Financial innovation

Assignment of Contemporary Issue In Commerce
Submitted To : Dr. Pinky IGU Professor
Submitted By :
Name : Govind Yadav
Class : M.COM Honors
Semester : 6th
Roll No. : 1700104047024
Topic : Financial Innovation

Financial innovation has emerged as life blood of
efficient and responsive capital market. The Financial
innovation comprises of advances over time in the
financial instruments and payment systems used in
the lending and borrowing of funds. These changes
includes innovations in technology, risk transfer and
credit and equity generation, have increased available
credit for borrowers and given banks new and less
costly ways to raise equity capital, are integral part of
financial innovation.
What Is Financial Innovation?

The current scenario of Indian economy cannot be extant until it is
supported by an efficient financial system. The financial system can be defined as
a cluster of markets, institutions, instruments and regulations through which the
financial securities are traded, interest rates are determined and financial services
are produced and delivered around the world. The financial system is considered
as the most innovative creation of the modern society.
The term innovation can be defined as the emergence of new ideas that
brings a change in the system. These ideas can be in the form of new concepts,
solutions to problems and instruments that can be implemented in order to change
and improve the conditions or situations of a business entity. A business entity or
an organization cannot have a sustainable growth without innovation
management followed by trust, reputation, knowledge and experience.
Financial Innovation with respect to Indian Economy

FINANCIAL TECHNOLOGIES & INNOVATIONS
Venture Capital is the fund
or initial capital provided to
businesses at start-up stage for
new ideas to small firms with
good growth potential. Venture
Capital is considered to be a
significant source of funding
for startups that are not able to
get sufficient finance from
trusted sources. Since the risk
involved in funding venture
capital is high, the returns from
the investment in startups can
also be rewarding.
1. Venture Capital

“Microfinance typically refers
to a range of financial services
including credit, savings, insurance,
money transfers, and other financial
products provided by different
service providers, targeted at poor
and low- income people.”
Microfinance is the provision of
financial services to low-income
clients, including individuals and
groups, who traditionally lack
access to banking and related
services due to low earning and
growth potential. Micro finance is
an effective in reducing poverty,
empowering women and leads to
economic growth and development.
2. Microfinance

3. NEFT
According to Reserve
Bank of India, National
Electronic Funds Transfer
(NEFT) is a nation-wide
payment system to facilitate
one-to-one funds transfer.
Under NEFT, individuals, firms
and corporate can
electronically transfer funds
from any bank branch to any
individual, firm or corporate
having an account with any
other bank branch in the
country participating in the
Scheme.

Automatic teller machine (ATM),
is a computerized telecommunications
device that provides Bank customers to
have access to financial transactions
without the need of visiting the bank
with the help of ATM Machines and
plastic cards.
ATMs can be used by customers to
have access to bank accounts in order
to make cash withdrawals or check
account balances. ATMs can be found
easily in cities, allowing customers
easier access to their accounts. Using a
ATM operated by your bank is
generally free of cost, but using ATM
operated by a competing bank may
involve a small fee.
4. ATM

Mobile banking is a
system that allows one to
conduct a number of
financial transactions
through a mobile device
such as a phone.
Mobile Banking in
increasingly getting
popular with the
increasing use of
Smartphone and it is
becoming very successful
with time
5. Mobile Banking

EFFECTS AND SCOPE OF FINANCIAL INNOVATIONS
The last decade have seen the emergence of many financial technologies and
innovation like NEFT, Mobile Banking, E-banking among many other. But there
exist a lot of room for improvement in the financial innovations and technologies
as after the liberalization and globalization of Indian Economy, India has been
trying to adapt to the turbulent financial market but there has not been any
innovation in this area.
India even lack the drivers of the financial innovation and technologies like
Internet, computer that hinder the growth of adoption of these financial
innovations as part of present way of doing business.
Countries should start spending more on financial innovation to get better
growth opportunities
and take advantage of the benefits of these financial innovations. The future
of these innovations can be brighter if countries start spending more on
these innovations.
There is a huge scope of financial innovations in our country. It has been
observed that with time people are
becoming more familiar to latest technologies like Internet that form a crucial part
of these financial innovations and technologies and therefore, the scope of these
innovations is becoming wider with time. Still, there exists a lot of scope in all
areas for further improvement.

Conclusion
The financial system of today is very dynamic and has high pace
of innovations occurring in its component like financial markets,
financial institutions, financial instruments and financial regulations.
The financial innovations like NEFT, Mobile banking aim to
enhance the efficiency of the financial system. By increasing the
efficiency of financial system improvement in the economy and
social wealth can be seen. There are many benefits of the financial
innovation as they can save time and money of the users of these
services. Therefore, the efficient usage of the financial innovation
can modernize the present financial system making the transactions
faster and easier than ever before.

Financial innovation

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