Understanding the

Disrupting the Financial

Industry (What and
Why)
PREFACE
 Financial technology disruption is a massive shift in the
banking service, from traditional banking to neobanks.
Disruptive technologies try to replace existing
technologies or products by innovation
 Disruption of Traditional Banking Models: One of the
main ways in which Fintech is disrupting traditional
banking models is through digital payments. Fintech
companies have made it possible for customers to make
payments seamlessly, securely, and at a lower cost than
traditional banks
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 Incumbent banks can view this digital disruption as a
huge opportunity for launching new products and
services. Digital offerings such as mobile banking
services, Unified Payments Interface (UPI), and digital
wallets have disrupted the banking services industry.
 Technology in financial services has great benefits, such
as improved security, speed, convenience, coverage, and
customer experience. Various technologies have been
used in the industry. These include blockchain and
cryptocurrencies, big data and artificial intelligence,
cybersecurity solutions, and digital banking.
INTRODUCTION
 The financial industry is being disrupted by a number of
new technologies and innovations, collectively known as
FinTech.
 FinTech is changing the way financial services are
delivered, making them more efficient, convenient, and
accessible.
 This disruption is forcing traditional financial institutions
to adapt or risk being left behind.
 Example: In 2021, the global FinTech market was valued
at $128 billion and is expected to reach $309 billion by
2028. This growth is being driven by the increasing
adoption of FinTech solutions by consumers and
businesses.
WHAT IS FINTECH?
 FinTech is a broad term that encompasses any new technology that is
used to improve or automate financial services.
 Some of the most common FinTech innovations in India include:
 Paytm: This mobile payments app allows users to make payments with their
smartphones.
 CRED: This app allows users to earn rewards for paying their credit card bills
on time.
 BankBazaar: This online platform allows users to compare and apply for
loans and credit cards.
 PolicyBazaar: This online platform allows users to compare and buy
insurance policies.
 Zerodha: This online brokerage firm allows users to trade stocks and other
financial instruments.
 These are just a few examples of the many FinTech innovations that are
transforming the financial landscape in India. As FinTech continues to
grow, it is likely to have a major impact on the way people access and
manage their finances.
WHY IS FINTECH DISRUPTING THE
FINANCIAL INDUSTRY?
 There are a number of reasons why FinTech is disrupting the
financial industry:
 Technology is becoming more powerful and
affordable: FinTech companies are able to leverage new
technologies, such as artificial intelligence, machine
learning, and blockchain, to create innovative financial
products and services.
 Consumers are demanding more convenient and
personalized financial services: Consumers are
increasingly looking for ways to manage their finances
on their own terms, and FinTech companies are able to
meet this demand with products and services that are
designed to be easy to use and tailored to individual
needs.
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 Regulatory changes are making it easier for new companies to
compete with traditional financial institutions: In many
countries, regulators are loosening regulations that have
traditionally made it difficult for new companies to enter the
financial services market. This is creating a more level playing
field for FinTech companies and traditional financial institutions.

 Example: The rise of smartphones and mobile internet

has made it possible for people to access financial
services on the go. This has led to the growth of mobile
payment apps and other FinTech services that are
designed for mobile devices.
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 Technology is becoming more powerful and
affordable: In recent years, there has been a rapid
increase in the power and affordability of technology.
This has made it possible for FinTech companies to
develop innovative financial products and services that
were not possible just a few years ago. For example,
artificial intelligence can be used to automate tasks that
were once done by human employees, such as processing
loan applications. Machine learning can be used to
identify patterns in data that can be used to make better
financial decisions. And blockchain can be used to create
secure and transparent transactions.
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 Consumers are demanding more convenient and
personalized financial services: Consumers are
increasingly looking for ways to manage their finances
on their own terms. They want to be able to do things
like pay bills, transfer money, and invest their money
from anywhere, at any time. They also want financial
products and services that are tailored to their individual
needs and goals. FinTech companies are well-positioned
to meet this demand, as they are able to use technology
to deliver convenient and personalized financial services.
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 Regulatory changes are making it easier for new
companies to compete with traditional financial
institutions: In many countries, regulators are loosening
regulations that have traditionally made it difficult for
new companies to enter the financial services market.
This is creating a more level playing field for FinTech
companies and traditional financial institutions. For
example, the European Union has recently adopted a
number of regulations that are designed to make it easier
for FinTech companies to operate in the EU.
IMPACT OF FINTECH ON THE
FINANCIAL INDUSTRY
 FinTech is having a major impact on the financial
industry, in a number of ways:
 It is changing the way financial services are delivered.
 It is making financial services more efficient and convenient.
 It is making financial services more accessible to a wider
range of people.
 It is forcing traditional financial institutions to adapt or risk
being left behind.
 Example: The rise of online banking has made it
possible for people to do their banking from anywhere in
the world. This has made it more convenient for people
to manage their finances and has also led to lower costs
for banks.
CHALLENGES FACING THE FINANCIAL
INDUSTRY
 The financial industry is facing a number of challenges
as a result of FinTech disruption:
 How to compete with new, more innovative companies.
 How to protect themselves from fraud and cyber attacks.
 How to comply with new regulations.
 How to adapt their business models to the changing
landscape.
 Example: Traditional banks are facing increasing
competition from FinTech companies that offer lower
fees and more convenient services. Banks are also facing
challenges in complying with new regulations, such as
those governing cryptocurrencies.
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 The financial industry in India is facing a number of challenges due
to FinTech:
 Competition from new FinTech companies: FinTech companies are
entering the Indian market at a rapid pace, and they are offering
innovative products and services that are challenging the traditional
players.
 Regulatory uncertainty: The Indian government is still in the process of
developing regulations for FinTech companies, and this uncertainty is
making it difficult for these companies to operate.
 Cybersecurity risks: FinTech companies are increasingly targets of
cyberattacks, and this is a major challenge that they need to address.
 Lack of skilled talent: There is a shortage of skilled talent in the FinTech
sector in India, and this is making it difficult for FinTech companies to
hire the people they need.
 Data privacy concerns: Consumers are increasingly concerned about
their data privacy, and this is a challenge that FinTech companies need to
address.
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 Competition from new FinTech companies: In recent
years, there has been a surge of new FinTech companies
entering the Indian market. These companies are offering
innovative products and services that are challenging the
traditional players, such as banks and insurance
companies. For example, Paytm is a mobile payments
app that has become very popular in India. It allows
users to make payments with their smartphones, and it
has been credited with helping to reduce the use of cash
in India.
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 Regulatory uncertainty: The Indian government is still in
the process of developing regulations for FinTech
companies. This uncertainty is making it difficult for
these companies to operate, as they are not sure what the
rules will be. For example, the Reserve Bank of India
(RBI) has recently announced that it will be issuing
guidelines for FinTech companies that offer lending
services. This is a positive development, as it will
provide clarity for FinTech companies and help to
protect consumers.
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 Cybersecurity risks: FinTech companies are increasingly
targets of cyberattacks. This is because they store and
process large amounts of sensitive data, such as credit
card numbers and bank account information. In 2021, the
RBI reported that there were over 14,000 cybercrime
incidents in India, and the financial sector was one of the
most targeted sectors. FinTech companies need to take
steps to protect themselves from cyberattacks, such as
using strong security measures and educating their
employees about cybersecurity risks.
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 Lack of skilled talent: There is a shortage of skilled
talent in the FinTech sector in India. This is because the
FinTech industry is relatively new, and there are not
enough people with the skills and experience that are
needed. FinTech companies need to find ways to attract
and retain skilled talent, such as offering competitive
salaries and benefits.
 Data privacy concerns: Consumers are increasingly
concerned about their data privacy. This is because there
have been a number of high-profile data breaches in
recent years. FinTech companies need to take steps to
protect the privacy of their customers' data, such as
using encryption and anonymization techniques.
CONCLUSION
 Opportunities for FinTech Companies
 The financial industry in India is facing a number of challenges, but it also
offers a number of opportunities for FinTech companies:
 Large and growing market: India is a large and growing market with a
population of over 1.3 billion people. This provides a large pool of potential
customers for FinTech companies.
 Underserved segments: There are a number of underserved segments in the
Indian financial market, such as small businesses and rural areas. FinTech
companies can tap into these segments and offer them innovative products
and services.
 Government support: The Indian government is supportive of FinTech
innovation. It has launched a number of initiatives to promote FinTech,
such as the Startup India initiative.
 Strong technological infrastructure: India has a strong technological
infrastructure, which is essential for FinTech companies. The country has a
large number of internet users and a growing number of smartphone users.
 Talent pool: India has a large pool of skilled talent, which is another
advantage for FinTech companies. The country has a number of universities
and colleges that produce graduates with skills in areas such as technology,
finance, and business.
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 Large and growing market: India is a large and growing market with
a population of over 1.3 billion people. This provides a large pool of
potential customers for FinTech companies. The Indian economy is
also growing rapidly, which is creating new opportunities for
FinTech companies.
 Underserved segments: There are a number of underserved segments
in the Indian financial market, such as small businesses and rural
areas. FinTech companies can tap into these segments and offer them
innovative products and services. For example, FinTech companies
are developing mobile-based solutions that allow small businesses to
manage their finances more easily.
 Government support: The Indian government is supportive of
FinTech innovation. It has launched a number of initiatives to
promote FinTech, such as the Startup India initiative. This initiative
provides financial assistance, mentoring, and other support to
FinTech startups.
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 Strong technological infrastructure: India has a strong
technological infrastructure, which is essential for
FinTech companies. The country has a large number of
internet users and a growing number of Smartphone
users. This means that FinTech companies can reach a
large number of people with their products and services.
 Talent pool: India has a large pool of skilled talent,
which is another advantage for FinTech companies. The
country has a number of universities and colleges that
produce graduates with skills in areas such as
technology, finance, and business. This means that
FinTech companies can find the talent they need to
develop and grow their businesses.