How to Understand the FinTech Ecosystem?

Fintech stands for Financial Technology, derived from the two words finance and technology. Fintech is the study of how the finance industry facilitates activities like making payments, opening bank accounts, and insurance through the aid of technology like AI and other tools. It also provides consumers with more comfort and helps businesses evolve.

You will be amazed at how technology is driving the finance industry with just one click.

iStock

Fintech innovation plays a vital role in securing a top position in the competitive finance market, all driven by the evolution of new technologies.

Everyone demands enhanced and modified products, prompting fintech companies to develop and launch new AI tools that simplify complex processes with just a click.

The finance sector needs a continuous flow of new products and services, demonstrating how finance investments positively affect fintech innovation within established firms. Open innovation benefits both fintech companies and customers, with open-source software leading supplier-driven innovation and emphasizing co-creation in customer-driven innovation. Scholars suggest that information technologies reshape the fintech innovation process, requiring new organizational designs to leverage the benefits of digital technologies in finance.

Various fintech innovations include:

1. Business Model Canvas

Business Model Canvas is a vital part of fintech innovation focusing on:

• Key Partners
• Key Activities
• Value Proposition
• Customer Relationship
• Customer Factors
• Key Resources

This model employs different methodologies for sample selection and analytical processes.

2. Innovation in Customer Segmentation and Service Delivery

Innovation combines web and mobile applications with customer services, segmenting customers based on different needs. For example, PolicyGenius helps customers find and evaluate insurance policies in categories like home, life, and auto insurance.

3. Key Activities Associated

Innovation plays a key role in automatization, particularly in core business processes of startups. Fintech companies help customers comply with KYC regulations and integrate delivery services with business partners. For example, PhonePe integrates with apps like Blinkit, Flipkart, and Myntra, allowing seamless payments directly through PhonePe.

4. Innovation in Management With Partner Relationship

Startups depend critically on partners for key resources needed for service delivery. For instance, SBI’s online banking service partners with Mastercard, allowing customers to use ATM cards on Mastercard’s platform. Fintech innovation leverages such networks to provide consumers with convenient access to their funds.

Fintech is a rapidly growing sector, continuing to innovate and boost productivity across the finance world.

In this finance technology era, the fintech world is too small to elaborate on the future of finance technology in the upcoming years. As all industries and business companies are eager to embed the ease of fintech to produce consumers at a greater scale to stand in the market of business, we can say that fintech is directly proportional to business growth. The fintech companies just want to integrate themselves with the payments mode and invest in leading tools directly into their platforms so the business can tap into the brand new era of revenue streams, boost their customer loyalty, and gain a tough competitive edge.

Key takeaways for fintech:

• As fintech is evolving with the traditional banks which are accepting the technology to ensure their customer’s protection and financial stability.
• The mainstream is accepting Blockchain technology and cryptocurrencies which are gaining another level of popularity.
• The most interesting theme is AI which will increase and drive personalized financial services, automatic trading, enhance risk management, and modify the fraud detection system.

In 2025, finance is likely to be dominated by mobile banking and digital payments leading the charge. This shift is primarily happening because the COVID-19 pandemic established a massive change as consumers and businesses sought contactless payment options and remote banking services. Change is often for the better; therefore, the world will increasingly adapt to an e-payment system, extending even to rural areas.

Below are some financial technologies that will accelerate banking and digital payments:

1. AI-Native Banking

According to McKinsey & Company, AI is estimated to generate $1 trillion in revenue for the global banking industry in the coming years. Here are some key areas in finance where AI is expected to make an impact:

• Algorithmic fairness
• Automation
• Conversational banking
• Personalized financial services
• Predictive analysis

AI will transform banking by providing 24/7 services to customers and detecting fraudulent activities, enhancing the banking experience, and making processes smoother for both customers and businesses.

2. Biometric Authentication

Authentication, such as entry and exit by fingerprint and facial recognition, adds more security to digital payments. This innovation is becoming more sophisticated, and users are very friendly to it, which could accelerate the adaptation of mobile banking and payment methods. It is also substituting the need for passwords and PINs.

3. Buy Now, Pay Later Lending

Buy now, pay later (BNPL) has matured since the pandemic as another option for making small payments first and completing the rest in installments, mainly for online shopping. For instance, Amazon has been a part of BNPL since the 2020s. Fintech apps like Street Style Store and Flipkart also use BNPL.

A recent report by the Consumer Financial Protection Bureau (CFPB) estimated that the number of BNPL customers will triple by 2027 from its 50 million figure in 2021.

*Datawrapper

4. Mobile Wallets

Mobile payment wallets include the trading and holding of cryptocurrencies, which are increasingly popular on platforms like Crypto.com. This enables consumers to trade digitally and make payments directly from their smartphones. Additionally, according to Worldpay LLC’s 2024 report and its forecast for payment trends in 2027, mobile wallets are set to play a significant role in the future of digital transactions.

*Datawrapper

5. Banking and Banking as a Service (BaaS)

BaaS is the leading service that should not be confused with blockchain as a service. It refers to nonbankers offering banking services to their customers through APIs. Fintech startups have extensively used APIs to develop financial services like checking accounts, payment processing, and lending within their products and services.

In a rapidly evolving financial ecosystem, traditional methods are being replaced by technology-driven solutions. FinTech is reshaping the way we think about finance and professionals who fail to adapt risk being left behind. The future of finance demands a new breed of experts—those who can navigate the complexities of digital finance, blockchain, AI, and big data. Are you ready to be at the forefront of this transformation?

Why Enroll in the PG Certificate Programme in FinTech at IIM Nagpur?
This FinTech certification programme is designed for professionals ready to take the next step in their careers. The fintech course focuses on solving real-time business problems, ensuring that learners are not just passive recipients of information but active participants in shaping the future of finance.

FinTech is not just a trend; it’s a revolution that is reshaping the entire financial landscape. From digital payments to blockchain innovations, FinTech is opening new avenues for growth and transformation. For individuals eager to capitalize on these changes, IIM Nagpur in association with Jaro Education provides an excellent opportunity to gain specialized knowledge and skills in the field. With their cutting-edge FinTech programs, you’ll gain deep insights, practical expertise, and the competitive edge you need to thrive in this fast-evolving industry. Whether you’re new to the field or looking to enhance your current expertise, we will equip you with the pedagogical techniques and tools to succeed in the future of finance.