Sunday, 5 December, 2021

The Future Of FinTech


Saroj Wagle


As an economy, we’re a collection of buyers and sellers. One thing that both parties have in common is that they want the process of making a payment to be as quick, convenient and safe as possible. Technology has played, and continues to play, a significant role in making this happen across the world. The use of smartphones for mobile banking, investing services and crypto-currency are examples of technologies aiming to make financial services accessible to the general public. In fact, financial technology companies consist of both startups and well established financial institutions and technology companies trying to replace or enhance the usage of financial services provided by existing firms. By keeping this in mind, here I want to put forth some of the wonderful ideas regarding FinTech:

Scenario of Nepal
In the context of Nepal, we have seen so many changes in the FinTech sector. In Nepal, different types of FinTech summits and expos have been organised to materialize the FinTech as well as cyber security ecosystem by bringing in leading FinTech leaders and innovators from around the world. The summits bring together leading tech leaders, academics, central bankers and bank supervisors, insurers, and government agencies to discuss various innovations, cutting-edge technology and latest trends.
Of course, the summits and expos highlight cutting-edge technological innovations that have transformed the global financial landscape and showcase some of the leading offers in the market today. From thought leadership keynotes, case studies and tech presentations, attendees are informed of the latest trends and best practices in the industry. In Nepal, FinTech services like FiSoft, eSewa, Khalti, Nepal Clearing House, Bottle Technology, etc. are doing phenomenal work in this sector.

The rise of contactless payments
Contactless cards — which have a chip that emits radio waves to a payment terminal, and do not require a PIN — have been central to this. Back in 2006, the technology wasn’t in place. Yet in 2016, of the 11.2 billion card transactions, around 22 per cent were from contactless debit or credit cards, according to UK cards association. The number of card transaction is set to reach 18.5 billion by 2026, of which more than half will be accounted for by contactless payments. At present, half of all credit cards are contactless, and more than a third of debit cards are too. Currently, most banks issue contactless cards by default and Barclay reported last year that just 1 per cent of customers requested cards requiring a PIN instead.

How FinTech payments shape economy
Mobile payment systems have become a cornerstone of FinTech, with digital wallets such as Apple Pay and Google Pay being common examples. These systems enable contactless payment through Near Field Communication Technology, which means the customer simply holds their smartphone in the vicinity of a payment reader. Instant payments can also be made to friends using the system. The trend is a clear one: transactions are disappearing into apps, and borders or currency barriers are being melted away by the technology pioneered by FinTech.

Safety and consumer needs first
There is still concern among many people when it comes to security, fraud and data breaches associated with these types of technology, and this is one area where agile, innovative FinTech firms have a deficit: trust. Unlike established counterparts such as banks, the onus is very much on them to develop their own reputation. Yet this, rather than being a burden, also acts as a strong incentive for FinTechs to prioritise safety in the technology they develop.
Consumers appear to be voting with their feet, with the majority of our nation demonstrating how enthused they are by these rapid advances in payment technologies, and embracing the benefits they have to offer.
The numbers speak for themselves, and demand and supply for these innovative and evolving systems are growing in equal measure. It is up to FinTech companies to prove themselves to be better, safer and more-convenient. But thus far, it’s fair to say FinTechs – and particularly across the world – is doing a remarkably good job. In a nutshell, FinTech will not only provide digital-first services to existing and new customers, it will also deliver a means of financial inclusion for those who don’t have access to traditional services.

The author writes regularly for TRN