A Report on Fintech in Banking

Submitted By-
Shruti Agrawal (2141425)
Shiksha Goswami (2141409)
Priya kumari (2141352)
Prateeksha yadav (2141341)
Adolin Rhian Kujur (2141136)
Riya Rai (2141379)

Submitted To-

Dr. Pawandeep Kaur Bindra

FMS- WISDOM

Banasthali Vidyapith

2022
 INDEX

• INTRODUCTION
• LITERATURE REVIEW
• OBJECTIVES
• HOW FINTECH IS CHANGING THE FINANCIAL INDUSTRY
• FINTECH MARKET SHARE AND DATA ANALYSIS
- FINTECH INDUSTRY WORTH
- FINTECH INDUSTRY GROWTH
- FINTECH MARKET SHARE BY REGION STATISTICS
- FINTECH INDUSTRY SCENARIO IN INDIA
• TOP 20 FINTECH COMPANIES IN INDIA
• CONCLUSION
• BIBLOGRAPHY
 INTRODUCTION

Financial technology (Fintech) is used to describe new tech that seeks to improve and
automate the delivery and use of financial services. At its core, fintech is utilized to help
companies, business owners and consumers better manage their financial operations,
processes, and lives by utilizing specialized software and algorithms that are used on
computers and, increasingly, smartphones. Fintech, the word, is a combination of “financial
technology”.

When fintech emerged in the 21st Century, the term was initially applied to the
technology employed at the back-end systems of established financial institutions. Since then,
however, there has been a shift to more consumer-oriented services and therefore a more
consumer-oriented definition. Fintech now includes different sectors and industries such as
education, retail banking, fundraising and non-profit, and investment management to name a
few.

Fintech also includes the development and use of crypto-currencies such as bitcoin. While
that segment of fintech may see the most headlines, the big money still lies in the traditional
global banking industry and its multi-trillion-dollar market capitalization.
Broadly the term “financial technology” can apply to any innovation in how people transact
business, from the invention of digitial money to double-entry bookkeeping.

Since the internet revolution and the mobile internet/smartphone revolution, however,
financial technology has grown explosively, and fintech, which originally referred to
computer technology applied to the back office of banks or trading firms, now describes a
broad variety of technology interventions into personal and commercial fintech.

Fintech now describes a variety of financial activities, such as money transfers, deposting a
check with your smartphone, bypassing a bank branch to apply for credit, raising money for a
business startup, or managing your investments, generally without the assistance of a person.
According to EY’s 2017 Fintech Adoption Index, one-third of consumers utilize at least two
or more Fintech services and those consumers are also increasingly aware of Fintech as a part
of their daily lives.
 LITERATURE REVIEW

Dipinder S Randhawa, Chan Jia Hao & Vani Swarupa Murali, 2018, Singapore:
“IndiaSingapore FinTech Cooperation: Opportunities and Challenges” – Singapore and India
lead developments in the use of FinTech. India offers the highest global returns on
investment in FinTech. Singapore has developed cutting-edge sandbox for testing new
FinTech products, it has a world-class digital and physical infrastructure. The potential for
mutually beneficial collaboration is vast. Key recommendations include- On collaborations
between governments, there is a need for infoamation sharing on policies, consultations on
data privacy, cyber security and more. Interoperability allows for seamless fund transfers
across geographical zones via a single account.
The digital economy is the latest manifesto to convert and reshape India into a digitally
entitled society and knowledgeable economy. Digitisation mechanizes both product and
process through which standard and productivity increases. Microfinance institutions and
new age FinTech companies in India are working on technology advancement which has
benefitted poor and underprivileged by providing access to capital.

Siddhanth Gurung, 2018. India: “FinTech: A Messiah for the ailing Banking Industry in
India” – FinTech is the latest buzzword in the area of banking and financial services. FinTech
has emerged as a potential disrupter in the financial sector with products and services that has
well managed to challenge the domination of traditional financial institutions. With the
traditional financial institutions, especially in India, undergoing a period of turbulence, which
has in the last few years witnessed the growth of bad loans, dissatisfaction among the
customers regarding several financial products and services, and growing loss of confidence
among the public with an imminent fear of a financial crisis, the opportunity seems ripe for
the emerging but FinTech is still a nascent player in the Indian financial sector. Hence, a
collaboration with the ailing traditional financial institutions would help provide a new
direction to India’s financial sector. This paper, thus, focuses on putting into perspective the
role FinTech could play in helping the country’s banking industry regain its lost footing in a
highly dynamic sector.

Vivek Dubey, 2019, India: “FinTech Innovations in Digital Banking” – This paper discusses
the role of Artificial Intelligence, Augmented Reality and Blockchain in Digital Banking.
Currently, AR technology is having a vibrational impact in numerous industry sectors. From
being deployed in healthcare, oil and gas construction, and retail as well as manufacturing,
AR technologies are currently deployed to increase process efficiency, reduce costs and bring
about a broad range of commercial benefits. Artificial intelligence is the rising star in the
world of technology.
Varun Mittal, 2019, USA: “India FinTech Landscape” – This document describes the India
FinTech landscape, approaching the analysis from a FinTech, regulatory, Investment and
talent standpoint. This document serves as a snapshot of the key pillars of a FinTech
ecosystem in a country and provides a good overall view of the state of FinTech at a glance.
India’s FinTech sector is growing rapidly, fuelled by a large consumer base, unmet financial
needs, SME credit gap and a conducive environment supported by regulatory initiatives and
policies. Much of FinTech adoption in the country is driven by digital payments, which has
got impetus from recent innovations like United Payments Interface (UPI) platform. India has
experienced a huge shift from cash towards digitization, primarily due to Government
initiatives and increasing mobile and internet penetration. Banks and financial services
industry is working in close partnership with FinTechs which has resulted in strong B2B
FinTech presence in the country.

Sunil Kapadia, 2020, India: “How Digitization Is Impacting Banking Transactions and
Financial Markets in India?” – The process of digitisation of our private and working lives
cannot be suspended. The progress in interconnection is paving the way for a new element of
globalisation: the globalisation of ideas, perspectives, possibilities, etc. Digital technologies
entitle and empower new framework and customer engagement turns progressively important
for many service providers. The digital economy is the latest manifesto to convert and
reshape India into a digitally entitled society and knowledgeable economy. Digitisation
mechanizes both product and process through which standard and productivity increases.
This digitization has contributed to advances like online banking, ATMs, and credit cards.
Information and Communication Technology can have a levelling effect. Microfinance
institutions and new age FinTech companies in India are working on technology
advancement which has benefitted poor and underprivileged by providing access to capital.
 OBJECTIVES

• To learn more about the concept of Fintech.

• To know how Fintech is used in the banking sector.
• To learn about how Fintech is helping in the advancement of the Financial Industry.
• To know about the companies which are using Fintech in their workings.
• To Analyse the data related to Fintech.
 How FinTech is changing the Financial Industry

Smart Chip Technology

Smart chip ATM cards have significantly helped in minimizing the financial loss that occur
in the case of mishaps. It comes with EMV technology that is embedded in the chip. This
technology uses a one-time password for each transaction. This increases the security since
the code is valid only for one transaction; so, even if somebody steals it, he won’t be able to
do anything.

Bank officials generally advise their customers to memorize their pin to avoid unnecessary
hassles and troubles. Bankers are constantly looking for ways to combat thefts and frauds by
providing top-notch security to its customers. As compared to smart chip, the magnetic stripe
technology uses the same pin for all the transactions, thus making it more susceptible to
frauds.

Biometric Sensors
FinTech in banking industry has given birth to many innovations and biometric sensors is one
of them. Biometric sensors along with Iris scanners are two technological advancements that
ATMs are witnessing. Moreover, these advancements are path breaking since it would simply
eliminate the need to carry your plastic card. Furthermore, you won’t need to remember your
pin.

Apart from providing convenience and ease, these advancements will also make ATMs
secure than ever since you’ll be able to access your own account without any password. The
biometric ATMs use integrated mobile applications, fingerprint sensors, palm, and eye
recognition to identify the account’s owner. To make the identification more accurate and
secure, ATMs also use micro-veins which completely eliminates the errors made by ATMs in
customer recognition.

The usage of biometric technology brings a huge sigh of relief for all the customers who get
panic even at the thought of losing their ATM card. It’s because due to this, they would be
able to access their funds even when they have lost their card.
Online Transactions
Monetary Control Act (MCA) was setup in 1980 with the primary purpose of promoting an
efficient payment system in the entire country by encouraging competition between private
sector payment service providers and the Federal Reserve.

The Automated Clearing House (ACH) assisted in efficient processing all the electronic
interbank payments taking place in the whole country. These electronic payments include
insurance premiums, social security, salary, dividend payments, bill payments, and direct
debits of mortgage.

The Federal Reserve report for the year 2016 reads that the number of online transactions
processed in that year 2015 were more than 3362 million, which is way more than 1189
million transactions that took place in 2012. A similar kind of rise was also seen in the credit
card payments. Furthermore, there was a steep rise of more than 45% in the number of
payments redirected from the merchant sites as compared to 2012.

The same trend was followed debit card users too. There was a massive increase of more than
90% in debit card users. In the year, 2012, there were about 2.1 million debit card
transactions which rose to over 270 million debit transactions in 2015.

Omni-channel & branchless banking

FinTech financial services is transforming the entire banking system from a branch-specific
process to various digital channels such as online, social, and mobile. It also reduces the
bank’s dependency on its brick and mortar branches to function.

As a result, we see many banks reducing their number of branches by adopting the
omnichannel banking. Only in the European Union, around 9100 bank branches were shut
down by the end of 2016.

Customer service chatbots

FinTech providers have also come up with customer service chatbots that have really become
popular in the recent past. Chatbots are nothing but bits of software that use machine learning
and natural language processing that enables them to constantly learn from human
interaction.

Chatbots are highly efficient as they streamline customer interactions like query handling and
directing customers to the required departments.
Chatbots can also perform other functions such as that of Bank of America’s chatbot Erica,
which can provide investment advice to its customers. Whereas, the chatbot used by UBS can
scan customer emails autonomously thus reducing the total time taken in the task from 45
minutes to mind-boggling two minutes. Similarly, a chatbot used by Japan’s leading bank can
help customers to find relevant piece of information on their website.

Chatbots have become an integral part of all the banks since it not only reduces costs and
enhances the customer satisfaction but also allows agents in the call centers to focus on value
addition.

Artificial intelligence (AI)

Over the years, AI has become an integral part of the FinTech banking services. AI along
with Machine learning is vital for fraud detection. The software that banks use for fraud
detection generates alerts whenever there’s a potential fraudulent transaction. Later it is
backed up by the human investigation that finally determines if the attack was real or false.

However, with time the detection of attacks is becoming difficult since the attacks are
becoming more sophisticated as the day passes. Due to which a lot of time and money is
consumed. Moreover, the risk of customer data loss is always there. To combat this issue,
banks are now adopting AI technology.

According to McKinsey, the adoption of machine learning-driven statistical modeling, data

aggregation platform, and process automation can totally transform the AML operations by
simply infusing new efficiencies.

For example, the data aggregation platforms can account data and mine unstructured
transaction to offer 360-degree customer view. This view assists in faster transaction
validation. Moreover, with machine learning algorithms, the banks can leverage historical
data to predict and determine patterns of a fraud attack. This will reduce the manual effort by
approx. 50%.
E-Wallets
The immense growth of E-wallets is another indicator of the rise of FinTech financial
services. Samsung Pay, PayPal, Android Pay, and Apple Pay and are some of the major e-
wallet companies in the world. These wallets are used for a plethora of purposes namely P2P
payments, top-up & utility bills, international remittances, booking tickets, and many more.

There are also some standalone wallets such as Starbucks and Walmart Pay. E-wallet have
managed to attract users due to their tempting offerings which includes exciting offers,
lucrative cashbacks, and reward points, and many more. Due to their huge success, many
banks are now realizing its importance and are recognizing e-wallets as a collaborative
measure to embrace the technological advancements.

Mobile Banking
The increase in the use of smartphones has forced banks to come up with mobile applications
that offers convenient FinTech banking services. Today, most of the banks have a mobile
application which has a user-friendly interface. Banks have also come up with mobile apps
that recognizes the fingerprints of the user. The application performs this function without
any biometric app or hardware.

A mobile application provides quick access to funds. With a mobile application, the user can
perform several banking functions such as quick bill pays, check deposit, account balance,
statements, and many more.
 Fintech Market Share and Data Analysis (2021/22)

In 2019, 64% of consumers have used two or more fintech services or platforms.
Additionally, recent fintech statistics show that the COVID-19 pandemic has contributed to
the acceleration of cloud services and similar solutions for the industry. As such, it makes
sense that the usage of FinTech will only increase in the coming years. With cutting-edge
hardware, software, and networks, fintech entices consumers to flock to its camp in droves,
and incumbents are forced to follow suit.

The reach of fintech can be pervasive, so deep-diving into the key figures of the industry will
enable you to make an accurate assessment of what exactly fintech can mean for your
business. We have compiled essential and recent data on this field, from market size to
consumer adoption and the goings-on in that underbelly of fintech—blockchain.

The nature of fintech leads analysts to categorize it into two sectors. These are the “fins”,
which are fintech companies with a B2B model, and the “techs”, which are B2C fintech
companies. Fins that offer online lending receive the most funding—42%.

In general, fintech market data shows growth, though it has encountered a hiccup in 2018. Its
growth rate seems slower than anticipated because any new innovation will always encounter
resistance. There are also concerns about fraud that force industries to update cybersecurity
measures. A movement to blockchain, which decentralizes financial processes, can beef up
security in this sense, though some banking CIOs—77% of them, according to recent data—
are still hesitant in using blockchain technology.
 Fintech industry worth

- The global financial services market is projected to reach $26.5 trillion by 2022. (The
Business Research Company, 2020)
- Fintech market share across 48 fintech unicorns is worth over $187 billion as of the
first half of 2019, or slightly over 1% of the global financial industry. (CB Insights,
2019)
- Fintech reached $55.3 billion in investments in 2019. To this figure, China
contributed a total of $25.5 billion, of which more than half ($14 billion) is from Ant
Financial of Alibaba Group, known for its Alipay mobile payment service.
(Accenture, 2018)
- In the first half of 2020, global fintech investment reached 1,221 deals or a total of
$26.5 billion. Many of the completed deals were carried over from 2019 as a result of
the COVID-19 pandemic. (KPMG, 2020)
- Up to 28% of banking and payment services will be at risk of disruption due to new
business models brought about by fintech. (PwC, 2020)
- Up to 22% of companies in the insurance, asset, and wealth management sector will
be at risk of disruption due to new business models brought about by fintech. (PwC,
2020)
- Companies that use robotic process automation for banking tasks see a return on
investment of 100% within three to eight months. (Medium, 2020)

Fintech industry growth

- The global fintech market is expected to grow at a CAGR of 23.58% from 2021 to
2025. (Research and Markets, 2020)
- Artificial intelligence is one of the leading technologies in the fintech market, with a
market share of 38.25% in 2019. (Research and Markets, 2020)
- Blockchain and regulatory technology (regtech) are the fastest-growing segments of
the fintech industry. (Grand View Research, 2019) (Transparency Market Research,
2018)
- Blockchain is worth $70 to $75 million in 2018, with a CAGR of 50% in the next six
years. (IndustryArc)
- This puts Blockchain technology on track for a $20 billion worth by 2024.
(Transparency Market Research, 2018)
- Blockchain can cut regtech costs by as much as $4.6 billion annually. (Quinland and
Associates, 2016)
- Regtech is estimated to be worth $120 billion in 2020 with a CAGR of 52.8% (Grand
View Research, 2019)
- Peer-to-peer (P2P) or digital lending, another segment of fintech, is worth $43.16
billion in 2018 and expected to rise to $567.3 billion in 2026 with a CAGR of 26.6%.
(Reports and Data, 2019)
 - In a survey, 56% of participants said that they recognize the importance of blockchain
technologies. (PwC, 2020)
- Even if they recognized its importance, 57% of participants said they are unsure about
how to respond to blockchain technologies. (PwC, 2020)

Fintech Market share by Region Statistics

Fintech market research shows that venture capital investment is growing year after year, but
investors are becoming more selective as the industry matures. Recently, as the slight dip in
2018 shows, they point toward choosing to fund fintech companies with a scalable model and
demonstrated revenue, especially those in personal finance, payments, banking, lending, and
insurance sectors.

Some incumbents, like JPMorgan & Chase Co., Goldman Sachs, and Citigroup, are highly
active in fintech funding, but other investors are also looking to inject funds in emerging
fintech solutions like robotic process automation, AI, and machine learning. Moreover,
studies show that the machine learning industry will be worth $80 million in 2025.

• As of 2021, there are 8,775 fintech startups in the Americas. (Statista, 2021)
• Asia-Pacific fintech startups were numbered at 4,765 in 2020. (FinTech Control
Tower, 2021)
• Europe, Middle East, and Africa had a combined total of 7,835 fintech startups in
2020. (FinTech Control Tower, 2021)
• In the United States and Canada, the biggest fintech segment is digital payment,
valued at over $1.2 trillion in 2021. (Statista, 2021)
• 60% of credit unions and 49% of banks in the U.S. believe that fintech partnership is
important. (Tipalti, 2020)
• Fintech market report in Asia, particularly China and India, shows that the region has
the fastest growth in fintech consumer adoption. (Bloomberg, 2019)
• In Q2 of 2019, India had 23 VC deals representing $350 million while China only had
eight, but valued at $375 million. (CB Insights, 2019)
• 61% of Chinese SMEs have adopted at least one fintech service. (Ernst & Young,
2019)
• By 2024, mainland China and the U.S. will account for more than 61% of the global
fintech transaction value. (Statista, 2020)
• Contrast this to the next market, the United States, with only 23% of their SMEs
embracing financial technology platforms. (Ernst & Young, 2019)
• Asia-Pacific regions have a 40% fintech lending market share. (Reports and Data,
2019)
• In 2021, the value of the fintech credit in the Asia-Pacific region excluding China is
$1.76 billion. (Statista, 2021)
• North America is next, with 28%, Europe at 27.7%, and ROW at less than 5%.
(Reports and Data, 2019)
• Cash is no longer king in China, with cash ATM withdrawals dropping in 2017.
(Bloomberg, 2019)
 Fintech Industry Scenario in India

The Fintech segment in India has seen an exponential rise in funding over the last few years,
investments worth more than $8 bn have already been witnessed across various stages of
investment in 2021.
India has over 17 Fintech which have gained ‘Unicorn Status’.
The Fintech revolution in India is the culmination of years of effort in laying the groundwork
towards developing key enablers through important initiatives.

• Jan dhan yojana – The world’s largest financial inclusion initiative, “Jan dhan yojana”,
has helped in new bank account enrolment of over 435 Mn beneficiaries for direct
benefits transfer and accessibility to a host of financial services applications such as
remittances, credit, insurance, and pensions enabling Fintech players to build
technology products to penetrate the large consumer-base in India.

• Financial Literacy – Some of the recent initiatives towards improving financial literacy
in India include setting up the National centre for financial education and
implementation of the centre for financial literacy project by the RBI.

• E-RUPI – e-RUPI is a person & purpose special digital payments instrument to allow
for contactless & cashless payment solutions and shall play an important role in
making the direct benefits transfer more seamless & effective. The solution is being
adopted for cashless payments for Covid-19 vaccination.

• India stack – India stack is a set of APIs that allows governments, businesses, startups
and developers to utilise a unique digital infrastructure to solve India’s hard problems
towards presence-less, paperless, and cashless services delivery.

The India stack has been the driving force behind the accelerated evolution of
Fintechs. It is one of the most important digital initiatives undertaken globally, aimed
at putting up a public digital infrastructure based on open APIs to promote public and
private digital initiatives and has a played a catalytic role in India’s digital foundation
and evolution.
 TOP 20 FINTECH COMPANIES IN INDIA

RAZORPAY
Razorpay allows businesses to set up accounts, automate payments and compliance, and
manage their finances from a single dashboard.

CASHFREE
cash free began as a payment gateway in 2015, but its creators, Akash Sinha and Reeju data
considered the existing bank bulk transfer choices to be cumbersome and began developing
payouts in 2016.

PAYTM
Vijay Shekar Sharma is the founder. Paytm began as a utility payment platform for DTH,
power, and broadband bills in 2010. paytm wallet was the first paytm payment tool in 2014.

BHARATPE
Bharatpe was the first to create an interoperable QR code that could take payments from
more than 150 UPI applications with no transaction costs.

CRED
CRED claims that by giving a complete analysis of their credit card bill spending and
delivering timely bill payment reminder notifications, they can enhance their consumer’
credit scores.

DIGIT
Digit’ digital-first strategy promises to make the insurance are some of the most popular digit
insurance products.

TURTLEMENT
It is an online marketplace where people can compare and buy insurance at the lowest
possible price.
PLUMHQ
Most small business do not provide insurance sine purchasing since purchasing coverage
takes time. Many insurers do not offer small business insurance policies tailored to their
needs.

ZERODA
Through its robust investment platforms, Zerodha allows investors to trade stocks, futures,
and options, invest in mutual funds and bonds, gift stocks, and apply for IPOs.

GROWW
It allows users to trade in US equities by creating a free overseas trading account with no
account opening or brokerage fees.

INDMONEY
IND Super money app uses a robot advising engine to assist customers in arranging their
money and proposing activities to enhance savings.

SMALL CASE
Small case provides the best of both words by bridging the gap between mutual funds and
PMS. Compared to PMS, customers can invest in a basket of equities created by specialists
with fewer funds.

LENDINGKART
Lendingkart technology private limited has created technology solutions based on extensive
data analysis to help lenders assess borrowers’ creditworthiness and deliver other services.

OFBUSINESS
OFB Tech is a platform that allows SMEs to buy raw materials without having to put up any
collateral.

SIMPL
Simpl aims to address the credit supply defilt by offering small-credit loans to consumers
without accredit history or access to a credit card.
JUPITER
Jupiter provides saving accounts, investments, and lending services to its target market.

OPEN
Open is a neo-banking solution that enables companies to accept payments, make mass
transfers, and automate accounting.

FAMPAY
Fampay’s goal is to teach financial literacy to teens to make better financial decisions later in
life.

WAZIRX
Wazrix is India’s largest cryptocurrency exchange, allowing users to buy, sell, and trade
Bitcoin, Ethereum, and Litecoin.

COINDCX
It allows users to trade crypto futures and earn interest by lending crypto in addition to spot
trading.
 CONCLUSION

In conclusion, there is a very famous saying in the financial service industry in India- “Banks
are trying to be fintechs, and fintechs are trying to be banks”. While this may seem like a race
between the traditional and non-traditional players, the actual winners are really the
customers.
Because each and every player is striving to fulfil an increased demand for inclusive financial
services, customer expectations, and the business need to reduce costs while providing faster,
safer, and cheaper services to the end user.
But before understanding the impact of fintechs in banking, let’s take a step back.
Interestingly- the term Fintech was first coined in the 21st century to describe the technology
used in the back-end systems of established financial organizations. Today, however, Fintech
have transcended those boundaries, it spans various sectors and industries, including
education, retail banking, non-profit fundraising, investment management, and much more.
The fintech startup ecosystem in India saw 5.8x higher capital inflow to reach $4.6 Bn
funding across 160 deals in H1 (January to August 202) period
But as India’s banking industry experiences major disruption and change through these
fintechs, the country’s banks are also transforming. They are investing heavily in digital
technologies and services to catch up the new age financial players.
At the same time, the government has taken several measures to give a boost to this
revolution, including social service provisions, transfers and transactions, and formal
banking. The country’s rapidly growing digital citizenry is increasingly demanding that
India’s banks not only keep pace with the fintechs, but leapfrog far beyond them by
developing new, uniquely Indian products, services, and business models.
While over the years, the fintech revolution has been constrained to bigger tier 1 cities of
India. But the COVID-19 pandemic and digital penetration have taken fintech innovation into
India's smaller towns and cities.
In the past decade the Financial Technology (Fintech) industry globally has transitioned from
being the new kid in the block to becoming the norm in financial services. The lines between
technology and business are ever-blurring, and startups as well as established banks have
realized the importance of technology innovation and are leveraging it to build novel
products and services for their customers.
 BIBLOGRAPHY

1) https://www.inventiva.co.in/business/corporate/top-20-fintech/
2) https://www.investindia.gov.in/sector/bfsi-fintech-financial-services
3) https://financesonline.com/fintech-statistics/
4) https://www.cnbctv18.com/finance/ways-in-which-fintech-is-
transforming-banking-in-india-11759152.htm