A

Specialization Project Report

On

“FINTECH REVOLUTION IN INDIA”

FIAKS (FORUM OF INDUSTRY AND ACADEMIC

KNOWLEDGE SHARING)
In the partial fulfillment of the Degree of

Post-Graduation Diploma in Management (Finance)

Approved by AICTE
By

Parth Patel
P.G.D.M Finance & Roll No:29
Batch:2018-20 (Year)

Under the Guidance of

PROF. Harsh Modi

ATHARVA INSTITUTE OF MANAGEMENT STUDIES

Malad-Marve Road, Charkop Naka,
Malad (West), Mumbai 400 095.

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 Declaration

This is to declare that the study presented by me to ATHARVA INSTITUTE OF

MANAGEMENT STUDIES, in partial completion of the Post-Graduation

Diploma in Management (Finance) under the title
“FINTECH REVOLUTION IN INDIA”
had been done under the guidance of PROF. Harsh Modi during May-June 2019.

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 Certificate

This is to certify that the project titled

“FINTECH REVOLUTION IN INDIA”

is the bonafide work carried out by Parth Patel student of ATHARVA
INSTITUTE OF MANAGEMENT STUDIES, during the year 2018-2020 in the
partial fulfillment of Post-Graduation Diploma in Management (Finance)and
that the project has not formed the basis for the award of any other degree,
associate-ship, fellowship or any other similar titles.

Place: Mumbai

Date:

Signature of the guide Signature of Director

Prof. Harsh Modi Dr. Sujata Pandey

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4|Page
 Acknowledgement

I would like to express my deep sense of gratitude to all those who have directly or indirectly
contributed towards the successful completion of this project with utmost accuracy and validity

Firstly, I would like to thank my mentor Prof. Harsh Modi for her unappeasable help and
direction. Next I would like to thank Vikas Panditrao (co-founder of FIAKS) for being my
mentor and giving his best guidance and supporting me throughout.

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INDEX

Sr no. Particular Pg no.

1. Executive summary 7

2. Introduction 10

3. What is fintech? 11

4. Fintech evolution 12

5. Fintech inclusion 17

6. Present situation of fintech in India 19

7. Future of fintech as a new technology 21

8. How fintech is beneficial to bank 22

9. Top 5 fintech companies 23

10. Recommendation 28

11. Conclusion 29

12. Bibliography 30

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 Executive summary
Over the last five years, there has been an explosion of tech start-ups rapidly
innovating in the finance sector. A number of new players are slicing off a service
normally run by a bank and doing it much better - from SME lending to card
payments, from wealth management to international payments.

Almost every financial service that is offered by a bank is now also offered - or soon
will be - by a financial technology (fintech) company. For the consumer, this means
that for the first time ever, there is a real alternative to the banks. Along with greater
choice comes better services that are faster, better value and fairer.

Fintech is on the cusp of becoming a mainstream consumer trend. Although its

impact on the industry is yet to be truly felt, expectations are high. But finance is
one of the hardest sectors to disrupt. One of the main reasons for this is trust. The
relationship we have with our banks is unlike one we have with any other service
provider. Usually long-term, often for life, we remain faithful no matter what.

Most of us don’t question what a bank does. They make it hard for people to access
money; even though it’s our money, they treat it as theirs. With no real competition,
the banks have been the only option for all our financial needs for a very long time.

The banks have had no incentive to change and we, as consumers, had no alternative.
The monopolistic environment created by the banks made it difficult for challengers
to enter the market. The current disruptors are challenging the incumbents by
introducing greater transparency - some do this out of a sense of fairness but it was
also a necessity in order to compete.

That transparency brings greater freedom and greater choice for the consumer: the
possibility of a different future.

In 2018, 68% of people had never used a technology provider for financial services
such as in-store payments, international money transfers, lending, wealth
management, property investment. In five years’ time, half (48%) expect to use a

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technology provider for at least one financial service - and a third (32%) expect to
use a technology provider for 50% or more of their financial needs.

In ten years’ time, 20% of consumers anticipate they will trust technology providers
for all financial services from credit cards to mortgages.

One of the most significant findings was that, for the most part, people from different
age groups have similar views on technology providers of financial services.

The age group with the least trust in the banks was those aged 35-44. The 55+ group
were the least trustful of alternative providers with 25% (compared to an average of
17% across other age groups) saying they would not trust a technology provider for
any of their financial needs.

The most significant difference was that 34% of those 55+ (compared to an average
of 23% across other age groups) said that nothing would motivate them to use
technology providers for services that their banks offered.

Current use

68% of those surveyed had never used a technology provider for a financial service.
The most common experience of using a technology provider to date for a financial
service was for payments in-store, with 15% having done so, using a service such as
Apple Pay or Android Pay for example to pay for goods in a shop.

The next most common experience for using a technology provider was for
international payments (12%). Then the numbers drop to single digits: 6% have used
a technology provider for a loan, and 4% have have used one for personal
investments or wealth management.
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The reasons for choosing the alternative
There seems to be general ambivalence from consumers regarding their trust in the
banks’ ability to look after their finances for them. Around a fifth (19%) don’t trust
them at all and a third (32%) trust them a lot - the majority lie somewhere in between.

Lack of trust is significantly higher among early adopters who are almost 3x as likely
not to trust a bank (54%). People are ready and willing to consider fintech
alternatives. 73% of consumers say that they would consider using technology
providers for services that they usually use their bank for.

The five main factors that would prompt consumers to use technology providers for
services that they usually use their bank for are:

 a more secure service than banks 34%

 a better cost than banks 29%
 a more convenient service than banks 26%
 a quicker service than banks 18%
 better customer service than banks 18%

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 INTRODUCTION
Regulatory and technological developments are changing the nature of financial
markets, services, and institutions in ways completely unexpected before the 2008
global financial crisis (GFC).Financial technology, or FinTech, refers to the use of
technology to deliver financial solutions.

The evolution of FinTech has unfolded in three stages. The first stage we
characterize as FinTech 1.0—a period that stretches from the laying of the
transatlantic telegraph cable to the development of the global telex network and
which captures long-standing interactions between technology and finance.

The second stage, FinTech 2.0, encompasses the pre-GFC period underpinned by
the digitization of traditional financial services, beginning with the first ATM and
culminating in e-banking. Since the GFC, the rapidity of technological development
and the proliferation of startups and IT firms providing financial services have
characterized the era of FinTech 3.0.

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 What is fintech?
Fintech is a term used to describe financial technology, an industry encompassing
any kind of technology in financial services from businesses to consumers. Fintech
describes any company that provides financial services through software or other
technology, and includes anything from mobile payment apps to crypto currency

Broadly, fintech describes any company using the internet, mobile devices, software
technology or cloud services to perform or connect with financial services. Many
fintech products are designed to connect consumers' finances with technology for
ease of use, although the term is also applied to business-to-business (B2B)
technologies as well.

When fintech emerged in the 21st Century, the term was initially applied to the
technology employed at the back-end systems of established financial institutions.
Since then, however, there has been a shift to more consumer-oriented services and
therefore a more consumer-oriented definition. Fintech now includes different
sectors and industries such as education, retail banking, fundraising and nonprofit,
and investment management to name a few.

Fintech also includes the development and use of crypto-currencies such as bitcoin.
That segment of fintech may see the most headlines, the big money still lies in the
traditional global banking industry and its multi-trillion-dollar market capitalization

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 FinTech Evolution
A. The Evolution of FinTech

FinTech is not a new concept. The term FinTech can be traced to the early 1990s and
now refers to a rapidly developing evolutionary process across financial
services.This trend only began to attract the attention of regulators, industry
participants, consumers, and academics in 2014.The evolution of FinTech has
unfolded in three stages. The first, which we call FinTech 1.0, occurred from 1866
to 1967, when the financial services industry remained largely analogue despite
being heavily interlinked with technology. The next period, FinTech 2.0, extended
from 1968 to 2008, an era characterized by the development of digital technology
for communications and transactions and thus the growing digitization of finance.
Since 2009, in the period we call FinTech 3.0, new start-ups and established
technology, ecommerce, and social media companies have begun to deliver financial
products and services directly to the public as well as to businesses, including banks.

Essentially, the recent growth of FinTech is attributable to a bottom-up movement

driven by tech firms and start-ups.

1. FinTech 1.0 (1866–1967)

Finance and technology have had a long history of mutual reinforcement. Financial
transactions were aided by the emergence of early calculation technologies, such as
the abacus. Finance evolved alongside trade, and double entry accounting emerged
as a result in the late Middle Ages and Renaissance. The late 1600s saw a European
financial revolution featuring the rise of joint stock companies, insurance, and
banking—all based on double entry accounting—which was essential to the
Industrial Revolution. The relationship between finance and technology laid the
foundations for the modern period.

In the late 19th century, technologies such as the telegraph, railroads, and steamships
helped forge financial connections across borders. In 1866, the fundamental
infrastructure that enabled a period of strong financial globalization (stretching from
1866 to 1913) was the laying of the transatlantic telegraph cable, followed by rapid
post–World War II technological developments. By the end of this period, a global
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telex network had been implemented, which provided the communications
foundation on which the next stage of FinTech would unfold.

2. FinTech 2.0 (1967–2008)

The late 1960s and the 1970s saw rapid advances in electronic payment systems.
Indeed, the basis of modern automated clearing services was formed by the
establishment of the Inter-Bank Computer Bureau in the United Kingdom in 1968.
The US Clearing House Interbank Payments System followed in 1970, and Fedwire
was introduced soon after. Reflecting the need to link domestic payment systems,
the Society of Worldwide Interbank Financial Telecommunications (SWIFT) was
established in 1973, followed shortly thereafter by the 1974 collapse of Herstatt
Bank—an event that highlighted the risks of increasing international financial links.
This crisis served as the catalyst for the first major regulatory initiative: the
establishment in 1975 of the Basel Committee on Banking Supervision of the Bank
for International Settlements, leading to a series of international soft-law
agreements.

In 1987, “Black Monday” saw stock markets crash globally. The effects were a
reminder that global markets were technologically interlinked. “Circuit breakers”
were introduced to control the speed of price changes, spurring securities regulators
to create mechanisms to facilitate cooperation. The foundations for the full
interconnection of EU financial markets were being laid, including the Single
European Act of 1986, the 1986 “big bang” financial liberalization process in the
United Kingdom, and the 1992 Maastricht Treaty.

Advances in the mid-1990s underscored the initial risks of computerized risk

management systems, as evidenced by the collapse of Long-Term Capital
Management after the Asian and Russian financial crises of 1997–1998. But the next
level of development continued with the provision of online consumer banking by
Wells Fargo in 1995. The emergence of the internet in the 1990s provided the
foundational change that made FinTech 3.0 possible a decade later.

During FinTech 2.0, e-banking presented new risks for regulators. For one thing,
electronic bank runs were a possibility because technology facilitated instant
withdrawals. Regulators expected that e-banking providers would be authorized

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financial institutions—typically, the only entities allowed to describe themselves as
“banks." But FinTech 3.0 called for a radical rethinking of that view.

3. FinTech 3.0

Between 2007 and 2008, a confluence of factors provided the impetus for FinTech
3.0 in developed countries. The brand image of banks was severely shaken. A 2015
survey reported that Americans trusted technology firms far more than banks to
handle their money. Today, the same phenomenon exists in China, where over 2,000
peer-to-peer (P2P) lending platforms initially emerged outside any established
regulatory framework; and yet lenders and borrowers—because of lower costs,
higher potential returns, and increased convenience—remain undeterred.

The GFC damaged bank profitability and competiveness, and the ensuing regulation
drove compliance costs to record highs while simultaneously restricting credit.
Requirements regarding ring-fencing, the preparation of recovery and resolution
plans, and the performance of stress testing only contributed to rising bank
costs. The GFC further led to large-scale redundancies, leaving many professionals
seeking to apply their skills to new outlets.

The timing of the 2008 GFC also played a critical role in the story of FinTech’s
development. It is highly questionable whether FinTech 3.0 would have arisen post-
crisis had the GFC occurred five years earlier: FinTech 3.0 has required high levels
of smartphone penetration and genuine sophistication regarding application
programming interfaces (APIs). Both technological developments were necessary to
provide the consumer interfaces—and interoperability between services and
applications—that have underpinned FinTech 3.0.

The key differentiating factors of FinTech 3.0 are the rapid rate of technology
development and the changing identity of the providers of financial services.
Startups and technology firms have challenged established financial institutions by
offering specific, niche services to consumers, businesses, and incumbent financial
institutions.

FinTech 3.0 has been characterized by the rapid growth of companies from “too
small to care” to “too large to ignore” to, finally, “too big to fail.” Naturally, the

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primary regulatory approach in FinTech 2.0 was to concentrate regulatory efforts on
systemically important institutions. However, today’s more fragmented landscape
raises the important question for regulators of precisely when they should begin to
focus on certain industry participants. This issue prompted Chinese regulatory
authorities to re-evaluate their own approach in 2015. flexible, multi-level approach
should be implemented so that regulatory requirements are imposed with varying
intensity depending on the size and risk of firms. Essentially, regulators will need to
work closely with industry to understand changing market dynamics and to develop
approaches that promote innovation while balancing risks and eliminating
opportunities for regulatory arbitrage. The latter was manifested in the run-up to the
GFC in the form of financial institutions shifting their activities to under regulated
markets

B. FinTech in Developed and Developing Economies

FinTech has expanded in scope, now covering the full spectrum of finance and
financial services. It can be delineated into five key areas: finance and investment,
internal operations and risk management, payments and infrastructure, data security
and monetization, and consumer interfaces. A common image of FinTech is that of
alternative financing mechanisms, such as P2P lending (facilitated by a platform).
But FinTech also encompasses the integration of technology in such financial
transactions as crowd funding and algorithmic trading. And FinTech plays a large
role in institutions’ internal operations, as evidenced by the high levels of spending
that large financial institutions invest in enhancing their IT capabilities. For example,
one-third of the current staff at Goldman Sachs are engineers, and 60% of the staff
have STEM (science, technology, engineering, mathematics) backgrounds. FinTech
is also being used by IT and telecommunications firms to disinter mediate the trading
and settlement of securities (and OTC derivatives).

Today, FinTech affects every area of the global financial system, with perhaps the
most dramatic impact in China, where such technology firms as Alibaba, Baidu, and
Tencent have transformed finance. China’s inefficient banking infrastructure and
high technology penetration make it a fertile ground for FinTech development.
Emerging markets, particularly in Asia and Africa, have begun to experience what

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we characterize as FinTech 3.5, an era of strong FinTech development supported by
deliberate government policy choices in pursuit of economic development.

FinTech development in Africa has been led by telecommunications companies on

the back of two factors: the rapid uptake of mobile telephones and the
underdeveloped nature of banking services. Mobile money—the provision of basic
transaction and savings services through e-money recorded on a mobile phone—has
been particularly successful in Kenya and Tanzania. Mobile money has significantly
spurred economic development by providing customers with a means to securely
save and transfer funds, pay bills, and receive government payments. M-Pesa,
launched in 2007, remains Africa’s best-known success story. Within a period of
five years, payments made via M-Pesa exceeded 43% of Kenya’s GDP.

FinTech 3.5 is supported by (1) high penetration of mobile devices (especially with
broadband internet access) among the young and technologically literate, (2) the
growth of the middle class, (3) untapped market opportunities, (4) a lack of physical
banking infrastructure, (5) consumers increasingly valuing convenience over trust,
(6) low levels of competition, and (7) weaker data protection requirements. The
spike in the number of graduates with engineering and technology degrees in such
economies as China and India has also played a role in planting FinTech firmly in
the soil of those economies.

Going forward, we can expect the convergence of FinTech developments in

developed and developing markets.This era, FinTech 4.0, will be characterized by
increasing monetization of data and reliance on digital identity, which we believe is
the new frontier in terms of a future regulatory framework, as we explain in the
remainder of the paper.

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 Fintech Inclusion
Fintech has brought a new paradigm to the design and implementation strategies for
financial inclusion. For example, smartphones for mobile banking and investing
services are technologies that are making financial services much more accessible to
the general public. I remember in Brazil 10 years ago, the major issue was how to
use correspondent banking to lower the access cost for financing. Now, instead of
focusing on the operational cost of bank agencies, we need to pay much more
attention to the price of a smartphone and related softwares.

financial inclusion has continued to improve globally. The 2017 Global Findex
Database shows that, globally, the share of adults holding an account is now 69%,
up from 51% in 2011 when the Global Findex Database was first released. For this
significant progress, we are quite grateful to the efforts of the GPFI and the broader
financial inclusion community. Obviously, digital financial inclusion, or fintech
developments in general, have taken root in a number of countries, and the benefits
and risks are now becoming clearer to financial sector authorities compared with
previous years.4 A number of impressive developments can be observed, such as the
progress in transferring money via mobile phone messages, or the widespread usage
of mobile payment services (egAlipay (Alibaba) and WeChat Pay (Tencent) in
China processed more than $10 trillion worth of transactions in 2017, with 502
million users; and Paytm in India has over 200 million users). In parallel, cross-
border retail payments have been facilitated by fintech (Alipay and WeChat Pay are
accepted in 28 countries by retailers; and the Bank of Thailand and the
Monetary Authority of Singapore are linking their mobile payment systems). Not all
these developments are directly related to poor customers, but one can say that
distributed ledger technology (DLT) has been reducing the need for intermediaries
or validators (eg credit card authorisation) and is facilitating access to financial
services. One important aspect directly affecting workers has been the significant
reduction in the cost of remittances and cross-border payments, which is very
important for emerging market economies (EMEs) (eg total workers' remittances
jumped from $50 billion in 2002 to $250 billion in 2017, amounts representing 5-
40% of national savings in poor countries). These new ways of transferring money
have increased competition and put downward pressure on the more costly
procedures using bank networks and SWIFT.
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Fintech has also changed the way small businesses operate throughout the world, a
major vehicle for promoting social inclusion. Trade finance has benefited from DLT
technology to reduce both cost and processing time, from 20 days to a few hours
(since digital agreements can be automatically executed when all parties have
accepted conditions). The technology also reduces fraud. Firms in EMEs are
experimenting with screening online borrowers with new credit scoring that could
change risk management (access to payments record, social media behaviour, etc).
In China, peer-to-peer (P2P) lending has experienced a surge in recent years,
complementing the traditional financial services in funding underserved segments
such as small and medium-sized enterprises (SMEs) and low-income households
while offering attractive investment opportunities to smaller investors.5 However, a
significant number of Chinese P2P lenders have gone bust, leaving Chinese
authorities to address the fallout, particularly vis-à-vis small investors.6 This clearly
illustrates that there are also fintech-related risks that, if not properly managed, could
spoil the potential benefits of this innovation.

National authorities' interest in fostering fintech's potential benefits while mitigating

its possible risks prompted the IMF and the World Bank to release the Bali Fintech
Agenda7 a couple of weeks ago, in order to outline the high-level issues that national
authorities may consider in their domestic policy discussions with regard to fintech.
Applications of fintech for financial inclusion are growing, as I have just illustrated.
One can envisage that more granular individual information may change many
aspects of policy intervention and increase its efficiency - for example, when policies
need to target specific sets of firms (SMEs or startups) and/or specific income groups
to reach the poor via eg means-tested conditional cash transfer (CCT) programmes.

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 Present situation of Fintech in India
In the race for becoming the next superpower, India has been proactive in redefining
the way ahead – particularly in the financial services sector. For over 200 years,
India has been building a formal banking system to cater to dynamic needs of people.
However, the hard fact is that the unbanked (or under-banked) populations still
remain high in numbers.

In an effort to entice more people, India has already started embracing digital
wallets, mobile banking applications, Aadhaar Enabled Payment Systems (AEPS)
and more. On the other hand, there stands a regulatory vacuum that restricts adoption
of futuristic financial tools like the cryptocurrencies. FinTechs are flourishing as
they work on an idea of innovating financial services by bridging the possible gaps,
providing greater convenience at a lower cost.

The FinTech sector was a topic of discussion in Union budget 2017, highlighting its
significance and probable regulations that may be underlined in the times to come.
This has resulted in a lot of investments being made in this sector. Today, India is
listed as a nation with highest expected ROI of 29% on FinTechs.

In a country like India, FinTech revolution is growing rapidly considering the

increasing fondness of start-up culture, rising digital payments systems, expanding
mobile reach, soaring demands of banking with ease etc.

FinTechs have reformed several financial sectors through digital lending, online
payment methods, blockchain etc. Here’s a list of the extensive capabilities of
FinTechs.

1. Offer better customer satisfaction

FinTechs have helped digitise banking by automating and innovating processes that
reduce human intervention, queues, restrictions of time/place etc. They offer
convenience to people and gives them the liberty to bank anytime, anywhere. This
empowers them to choose the preferred mode and make informed decisions.

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2. Deliver data-driven insights and solutions

Unlike the traditional banking systems, collecting and storing customer data has
become easier, accurate and error-free. This enables financial institutions to serve
customers with personalized products/services while understanding their financial
behavior, repayment capacity (in case of loans and advances) etc.

3. Ensure cost-effectiveness

The solutions offered by FinTechs save costs both for customers and bank branches.
The costs of banking at a physical branch i.e. via the traditional approach is at least
10 times more than that incurred at an ATM and 50 times more when transacted on
a mobile banking application.

4. Risk management and compliance

For the obvious reasons, financial services must be strictly regulated and so
numerous guidelines have been defined by the regulatory bodies. With new
technologies being introduced, these regulations are continually broadening.
FinTech solutions are in-built with automation that help financial service providers
to stay compliant with the changing dynamics and reduce risks such as frauds.

5. Greater access to banking and financial facilities

With FinTechs innovating how customers are served, users are provided with an
array of choices to enhance their interactions with the financial institutions. FinTechs
have also enabled them to access their finances across all geographies, time zones
and more through smartphones, 4G/Wi-Fi networks and other such modern
technologies.

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 Future of Fintech as a New technology:

Fintech is a keen adaptor of automated customer service technology, utilizing

chatbots to and AI interfaces to assist customers with basic tasks and also keep down
staffing costs. It help to fight fraud by leveraging information about payment history
to flag transactions that are outside the norm.

Some of most active areas of Fintech innovations are following:-

1. Cryptocurrency and digital cash.

2. Blockchain technology, including Ethereum, a distributed ledger
technology (DLT) that, maintain n records on a network of computers, but
has no central ledger.
3. Smart contracts, which utilize computer programs (often utilizing the
blockchain ) to automatically execute contracts between buyers and sellers.
4. Open banking, a concept that leans on the blockchain and posits that third
parties should have access to bank to built applications that create a
connected network of financial institutions and third party providers.
5. Insurtech, which seeks to use technology to simplify the streamline the
insurance industry.
6. Regtech, which seeks to help financial service firms meet industry
compliance rules, especially those covering Anti-money Laundering and
know your customer protocols which fight fraud.
7. Robo-advisors, such a betterment, utilize algorithms to automate
investment advice to lower its cost and increase accessibility.
8. Unbanked/underbanked, services that seek to serve disadvantaged or low
income individuals who are ignored or underserviced by traditional banks
or main stream financial services companies.
9. Cyber security, giving a proliferation of cybercrime and the centralized
storage of data, cyber security and Fintech are intertwined.

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 How Fintech is beneficial to bank
A Fintech company is one that develops new technology and ideas in order to offer
an alternative e financial product that disrupts the existing ones. A good example is
TransferWise, who eradicated the old practice of paying massive fee for sending
money abroad by offering a service which let people transfer money between
themselves.

Another examples are digital only banks such as ATOM or MONDO – these
businesses don’t just make full use of the technology , they also provide a better
customer service which is something you don’t normally associate with a bank.

The Fintech industry consists of the following:

1. Mobile payments
2. Instant money transfers
3. Instant loans
4. Crowdfunding
5. Asset management, etc.

Products offered by a Fintech company:

1. Single interface for managing accounts

2. Multilingual mobile applications
3. Cardless withdrawals from ATMs

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 Top 5 FINTECH Companies
1. OPEN – BANKOPEN ; Asia’s First NEO Bank offered by India
2. NCPI – National Payment Corporation of India
3. BBPS & UPI
4. RUBIQUE
5. LazyPay – PAYU

OPEN – BANKOPEN: Asia’s First NEO Bank offered by India

Bank Open is a NEO bank. It issues a Bank account number, and IFSC code and it’s
all they do on the frame of bank which is running on a background. Neo-banking
emerged about 5 years ago through Fintech players such as Atom and Monzo bank.

Neo-bank is a new type of digital bank that exists without any branches. Neo-banks
are starting to evolve with not only the introduction of equity crowd funding, but
legislation being put forward that reduces restrictions on an organization. It is sitting
on a 100% digital and mobile platform, but its systems are 100% new too, which
means it is not simply a digital front end to a traditional bank.

Open is a business banking services that combines everything from banking to

invoicing and automated bookkeeping in one place. Open is Asia’s first digital
banking service that offers an all-in-one digital bank account that includes a current
account packed with powerful tools for bookkeeping, invoices, moving money and
accessing credit.

NCPI : National Payments Corporation of India

NCPI is an organization for operating retail payments and settlement systems in

India. NCPI is a payment industry which was founded in 2008 . Its products are NFS

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(National Financial Switch), NACH, IMPS (Immediate Payment Service), RuPay,
CTS (Cheque Truncation System), AePS (Aadhaar Enabled Payment System), UPI
(Unified Payments Interface), *99#, BHIM, Bharat bill Payment System. The
organization (NCPI) is owned consortium of major banks and has been promoted by
country’s Central Bank, the Reserve Bank of India.

Presently, there are ten core promoter Banks i.e SBI – State Bank of India, PNB –
Punjab National Bank, Canara Bank, Bank of Baroda , Union Bank of India, BOI –
Bank of India, ICICI Bank, HDFC bank, CITI Bank and HSBC.

BBPS and UPI

BBPI – Bharat Bill Payment System, is an integrated bill payment system which
offers interoperable and accessible bill payment services to customers through
registered agents and enable multiple payment modes and provide instant
confirmation of payments. It is an integrated payment platform which creates a
single, bank-agnostic pitstop for all utility payment, while wallet services brought a
payment revolution with customers paying their bills through mobile wallets.

UPI – Unified Payments Interface, is a system that powers multiple bank accounts
into a single mobile application (of any participating banks) , merging several
banking features, seamless fund routing, and merchant payments into one hood. It
also caters to the Peer to Peer collect request which can be scheduled and payed as
per requirement and convenience. How to get it:

 Bank account
 Mobile number should be linked with bank account
 Smart phone with internet facility
 Debit card for re-setting MPIN

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Service Activation:

1. Download the app for UPI

2. Do registration online on the with account details
3. Create a virtual ID
4. Set MPIN
5. 5-7 minutes

Requirement for transactions:

1. Smart phone with internet facility

2. Registered device only
3. Use registered MPIN
4. Self service mode

Transaction Cost:

1. Nil to customer by most banks

2. Customer pays for data charges

Services Offered:

1. Balance enquiry
2. Transaction history
3. Send/pay money
o Virtual address
o Account number and IFSC code
o Mobile number and MMID
o Aadhaar (to be made functional)
4. Collect money
5. Add bank account
6. Charges/MPIN
7. Notifications
8. Account management

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Rubique

Rubique was formed to create an online financial matchmaking market place/credit

market place in India that fulfills the financial aspirations during the customer’s life
cycle in the simplest, shortest and speediest possible ways. Rubique’s proprietary AI
based recommendation engine and Rubique’s financial match making platform
allows customers to find the best match to his/her credit requirement. The credit
policy digitization is the magic key at the foundation which brings predictability for
all and helps in faster turnaround time.

Rubique’s multi-sided lending platform is loaded with features like e-KYC, bank
statement analysis, credit bureau check, credit memo generation and MCA
integration along with real time application tracking to make it a paperless
experience. Built on AI based recommendation engine, Rubique’s online credit
market place platform has been integrated with financial institution systems for real
time processing and providing online approvals to the customers. Right from the
customers, influencers to financial institutions, Rubique offers a host of technology
solutions to cover the entire landing spectrum. Rubique provide top-notch solutions
to the entire landing spectrum.

It provides lenders with:

 High quality fulfillment

 Fraud detection
 Credit decisioning engine

LazyPay (PAYU)

LazyPay was launched by PAYU in India, a unique online deferred payment facility
for customers. It is a product aimed at those who transact digitally for any amount
between INR 500 – INR 2500, and is an option to pay later.

PayU is a fintech company that provides payment technology to online merchants.

The company was founded in 2002 and is headquartered in Hoofddrop, Netherland.

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It allows online businesses to accept and process payment through a payment method
that can be integrated with web and mobile applications.

PayU is the biggest payment gateway used in India. It is a regulated financial

institution which holds licenses from national banks and local regulators. PayU’s
products include:

 PCI-DSS certified payment gateway

 An anti-fraud system
 An online- Visa/MasterCard acquirer

PayU is a leading financial services provider in global growth markets using its
expertise and heritage in cross border and local payments to extend the services
offers to its merchants and customers.

PayU’s innovative technology, developed in-house as well as throughout

investments and strategic partnerships, empowers billions of people and millions of
merchants to but and sell online, extending the reach of financial services. Its local
operations span 18 markets across Asia, Central and Eastern Europe, Latin America,
the Middle East and Africa by delivering fast, simple and efficient financial services
technology that unlocks access to more than 2.3 billion consumer. Its unique
knowledge of local habits helps to offer cross-border customers access to the best
payment services.

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 Recommendation

In reality, there will be very few firms that decide to pursue the fintech charter route,
since there are easier ways to make an impact on the marketplace through
partnerships and even the buying of smaller fintech firms by traditional financial
institutions. In addition, the entire structure of the proposals look at fintech firms as
being similar to banking organizations as opposed to being technology solutions that
can be used to build a better overall banking ecosystem. This ‘old school’
perspective of banking does not reflect the realities of today’s banking ecosystem.

These recommendations will provide tightening of loopholes that previously existed.

We are already seeing larger banks build digital-only units and smaller fintech firms
succeed in their narrow scope of product innovation. Rather than getting charters,
there are better ways to respond to consumer needs through collaborations.

Even big tech firms (GAFA) would most likely want to avoid becoming a
‘traditional’ banking organization. Banking compliance requirements are far more
than in the technology space. These firms also have already shown their ability to
compete with traditional financial services firms in lending, payments, deposit
acquisition, etc., and there is no reason why tech organizations will need to replicate
the outdated model of a traditional bank.

The benefit of a fintech firm is the ability to serve a rather narrow range of segments
in a way that current financial institutions don’t. We are no longer talking about a
format of accounts that include a checking, savings, investment, loan and payment
service, but instead a digital financial relationship that integrates the best of all of
these components into a service that has no barriers and can be formatted the way a
consumer wishes.

The Treasury and OCC’s recommendations allow for more innovation, better
structure of partnerships and tighter regulation of consumer data. All good news. At
the end of the day, the market will move forward with or without these regulations.

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 Conclusion
With complementary strengths, fintech startups are increasingly looking to
symbiotic collaboration with the traditional financial services firms they once sought
to overthrow, according to the Capgemini study

The challenge is to scale-up and create financially-viable business models. Although

fintech firms have raised nearly US$110 billion since 2009, the report found that
most are likely to fail if they do not build an effective partnership ecosystem.

At the same time, traditional financial institutions are adopting many agile fintech
customer service enhancements, while retaining strengths including risk
management, infrastructure, regulatory expertise, customer trust, access to capital,
and more.

“With more than 75% of fintech firms identifying their primary business objective
as collaborating with traditional firms, it is essential that both fintechs and traditional
firms transform their business models by collaborating to drive innovation while
retaining customer trust,” says Anirban Bose, head of Capgemini’s financial services
global strategic business Unit. “Without an agile and committed collaboration
partner, both traditional and fintech firms risk failure.”

Echoing the views of a similar report released by Accenture yesterday, Capgemini

found that more than 70% of fintech executives polled said their top challenges to
engaging with traditional financial firms was the latter's lack of agility, while
incumbents in turn perceive negative impacts on customer trust, brand, and changing
the internal culture as their top challenges.

Both Accenture and Capgemini recommend the establishment of a formal process

for banks to chart their relationships with startups. To this end, Capgemini has
launched a 'ScaleUp Certification' tool that creates a model for collaboration and
mutual verification between partner organisations.

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 Bibliography

 https://blog.ipleaders.in/top-five-fintech-companies-in-india-that-you-must-know-about/

 https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/indias-fintech-future-
looks-bright-but-it-needs-to-find-its-raison-dtre/articleshow/67986757.cms?from=mdr

 https://www.india-briefing.com/news/future-fintech-india-opportunities-challenges-
12477.html/

 https://en.m.wikipedia.org/wiki/Financial_technology

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