Since 1999, Indian National Technology Day has been celebrated on the 11th of May every year. The day was coined by our former Prime Minister Atal Bihari Vajpayee and is dedicated towards recognizing the contributions of various innovators, engineers, scientists, and technocrats to promote scientific and technological innovation in the country. Having said that, technology advancements have showcased disruptions across various businesses, irrespective of industry verticals. And one area that has witnessed a noteworthy transformation is the world of finance.
Looking forward to this auspicious day, let’s look at some of the noteworthy aspects of technology in the realm of finance
Digitalization of Banking
Mobile banking apps, fintech partnerships, and blockchain-based solutions are just a few examples of the key verticals driving the digital banking narrative. The synergy between these verticals is creating a dynamic ecosystem that prioritizes convenience, accessibility, and innovation. As traditional banking institutions and barriers crumble, and digital solutions become more ingrained in everyday financial activities, the stage is set for a transformative journey that promises enhanced user experiences and a reshaped financial landscape.
Fintech Innovations
Open banking and API-based services are experiencing a significant uptick globally, with Europe leading in platform and API numbers, while Asia-Pacific sees substantial growth, especially in countries like Australia and Indonesia. Regulatory frameworks are also advancing worldwide, fostering the diversification of API products beyond mandated ones, which is transforming banking and driving fintech innovation. Additionally, open banking holds promise for improving financial inclusion, as demonstrated in Brazil, where it is expected to bring millions into the formal credit market.
Furthermore, fintech is undergoing a transformation driven by big data, which enables faster, informed decisions and personalized financial services. Neobanks, with their digital-only presence, are gaining popularity, challenging traditional banks with advantages like convenience and lower fees. Meanwhile, blockchain technology and cryptocurrencies are reshaping finance by offering faster, cheaper, and more secure solutions. Decentralized finance (DeFi) is particularly noteworthy for its potential in providing financial services to the unbanked population, while artificial intelligence is enhancing banking operations and customer experiences. Finally, digital wallets are becoming increasingly prevalent, offering secure and convenient payment options with added social features.
Digital Payments Revolution
India's digital payment landscape is poised for further transformation in 2024, driven by several key factors. UPI, with its remarkable growth trajectory, is set to dominate the scene, facilitating a multitude of transactions, including international remittances and merchant payments. The expansion of the Account Aggregator framework promises deeper integrations and enhanced fintech innovations, while the mainstream adoption of Pay Later services reflects evolving consumer preferences, particularly among urban youth. As digital wallets refine their offerings and form strategic alliances, they are expected to maintain a significant share of the market, alongside the emergence of novel payment mechanisms like voice payments and digital rupee, catering to specialized use cases and broadening the payment landscape further. Overall, the future of payments in India appears vibrant, with continued innovation and increased accessibility driving the industry forward.
Data Analytics and AI in Finance
The Four Oracles, composed of global experts Prashanth H Southekal, Tobias Zwingmann, Arun Marar, and Sanjeev Chib, have unveiled their comprehensive insights on the future of data, analytics, and AI, specifically tailored for CFOs but applicable to all business leaders. Prashanth Southekal, a specialist in enterprise data management, highlighted the resurgence of foundational analytics aimed at enhancing business performance. He emphasized the pivotal role of data governance in enabling better performance, advocating for practices to minimize data footprint to align with environmental, social, and governance (ESG) initiatives. His prescriptions included focusing on KPIs, embedding data governance throughout the data lifecycle, and implementing strategies for reducing data footprint responsibly.
Arun Marar, a technology executive, delved into the potential of synthetic data to revolutionize AI model development, reducing biases and ensuring privacy, particularly for sensitive applications. He warned of the risk of model drift in static AI models, which could degrade outcomes and hinder ROI expectations. Their collective insights offer CFOs a roadmap for leveraging data, analytics, and AI to enhance decision-making, risk management, and operational efficiency in an increasingly data-driven world.
Regulatory Challenges and Security Concerns
Today, Financial services firms have come face-to-face with an array of complex landscapes marked by sluggish economic growth, high interest rates, and a persistent cost of living crisis. With this, regulatory changes post-Brexit pose significant challenges. This calls for a focus on embedding Consumer Duty and enhancing cyber resilience.
Furthermore, embracing technologies like AI and ML has been offering the much needed opportunities for the players in the finance sector. However, with this, it also requires vigilant security measures, as emphasized by the National Cyber Security Centre. Moreover, firms must prioritize ESG, sustainability, and diversity and inclusion initiatives, aligning with regulatory expectations and preparing for forthcoming deadlines and consultations. Additionally, data-driven strategies are paramount which necessitate improvements in data quality, governance, and security, as well as investment in modernization to navigate legacy systems and enhance operational efficiency.
