FINTECH

SKILL OFFERING ID:2280

AN INVESTIGATION OF THE BENEFITS OF DIGITAL FINANCIAL
INCLUSION IN CHENNAI DURING 2020-2023

PROJECT SUBMITTED TO:

UNIVERSITY OF
MADRAS/NAAN MUDHALVAN

YEAR:2023
DEPARTMENT: BACHELOR OF COMMERCE (Accounting and Finance)
SEMESTER: VI
GROUP NUMBER: BCOM006

MEMBERS OF THE GROUP

1.KAVIYA.K - Reg.no:312018575
2.JANANI.R - Reg.no:312018573
3.KEERTHANA N.M - Reg.no:312018577
4.KAVIYA.P - Reg.no:312018576
5.HEMAVATHY.R- Reg.no:312018572

`
GUIDED BY
DR.V. NAGARATHIM M.COM., M.Phil., Ph. D

SPOC NAME
DR. P. PARIMALA M.SC., M.Phil., Ph. D
CHAPTER -1

1.1 FINTECH INTRODUCTION:

A. Financial technology (better known as fintech) is used to describe innovative technology

that seeks to improve and automate the delivery and use of financial services.
B. At its core, fintech is utilized to help companies, business owners, and consumers better
manage their financial operations, processes, and lives.
C. It is composed of specialized software and algorithms that are used on computers and
smartphones. Fintech, the word, is a shortened combination of “financial technology.”
D. When fintech emerged in the 21st century, the term was initially applied to the
technology employed at the backend systems of established financial institutions, such as
banks.
E. From 2018 or so to 2022, there was a shift to consumer-oriented services.
F. Fintech now includes different sectors and industries such as education, retail banking,
fundraising and non-profit, and investment management, etc….

1.2 INTRODUCTION:

Digital technology has accelerated the pace of financial inclusion through the introduction of
innovative business models and the progressive digitization of financial systems. In a rapidly
digitizing country like India, it is evident that Digital Financial Services (DFS) hold the promise of
bringing financial inclusion to the last-mile and reaching the most vulnerable, marginalized, and
remote populations of the country. However, several challenges need to be overcome to ensure that
these efforts reach the marginalized and prevent further exclusion.
India’s overall rate of adoption of digital tools is the second fastest in the world (trailing behind
Indonesia) and, in absolute terms, the number of digital users in India is second only to China. Data
from the Telecom Regulatory Authority of India (TRAI) shows that there are 726 million digital
users as of September 2020, which is an impressive 278% growth from September 2016. The
increase is driven by mobile internet users, who account for more than 95% of total internet users.
Yet, in a country of over 1.3 billion people, these numbers account for little more than 50% of the
population, which suggests that there is significant untapped potential for further digitization and
with the right interventions, the number of “newly digital” users is likely to increase in the coming
years.

CHAPTER .2

2.1 OBJECTIVES OF THE STUDY:

a) Financial inclusion intends to help people secure financial services and products at
economical prices such as deposits, fund transfer services, loans, insurance, payment
services, etc.
b) It aims to establish proper financial institutions to cater to the needs of the poor people.
c) These institutions should have clear-cut regulations and should maintain ambitious standards
that are existent in the financial industry.
d) Financial inclusion aims to build and maintain financial sustainability so that the less
fortunate people have a certainty of funds which they struggle to have. Financial inclusion
also intends to have numerous institutions that offer affordable financial assistance so that
there is sufficient competition so that clients have a lot of options to choose from.
e) There are traditional banking options in the market. However, the number of institutions that
offer inexpensive financial products and services is very minimal.
f) Financial inclusion intends to increase awareness about the benefits of financial services
among the economically underprivileged sections of the society.
g) The process of financial inclusion works towards creating financial products that are suitable
for the less fortunate people of the society.
h) Financial inclusion intends to improve financial literacy and financial awareness in the
nation.
i) Financial inclusion aims to bring in digital financial solutions for the economically
underprivileged people of the nation.

2.2 SCOPE OF THE STUDY:

the Indian Banking sector has witnessed the scaling of Fintech to new heights with varied banking
products and services assisted with technology. One among them being the digital payments and
lending. Chennai is also catching the pace to the role of fin tech in banks services by including to
the list of fin tech hubs of Delhi, Mumbai, and Bengaluru, the tech city of India, Chennai was seen
quite successful with start- ups like Flexiloans.com, Bank Bazaar, Credit mantra, Kaleidofin, Funds
India. However, the banks are looking at Digital Fintech services as a strategic tool to bring
financial inclusion and for this bank need to be strong enough to overcome the challenges.
limitations in credit, smart automation, financial planning, cybercrime, crossing digital divide etc.
Customers need to be made aware of the benefits like transparency, payment methods which are
easy to use, most importantly being the smooth banks quick and faster lending.

2.3 NEED:

a) Digital platforms enable clients to send and receive payments and as well as store
information electronically through the digital transfers device that transmit and link to a
bank or non-bank authorized to save electronic value.
b) Customers can utilize mobile banking services that transfer information to a digital device
like a point-of-sale terminal.
c) Through retail mediators who have a digital connected device to transfer the information,
customers can change cash into electronic storage value ("cash-in”) and subsequently
change stored value in return into cash ("cash-out").

CHAPTER-3

3.1 RESEARCH AND METHODOLAGY:

Banks have started to invest their own capital in FinTech start-ups thereby creating in house venture
capital. But this has given banks a challenge to tackle the traditional structures and legacy systems,
which is quite expensive to develop and maintain as it requires technology and specialists to operate
the new system. Technology has always been an enabler for banks to bring in innovative products,
but this has been slow due to the complexity of business and strict regulatory and compliance
environment Banks need to have good management of the cyber security regulations and
management of data. Employee's feel cyber security is the major problem for the use of fin tech in
lending. As per the factor loading, employees perceive use of big data and integration and the use of
artificial intelligence to be an issue. Security issues and data privacy, block chain integration,
emergence of new risk like strategic risk, compliance risk. operational risk, cyber risk along with
the digital divide between the traditional methods and customers has aroused doubts on the
reliability of the new system. New methods have made the regulations quite stringent and strict.
Banks find it difficult to comply with the government regulations for all their loan disbursements.
Technology is not new to customers now and they find lack of mobile and technological expertise
not to be causing much harm to the employees. Shift in consumer expectations and the focus on
technology has given new lead to the fintech companies: They have spread the gains of economic
growth to other sectors by offering unique financial products.

3.2 TYPES:
a) online banking, online payment, and transfer services.
b) peer-to-peer lending.
c) personal investment advice and services.

3.3DATA COLLECTION TOOLS

a) Access to real-time information.
b) Better decision-making.
c) Freedom.
d) Ease and efficiency.
e) Flexibility.
f) Transparency of information.
g) Integration of economic management into other business operations.

CHAPTER 4

4.1 ANALYSIS & DISCUSSIONS

a) I Impact of demographic variables on the various challenges of fin tech.

b) Test whether there is any significant difference between the male and female employees towards
the various challenges of fintech.

c) students t test was performed on the four factors identified, employee’s response towards
digitalisation and technology adoption, external concerns relating to fintech, problems
associated with the employees and problems associated with the customer. Objectives of
Financial Inclusion
d) Financial inclusion intends to help people secure financial services and products at economical
prices such as deposits, fund transfer services, loans, insurance, payment services, etc.

e) It aims to establish proper financial institutions to cater to the needs of the poor people. These
institutions should have clear-cut regulations and should maintain ambitious standards that are
existent in the financial industry.

f) Financial inclusion aims to build and maintain financial sustainability so that the less fortunate
people have a certainty of funds which they struggle to have.

g) Financial inclusion also intends to have numerous institutions that offer affordable financial
assistance so that there is sufficient competition so that clients have a lot of options to choose
from. There are traditional banking options in the market. However, the number of institutions
that offer inexpensive financial products and services is very minimal.

h) Financial inclusion intends to increase awareness about the benefits of financial services among
the economically underprivileged sections of the society.

i) The process of financial inclusion works towards creating financial products that are suitable for
the less fortunate people of the society.

j) Financial inclusion intends to improve financial literacy and financial awareness in the nation.

k) Financial inclusion aims to bring in digital financial solutions for the economically
underprivileged people of the nation.

l) It also intends to bring in mobile banking or financial services to reach the poorest people living
in extremely remote areas of the country.

m) It aims to provide tailor-made and custom-made financial solutions to poor people as per their
individual financial conditions, household needs, preferences, and income levels.

n) There are many governmental agencies and non-governmental organisations that are dedicated
to bringing in financial inclusion. These agencies are focussed on improving the access to
receiving government-approved documents. Many poor people are unable to open bank
accounts or apply for a loan as they do not have any identity proof. There are so many people
who live in rural areas or tribal villages who do not have knowledge about documents such as
 PAN, Aadhaar, Driver’s License, or Electoral ID. Hence, they cannot avail many of the services
offered by governmental or private institutions. Due to lack of these documents, they are unable
to avail any form of subsidies offered by the government to which they are entitled.

o) Goals of Financial Inclusion for Women Empowerment

p) Financial inclusion is very particular about including women in economic management

activities of a household. Financial inclusion believes that women are more capable of handling
finances efficiently when compared to men of a house. Hence, financial inclusion activities
target women by helping them get started engaging in economic management. There are many
houses where women are not permitted to be involved in managing money. They are controlled
by the men of the house and are asked to take care of only the domestic.

q) Many conservative people in India believe that women are not capable of handling money. With
the help of financial inclusion, the government, as well as non-governmental agencies, intend to
get rid of this mentality.

r) Financial inclusion is encouraging women to take up more employment opportunities and be

financially independent. It also explains that women will not have to rely on men for money.

s) They also do not have to wait for men’s permission to do anything.

t) Financial inclusion intends to empower women belonging to low-income groups by increasing

financial awareness among them. Women are also taught in simple ways to save their money for
future purposes. They are provided with exposure to multiple affordable savings instruments.
They are also taught about the various forms of credit available in the market. These forms of
credit will help them start up a new small business venture or take up a training course to apply
for a new occupation.

HO: There is no association between demographic variables and the positive impact of
fintech in lending.

CHAPTER-5

5.1 CONCLUSION
The entry of fin tech has paved the way for building a strong banking system with a good indication
for financial inclusion. However, the other side of the fin tech explains the predicament faced by the
system. The first round of fin tech revolution was spear headed by the various financial institutions,
but the second generation of fin tech must be implemented with a slight hesitation on the part of the
authorities. Whatever radical measures are introduced it may not yield the desired results, unless the
management of these start-ups are strengthened, and the procedures are tightly plugged off. The
implementation of fin tech has given countless benefits like use of artificial intelligence, chat bots,
faster service, user of block chain etc. Despite these benefits from fintech, start-ups are
encountering various hurdles like resistance form the employees and customers, lack of training,
limited infrastructure, capital, increased customer expectations, cyber security followed by global
competition, poor maintenance, inadequate control etc. These problems have created boule necks in
the proper implementation and benefits have not been enjoyed to the full extent. Fintech start-ups
need to become conscious that they are entering a challenging environment and will have to
redefine their position with the Banking sector. Forward planning, continuous research and
leveraging consumer data while making financial products and services can be vital to establish a
strong market with Finte1.

Annexure: -

1. Nanda, Kajol; Kaur, Mandeep (2016). "Financial Inclusion and Human Development: A
cross-country Evidence". Management and Labour Studies. 41 (2): 127-153.
doi:10.1177/0258042X16658734. S2CID 158002205.

2. ^ Jump up to a b World Bank (2013-11-07). Global Financial Development Report 2014:

Financial Inclusion. The World Bank. doi:10.1596/978-0-8213-9985-9. hdl:10986/16238. ISBN
978-0-8213-9985-9.

3. ^ Shankar, Savita (2013). "Financial Inclusion in India: Do Microfinance Institutions

Address Access Barriers?" (PDF). ACRN Journal of Entrepreneurship Perspectives. 2: 60-74.
4. ^ Ranjana, K.S.; Bapat, Varadraj (January 2015). "Deepening Financial Inclusion Beyond
Account Opening: Road Ahead for Banks". Business Perspectives and Research. 3 (1): 52-65.
doi:10.1177/2278533714551864. ISSN 2278-5337. S2CID 168066239.

5. ^ Dixit, R., Ghosh, M. (2013). Financial Inclusion for Inclusive Growth of India - A Study
of Indian States. International Journal of Business Management and Research. 3, 147-156.

6. ^ "Overview". World Bank. Retrieved 2020-04-22.

7. ^ Shankar, Savita (2013). "Financial Inclusion in India: Do Microfinance Institutions

Address Access Barriers?" (PDF). ACRN Journal of Entrepreneurship Perspectives. 2: 60-74.

8. ^ Arp, Fridtjof (12 January 2018). "The 34-billion-dollar question: Is microfinance the
answer to poverty?". Global Agenda. World Economic Forum.