The fintech phenomena has far reaching impacts. It is not only transforming the traditional financial services but also fintechs are already playing a major role in revolutionizing sustainable finance or sustainability at large. Fintech has a great power; it brings together the power of technology like AI & Big Data along with finance and use it for building sustainable future of the planet.
SwissCognitive Guest Blogger: Utpal Chakraborty, Chief Digital Officer at Allied Digital Services Ltd., AI Researcher
Banks vs. Fintechs is a hot topic today and there are a whole lot of speculations and schools of thoughts going around this topic. On one hand the fintech firms are aggressively intruding into the territories of the banks, taking over traditional banking functions; on the other hand, we are also seeing some of the success stories of fintech firms joining hands with the banks complementing each other, and thereby offering brilliant services to the customers.
As per some experts, it’s going to be a tough competition initially but someday in the future eventually there could be convergence among the traditional banks and these next-gen financial institutions, the ‘Fintechs’. I personally believe that fundamentally there was a gap that existed, and it exists even today between what customers expect and what banks can deliver. Fintechs seized the opportunity in addressing these gaps. One example is partnering with banks or independently, they provide a frictionless digital banking experience that customers would have been expecting from the banks since long.
Nevertheless, the fintech phenomena has far reaching impacts. It is not only transforming the traditional financial services but also fintechs are already playing a major role in revolutionizing sustainable finance or sustainability at large. Fintech has a great power; it brings together the power of technology along with finance and use it for building sustainable future of the planet.
On a broader spectrum, fintechs are transforming sustainable development in finance in three different ways –
Firstly, using the power of internet, mobile technologies, big data and artificial intelligence, it has been able to enhance the digital reach of financial services to those segments of population that did not have access to the services through traditional channels. For example – Financial Inclusion is one of those areas where fintechs have played a major role by bringing a large section of unbanked population under the financial umbrella using disruptive digital technologies. Also, rendering financial services and making those available to the customers wherever they are available- like mobile banking, social banking, WhatsApp banking etc. are probably some of the biggest attempts towards sustainability and green finance.
Out of all other technologies in this spectrum, AI has a special role to offer, and it has already been leveraged by most of the Fintech firms in many of their products and solutions. The ability of AI is in perfect sync with the need of sustainable finance in many ways. It includes powering solutions to provide affordable services anywhere anytime, eliminating physical aspects by delivering through digital means, and the personalization and predictive capabilities of AI makes it the first choice for the FinTech firms and the Financial Institutions today.
The second major impact that fintechs have been able to make is by bringing down the cost of financial services and making it affordable for even the lowest income category of the society by using newgen technologies. It has also been able to break the monopolies of some of the financial institutions and bring competition in terms of cost.
And the third contribution is the innovative approach of serving customers through digital channels and touchpoints keeping customer convenience at the center. They eliminated the complexities around security, privacy, regulatory and compliance matters from the customer journey while providing a bouquet of financial services to the customers.
Looking at it through a sustainability lens is very important when it comes to any financial initiative to make it a successful green finance project. This dimension must be taken into consideration seriously. While selecting products, services, or partners or even while making investments, sustainability is a factor that has now been investigated very seriously as one of the critical parameters. Experts are now convinced that fintech can play an important role encouraging impact investment or sustainable investment.
Associating sustainable goals with fintech initiatives may not be easy buy getting started will start having an impact gradually. Even while doing technological innovations in any field, we should always keep in mind the aspects of sustainability. By encouraging fintech initiatives, sustainable finance is getting encouraged indirectly.
For example, a quantitative analysis and representation of what contributions an individual has done by choosing a sustainable alternative is very important to encourage people for exploring sustainable options in every walk of life. Fintech can solve this easily by integrating sustainable options and displaying qualifiable impact that’s of a buying decision or any other decisions for that matter.
Like many of responsible companies, we, at Allied Digital laid down an ambitious plan to seriously consider sustainability options in our business & technological endeavors in our current and future initiatives like fintech, smart city projects etc. In the past also we have made decisions that are in favor of our sustainable goals; for example, in our smart city and other projects that brought measurable green impacts. Through our fintech initiatives, we aimed to build cutting-edge fintech products and solutions that offer cost-effective options for the financial institutions to reach out to their customers with light-weight channels and touchpoints. Other solutions like human-less bank branch and virtual banking are totally aligned with our sustainable goals.
It’s high time for every business today to come forward and not only support sustainability by principle but also integrate sustainability in their business models and the goals. Technology can actually help materializing those sustainability goals and Fintech in Finance is already showcasing a perfect example to the world.
About the Author:
Utpal Chakraborty is an eminent data scientist, AI researcher, strategist and thought leader with more than two decades of industry experience, including as a principal architect in Larsen & Toubro (L&T) Infotech, IBM, Capgemini and other MNCs including heading the Artificial Intelligence division of YES Bank. Currently he is he is the Chief Digital Officer(CDO) at Allied Digital Services Ltd. Utpal is a well-known speaker and author on artificial intelligence, Quantum Computing, IoT, as well as Agile & Lean and has spoken at conferences around the world. Utpal has also been recognized as one among top AI Influencers & Thought Leaders by reputed forums.