India’s Leading BFSI and FinTech Companies 2021

53 Some of the key advantages of partnerships between FinTechs and Financial Institutions are as follows: - • Effect of technological changes on customer behaviours: We live in a hyper-digital age which is characterised by the increased use of mobile devices, the increased use of cloud to host data and information that can be accessed anywhere and anytime, higher availability of online services and awareness about data security and privacy. Since conventional financial service providers are less likely to have enough knowledge or resources to deploy such technologies, working with FinTechs will certainly help elevate services. • Broadened consumer base: Needless to say, such partnerships can help both sides tap into each other’s existing consumer base, thereby broadening their market share and reach. • Offering more functions and features to consumers: Such partnerships allow financial service providers to offer customers useful features and functions that it wasn’t previously able to provide, such as money management tools, spend analytics, risk assessment or mobile check deposits, among others. • Increased ease-of-use: Digital finance is usually user-friendly and easy for consumers to figure out. By working closely with FinTechs, financial service providers can elevate customer experience through features that are intuitive and easy-to-use. • Reduced costs: More often than not, it is cheaper for financial institutions to work with FinTech on improving digital services than for them to make an effort on their own. • Ability to scale quickly: Such partnerships can also be easily scaled up or down, depending on the outcomes derived. Issues & Challenges One of the key issues that can potentially hold back the rapid growth of FinTech are concerns pertaining to data privacy and protection. With people relyingmore on digital transactions, Fintech players find themselves in possession of more valuable data than ever before. Cybercrime has become sophisticated with even large, reputable institutions being vulnerable to data leaks and attacks. In addition to this, the proliferation of FinTech services can potentially impact the overall financial stability of the economy. Wider access to credit amidst increasing competition could dilute lending standards. With many FinTech players lending out of debt and equity rather than deposits, such credit could bring inmore volatility in the absence of any standard credit guidelines. Besides, cross-border payments, consumer protection and digital education, inequality of access to FinTech services are some other aspects that can pose challenge to the growth of FinTech services in India. On the regulatory front, the RBI has broadened the scope of priority sector lending to include start-ups. The central bank also announced a pilot scheme, under which authorised Payment System Operators (PSOs) including banks and non- banks, would be able to provide offline payment solutions using cards, wallets or mobile devices for remote or proximity payments. This measure has been taken to overcome internet connectivity issues that curtail digital payments across rural areas and to encourage innovations that enable offline digital transactions. The RBI has time and again taken various measures, like additional factor of authentication and online alerts, to boost customer confidence and safety with a view to facilitate increased adoption of digital payments. Going forward, FinTech players would need to build on regulatory compliance and cyber risk management. They will also need to develop strong cyber-risk prevention frameworks using new-age technologies to defend against cyber-attacks. Dun & Bradstreet