Fintech vs banks: Why do businesses prefer fintech in India?
Banks have always been the heart of any country’s financial system. In today’s contemporary world, banks have hundreds of branches, and this fact is equally applicable to India.
Banks and their branches in India are spread across the country, providing financial support to all the citizens and, in return, getting solid customer loyalty.
However, with the expansion of options, customer service has become a deal-breaking factor whenever a customer has to choose from the numerous options available. This is where fintechs have expertise.
Fintech organizations in India have been ever-increasing since 2015 and have been spreading their reigns over the financial sector of the country.
Through the use of smartphones and the internet, fintech has made transactions and money management immensely easy.
Along with this, fintechs are known for providing extremely personalized and cooperative customer services in collaboration with other technological and functional benefits they offer.
The advantages of fintech over banks are numerous; however, both these types of organizations are crucial for a country’s development.
India is one of the rapidly rising economies and has definitely become a hot center for the FinTech industry in the past few years.
In the race of fintech vs banks, the former seems to be leading in the country because mobile banking, paperless and cardless transactions, digital wallets, and easy international transfers have all facilitated an excellent management system in India.
Fintech digital banking has seen a stark rise in the past two years in the country, majorly owing to the pandemic.
However, the reasons for the rise are not only the lockdowns but also the technological convenience fintech organizations offer in times of need.
Today the whole financial system of the country has become convenient and effectively manageable.
Along with this, the growth of the fintech sector in India is also owed to the expanding availability of smartphones, internet connectivity, access, and many other high-tech gadgets and platforms.
Furthermore, there have been various payment infrastructures, interfaces, and mechanisms built in India which have proven to bring about significant improvements — like Unified Payments Interface (UPI), Immediate Payments Service (IMPS), Bharat Interface for Money (BHIM), and more.
Government initiatives such as Digital India and Make In India have been seen to have major contributions to the growth of the Fintech industry in India.
During the initial months of COVID-19, there was a 20-50% increase seen in the use of the internet and mobile banking, and from then on, it has been ever-increasing.
As people are getting more and more comfortable with the whole digital banking dynamic, they are demanding and expecting a better flexible journey.
71% of the population prefers to have multi-channel interactions. 25% of the others want a completely digital banking journey and would like to have remote customer assistance available. Consumers' utilization trends tend to be evolving time and again.
With the demand for efficiency and speed and to render an enhanced customer experience, Fintech organizations are on a constant move to integrate better technological solutions.
Fintechs are known to offer hurdle-less payments and transaction experiences to their customers. The majority of businesses today, even the giants, use online payment modes through which purchases are made within seconds.
The Fintech sector in India is performing the task of filling the loopholes and gaps which have been created by the traditional banks and is also the connection between modern consumers and the banks.
This industry is rapidly growing, and according to The Business Research Company, the fintech industry will see a rise up to $309.98 billion in 2023, with an annual growth rate of almost 25%.
A personalized user experience is the ultimate success factor for any business across all industries.
However, this becomes a bigger deal in the financial services sector as the interface provided by the fintech companies is way more advanced than banks, as customers receive facilities exactly matching their preferences.
Ranging from quick processing to real-time transaction information, readily available customer service, and channels to get easy access to all services.
The technological services offered by traditional banks are not as efficient as fintech services.
The former’s systems are generally outdated and bulky because banks have to deal with numerous legal issues and infrastructural guidelines before offering any online services.
Customers who utilize online solutions offered by banks have to suffer through various challenges like:
• Tedious and long approval processes
• Old-fashioned code for integrations
• Inadequate customer support
Finetech solutions are robust services with developer-friendly documentation, cloud-based automation, extensive data analytics, a user-friendly interface, and faster processing, all available at a comparatively lower cost.
One of the most important differences between a fintech vs banks are the facility delivery speed. Fintechs play a strong game in efficiently catering to the customer’s needs.
Considering the terms of operational speed, fintech is a clear winner in the fintech vs banks war.
Traditional banks lag behind in these terms because they are still stuck to the conventional paper trail documentation method and manual verification, which of course, takes an immense amount of time.
Fintech is able to provide efficient processing through technologically advanced features like online onboarding, automatic paperless verification, digital interface integrations, cloud-enabled information storage, etc.
Fintech organizations run their websites in different languages. This means customers from different regions have the convenience of viewing the website or platform in their preferred language.
This kind of flexibility enables fintech to have a wider range of audiences attracted and captured to their platform. People are more likely to make global payments through the provided technology.
Payments made through fintech platforms are cost-effective and extremely secure due to the various protection steps taken by the organizations.
While making payments, especially international payments, along with the actual payments, there a numerous other hidden costs, which make the actual payment very expensive.
There are various charges that affect the remittance amount, like FX rates, inter-bank conversions, processing fees, and intermediary commissions.
Fintechs tend to refrain from charging any hidden costs or additional fees like cancellation fees, modification fees, etc.
The services offered by fintech enable customers to make payments across the world without incurring extra burden costs or fees.
Amongst the advantages of Fintech over banks is the tight security offered by the former in accordance with the rules and regulations of the region.
These organizations integrate advanced technological systems which can easily detect any unauthorized activity and immediately prompt the user about the access, which can then be effectively solved through the further security measures offered.
Fintech digital banking offers convenience and efficiency, which are two of the most common benefits seen while comparing both financial entities.
The technological integrations offered by Fintechs offer higher processing speed which in turn gives immediate insight into the transactional information of the business.
If the customers would have been using traditional banking, for even a simple process, they would have to roam around from branch to branch and fill out different online applications.
On the other hand, Fintech organizations provide their customer with everything in one single dashboard.
With the increasing access to smartphones and the internet in the country, more and more people are demanding the convenience of getting everything readily available.
Along with this, fintech digital banking is rising with the advancing technology and the smart integrations which fintech firms can easily do.
Digital lending basically means loaning money through financial web platforms and mobile apps. These lendings are digitally authorized, and the credit evaluation can easily be done online.
Nowadays, businesses prefer to obtain a line of credit online through fintech platforms.
The money is easily transferred from the lender's account to the borrower’s account without the customer having to roam around with cash or cheques.
In the same manner, the monthly interest installments can be directly transferred from the borrower’s account to the lender’s account.
Fintechs are widely benefiting from Blockchains as it has distributed, transparent, and properly divided digital ledger technology.
This means that none of the information is controlled by one single organization or controlling unit; this gives fintech a new reign on security and freedom.
As there is no singular controller, no modifications can be made to the data, and all the information tends to be bullet-proof.
A virtual card is a feature extremely beneficial for both the organization offering them and the customers using them.
Virtual cards have become an integral part of any business financial system, which means that fintech firms have to be on top of it and offer their customers the best technologically integrated virtual cards.
More and more businesses using virtual cards mean more business for the firms.
Interesting read: Key fintech industry trends for 2023 in India
To integrate your business system with a robust platform with advanced technology, you need to make a smart decision and get Volopay.
Volopay is an all-in-one expense management platform that provides businesses with all high-tech features to manage their finances.
Features like direct accounting integrations, corporate cards, both physical and virtual, low remittance international transfers, real-time transaction visibility, built-in reimbursement system, accounts payable automation, OCR to recognize and automate receipt matching, and many more facilities will not only help in boosting your company’s cash flow but will also bring in efficiency and accountability into the whole business system.