created the future, as we look at the incredible pace at which finance has changed in recent times. 

Just a few years ago, the idea of managing finances without ever setting foot in a bank, the very symbol of financial stability, or getting insurance policies tailored to each customer’s particular situation with the precision of a bespoke suit, or even paying for purchases using a wallet on a phone, all seemed impossible to deliver.

Today, the power of fintech has changed it all, and is replacing the stodgy world of finance, once perceived as clunky and slow, by leveraging technology, data and the use of analytics to deliver financial services seamlessly. These fintech offer better ways to ‘store, save, borrow, invest, move, pay, and protect money’, while focusing on hyper-personalised user experiences akin to having a financial concierge, at lower fees and with real-time transaction capabilities that are  fast and immediate, with a continued focus on aligning with evolving client expectations.

While, fintech has made their maximum impact in banking, the very heart of the financial system, they have also disrupted traditional telco and insurance business. Traditionally, telcos and Insurance providers have been thought to be highly rigid and inflexible players. However, now, they too are increasingly embedding financial services into their platforms, by placing their products on the market place and by activating the new ecosystem where banking, telecom, and insurance can easily merge to provide more integrated, customer-friendly solutions, accelerating the rise of embedded finance in telecom and insurance.

Traditionally, banks have sought to ‘singly’ own the customer relationship with the aim to be the sole providers of financial services, in order to maintain their monopoly on trust and an absolute hold on all transactions. However, their folly lay in the fact that they relied on clunky systems and legacy core banking infrastructure, which has become increasingly difficult to integrate with the external world, as traditional banks and systems are burdened with the incumbency of outdated processes.

Also, clients today demand instant access, with services available a tap of a finger, to get real-time insights, and to be delivered solutions in the blink of an eye, with transactions executed seamlessly - making their financial service needs being fulfilled as part of a continuous, embedded experience in their preferred customer journey as part of their daily digital lives, 

For example, fintech like ‘Revolut, Monzo, and Nubank’ have benefited by eliminating unnecessary friction in banking, removing the hurdles of traditional processes, by offering AI powered services — like, instant account opening (a process that once took days), sending and receiving money at low fees as a stark contrast to traditional charges, etc. and without requiring physical branches which liberates customers from the constraints of physical space, helping banks save costs to offer higher interest rates, which is a boon for savers. Such, and more, intuitive services delivered remotely on a real-time basis with a customer centric approach that offer solutions designed with the user in mind, leads to customer delight, an increase in engagement and usage, and a maximisation of lifetime earnings from each client.

Rajeev Kakar, Corporate Board Member, Entrepreneur, Founder of Dunia Finance, Global Co-founder of Fullerton Financial Holdings, and former Citibank CEO of the Turkey-MEA region.

And for sure, such a future is being delivered today and improving by the day, with the rise of cool ‘neobanks like Revolut, Monzo, and even India’s famous Unified Payment Interface (UPI) enabled solutions – that live right in client pockets, always accessible and ready, operating as personal financial assistants, offering guidance and support, using artificial intelligence and big data to tailor services to specific needs on a true customer-centric manner, while placing the user at the forefront. All this has helped make banking less of a chore and, in fact, more delightful, transforming what was traditionally a mundane task into a relatively more pleasant experience.

This construct, also known as ‘open banking’ has allowed for a collaborative financial ecosystem, fostering partnerships and innovation, where client owns their own data, empowering them with control, so they can decide on how to fulfil their financial needs, by selecting the best options and availing them through their individual preferred journeys, through a, customised experience, using their preferred digital identity of choice (for example Apple, Amazon, Uber, or other). To enable such functionality, banks are investing fast to embed third party provided financial services into their platforms so as to blur the traditional lines between industries, creating a more interconnected world of finance with the broader external ecosystem — to help facilitate instant fulfillment of all client needs in a seamless, real time manner.

InsurTech Disrupts Insurance Sector

Likewise, in the insurance world, Insurtech has led to disruption by bringing automation, machine learning, and blockchain into the mix. Companies like Lemonade and Oscar Health use AI and big data to assess actuarial risks and tailor-make policies in real time, adapting to changing circumstances, making insurance more personalised and proactive, anticipating needs and offering solutions. It’s pretty innovative and exciting to have car insurance premiums adjusting based on one’s driving habits to reward safe driving, or to have more physically-active people being rewarded with lower health insurance premiums, which in turn also incentivises healthy lifestyles.

Similarly, telcos too have been influenced by the rise of fintech, to deliver a quantum leap of offering through their operations to their clients. Here, mobile-money platforms like M-Pesa and Paytm have been game-changers, in revolutionising financial access and in transforming mobile phones into digital wallets for transaction ease to simplify payments, and also for making it easier to provide access for financial services to unbanked individuals and those in remote areas, by helping bridge the gap at low cost for driving financial inclusion.

Therefore, it is fair to say that fintech is not just provider of convenience and ease of use, but it is also ‘empower’ people through the digital economy, enabling their participation and growth, to ‘enable’ their success through offerings like ‘BNPL, microfinance, micro-insurance, digital credit, etc, and by providing tools for financial advancement, to ‘enrich’ their lives. All this achieved by ensuring a higher adoption of services through the availability of tech-enabled enhanced customer experience, designed to elevate the user journey. 

Fintech, therefore, amplify impact by leveraging off a decentralised financial world, as they open up new possibilities, to enable faster and cheaper transactions, speeding up processes and reducing costs, by using real-time data analytics to predict clients’ financial needs and to offer tailored solutions by anticipating requirements. They deliver personalised services efficiently and reliably, by using data-led analytics and machine learning through the use of AI to activate the ecosystem, and by fostering collaboration and innovation amongst different participants in the broader ecosystem.

The fintech story has just started! 

With new strides being made in innovation every day that aims to push the boundaries of what’s possible, traditional financial institutions are transforming to be digital-ready and to be prepared to embrace the future. In parallel, regulations are evolving as they too adapt to the changing landscape and evolving customer needs, it provides greater fillip to technology for innovation to advance faster so as to drive progress at exponential speed. Given all this convergent growth, it is fair to expect that fintech will only accelerate their role at the forefront, leading the charge, shaping the future of finance.

Therefore, as we can see, fintech has not only revolutionised banking but has also paved the way for financial services to be seamlessly integrated into other industries such as telcos and insurance firms — through the convergence of finance, technology, and the preferred digital ID of the consumer, ensuring that a customer can seamlessly access financial solutions as part of his preferred customer experience or journey. 

To enable such fulfilment of customer choices seamlessly, there is a constant rush amongst customer-owning businesses (whether fintech, insurance firms, telcos, e-commerce players, logistic firms, and other customer owning businesses) to rapidly become a part of this ‘ongoing rapid process of convergent disruption’ in our fast-evolving world, where all players are necessarily needing to move toward a fully digital, embedded, and hyper-personalised financial ecosystem…as those that fail to adapt to this shift, risk being left behind. 

As Socrates famously said, “…The secret of change is to focus all your energy not on fighting the old, but on building the new...”, the future belongs to those who can combine technology, data, and customer-centric innovation to create seamless financial experiences by partnering with other players in the ecosystem, to provide for customer needs, wherever and whenever they are needed.

In this wild-west of insurgents and incumbents, it will be intriguing to see who, in the future, will lead the charge…who will survive…and, who will thrive? 

l, for one, will watch with bated breath to applaud the winners!

Rajeev Kakar, Corporate Board Member, Entrepreneur, Founder of Dunia Finance, Global Co-founder of Fullerton Financial Holdings, and former Citibank CEO of the Turkey-MEA region.