Fintech unicorns fostering innovation to become successful banks of the future

India's Fintech industry has experienced a remarkable surge in growth in recent years. There has been a rapid development in an extensive range of FinTech sectors, including digital banking, PayTech, LendTech, InsurTech, RegulationTech, and WealthTech, among other segments, in just a few short years.   

The fintech industry has experienced a significant surge in unicorn valuations, with the number of companies valued at over $1 billion rising from just 25 in 2017 to at least 274 as of September 2022. With a combined market value exceeding $1 trillion, they stand as an immense force.

Despite being a convenient one-stop shop for businesses and consumers, traditional banks have failed to keep up with the rapid pace of technological advancements in other industries, resulting in a lack of product evolution. To remain competitive, banks must adopt cross-industrial platforms that dismantle the conventional barriers between industries. This shift in approach will not only alter customer behavior but also transform linear value chains into dynamic ecosystems that cater to customer needs in novel and innovative ways.

With the rise of cross-industrial platformisation, banks are now facing competition from a wide range of organisations that are capable and willing to provide financial services. Tech giants like Google and Tencent have leveraged their platforms to provide banking services to millions of customers with ease. The competition in various industries is rapidly increasing worldwide.

During the Techcircle Finserv Innovation Summit 2023, Vaibhav SJ, Co-Founder & CEO, Easy Pay while talking about how organisations are fostering innovation and how that’s driving the much-needed change, said, “When we talk about innovation most often in India. What I've seen in the past two decades since digitisation has picked up, is that people want to automate processes. Eventually what needs to be done is you need to think out of the box and not just digitise processes, and that is exactly how innovation gets fostered.”   

Speaking about innovating the customer experience and journey, Shrini Viswanath, Co-Founder, Upstox said, “All of us right now are innovating but at a consumer journey level. We’re all solving the transaction layer. How do we get a product or service to you? Faster, cheaper, easier? I think there’s a lot of opportunity for us to take financial services beyond just the transaction layer and more into discovery and more engaging experience. We’re seeing a lot of tools, such as AI, and everything come in here. We're seeing the power of things like ChatGPT… and I think the next 10 to 15 years is going to be even more revolutionary.”  

With the rapid advancement of technology, size is no longer a determining factor in providing excellent services, securing customer loyalty, analysing data, and establishing networks of capital.     

The arrival of new contenders has elevated the standards of customer expectations. Financial service providers are now expected to meet a wide range of demands from both individual and organisational customers. These demands include personalised services, seamless experiences, and a dedication to social and environmental responsibility.

Nalini Venkat, President — Digit Insurance, said, “I think technology aids innovation. But innovation comes from solving customer problems. We at Digit, look at product innovation to solve customer pain points, and customer journeys to reduce friction and make it simple and communication.”