<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/07/July-Blog-Banner-V3_1_Main-Banner.webp" alt="M2P Fintech" title="" width="100%" height="253">Artificial Intelligence (AI) has transformed the physics of financial services. It has altered centers of gravity, isolated vulnerable bonds, and changed traits that are imperative to building a successful business. The ability to leverage data to drive process and talent optimization, product performance, and personalized interactions is now considered critical to driving value and efficiency.By combining technology and robust data, AI delivers insight-driven decisions to resolve challenges. Financial services companies are becoming future-ready by harnessing the power of AI and Machine Learning (ML) to enhance operational efficiency, mitigate risk exposure, and customize product development, distribution, and customer experience.<blockquote class="block-node" id="ll5niu0xi">According to PWC reports, AI will boost global GDP up to $15.7 trillion by 2030 and 45% of total economic gains will arise from AI-driven product enhancements that stimulate consumer demand.</blockquote><h2 class="heading-node" id="fec6" style="text-align: justify">Growth Potential of AI in Finance</h2>Artificial Intelligence in the global financial technology market is expected to grow at <a class="link" href="https://www.prnewswire.com/news-releases/ai-in-fintech-global-market-to-reach-24-17-billion-by-2026--301615420.html">27.6% CAGR and reach $24.17 billion in 2026</a>. The growth projection is attributed to its ability to increase security and efficiency, personalize customer experience, automate services, and unlock several other growth opportunities.91% of financial services companies reported driving critical business outcomes by leveraging AI investments (Source: <a class="link" href="https://www.nvidia.com/content/dam/en-zz/Solutions/industries/finance/ai-financial-services-report-2022/fsi-survey-report-2022-web-1.pdf">Nvidia Report</a>). Here are the benefits they realized.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/07/July-Blog-Banner-V3_1_Benefits-of-AI-Chart.webp" alt="M2P Fintech" title="" width="100%" height="253">AI-led data analysis and reporting surpass human intelligence to cut costs, accelerate revenue, and optimize service quality and product efficiency. It creates operational efficiency, predicts customer preference, detects fraud, and plans market expansions. Although some industry voices expect AI to replace 9% of all jobs by 2030, fintech companies are optimistic that AI will expand their workforce by 19%.<h2 class="heading-node" id="21fd" style="text-align: justify">How AI Transforms Banking &amp; Fintech</h2>Millennial and Gen Z customers prefer newer and faster technology over traditional systems. AI-based products and services enable FIs to meet the demands of today’s digital-age customers. It helps them enhance user experience through customized products and services.Listed below are sample AI-enabled services that global banks use to enhance customer experience.· Smile-to-pay facial scanning to initiate transaction· Micro-expression analysis with virtual loan officers· Conversational bots for basic servicing requests· Humanoid robots in branches to serve customers· <a class="link" href="https://m2pfintech.com/blog/5-reasons-why-banks-need-behavioral-biometrics/">Biometrics </a>to authenticate and authorize· Machine vision and natural language processing to scan and process documents· Machine learning to identify risk patterns and cybersecurity incidents· Real-time transaction analysis for risk monitoringAI technologies augment the overall customer experience by offering personalized recommendations, insights, and suggestions. In short, AI powers banks, insurers, asset managers, and fintechs to outperform peers, boost customer lifetime value, and increase market share.<h2 class="heading-node" id="fb07" style="text-align: justify">Top 6 Use Cases of AI in Fintech and Banking</h2>Over 75% of businesses use high-performance computing (HPC), machine learning, and deep learning for AI applications. While retail banking and capital markets benefit from deep learning, fintech firms rely on machine learning for the use cases below.<ol class="list-node" id="mglp0g4e6"><li>Transaction Fraud Detection</li><li>Conversational Chatbots</li><li>Robo-Advisors — Portfolio Optimization</li><li>Regulatory Intelligence</li><li>Credit Decisioning</li><li>Algorithmic Trading</li></ol>Transaction fraud detectionFinancial firms leverage AI and ML to identify, investigate, and mitigate transaction fraud, <a class="link" href="https://m2pfintech.com/blog/how-to-combat-money-laundering-2/">money laundering</a>, and <a class="link" href="https://m2pfintech.com/blog/crack-the-kyc-jigsaw-ease-onboarding-compliance/">KYC</a> discrepancies efficiently. Analyzing large datasets and user behavior, AI can decode risk factors and help reduce chargebacks, fake accounts, spam, account takeovers, and any other <a class="link" href="https://m2pfintech.com/blog/prevent-cnp-frauds-with-pci-3ds/">CNP</a> frauds in real-time. The fraud detection use case is critical in banking, card transactions, insurance, and lending platforms, to name a few.Conversational chatbotsChatbots and virtual agents fall under the conversational AI use case. They are quite different from conventional chatbots. By leveraging Natural Language Processing (NLP) and Machine Learning (ML) processes, they can understand customer intent, troubleshoot issues, and make small talk based on context. In financial companies, they can be used to collect customer information, deliver support, resolve queries, and redirect escalations to customer service representatives. These chatbots can be used across multiple channels and can deliver support via audio, video, and text.Robo-advisors — portfolio optimizationBuilding a strong financial portfolio is critical to maximizing returns on investments. Optimizing the portfolio helps balance the risk-to-reward ratio. AI-enabled Robo-advisors use predictive analysis to foresee future returns by analyzing the trends in the financial market. Investment companies can use this feature to make data-driven decisions that increase sales, optimize resource utilization, and improve operational capabilities. Robo-advisors are less priced options than conventional financial advisors. Even novices can drive value from investments with the help of Robo-advisors.Regulatory intelligenceThe banking and fintech sector must constantly update operations to stay compliant with governments and regulators. Using AI-led automation, compliance obligations are simplified, streamlined, and automated. The personalized, role-based dashboards provide regulatory intelligence for data-driven decisions at a lesser cost and time. Finance companies can stay up to date on compliance status and keep abreast with the latest regulations.Credit decisioning engineAI-based credit scoring can help expedite the assessment of creditworthiness and lending decisions. AI-led credit scoring models analyze real-time indicators such as current income, employment opportunities, and potential ability to earn, in addition to credit history, transaction patterns, work experience, and online behavior. This enables a sensitized and customized credit score assessment and inclusive lending decisions.Algorithmic tradingTrading is all about making profitable transaction decisions. AI-driven algorithmic trading uses pre-trade analytics and trading strategies to make lucrative transactions and groom efficient traders. Assimilating its own data using machine learning methods, AI-based algorithmic trading delivers real-time forecasts based on the analysis of price change patterns, currency values, global indices, raw materials, and other macro/micro indicators. It is super accurate in detecting market anomalies and helps reduce operational and trading risks.Now, these are not all. Apart from the use cases discussed above, AI can also help automate and expedite <a class="link" href="https://m2pfintech.com/blog/steps-in-credit-underwriting-why-using-an-alternative-source-of-data-and-behavior-metrics-will-be-of-help/">underwriting</a>, customer acquisition, and marketing optimization.To know more about the use of AI in banking and fintech, write to us at&nbsp;<a class="link au nr" href="mailto:business@m2pfintech.com" target="_blank" rel="noopener ugc nofollow">business@m2pfintech.com</a><a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

How is AI Changing the Financial Industry? Top 6 Use Cases in Fintech and Banking

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/07/MicrosoftTeams-image-3.webp" alt="M2P Fintech" title="" width="100%" height="447"><a class="link" href="https://m2pfintech.com/blog/neo-banking-101-all-you-need-to-know/">Neobanks</a> have led to tectonic shifts in every corner of the financial services market. The market embraces a new player almost every day with a prime intention to simplify financial services to meet the ever-evolving expectations of the digital-age customers.According to recent reports, some of the most prominent players in the market see over 140% year-on-year growth in their customer base. However, growth does not necessarily translate into profits. Even after more than five years in business, a large number of neobanks are operating at a loss.Globally, the neobank market continues to grow swiftly. But the real question is, how many of these banks will succeed and be sustainable?We have our very own Devang Mehta, Vice President of Business Development spill the beans on what makes a neobank successful. Devang delves into the pros and cons of the current business model and offers insightful strategies on how to refine vision and value propositions that will help build a neobank that is both profitable and sustainable.Being an avid neobanker and fintech enthusiast himself, he is certain that neobanks are here to stay and have a long way to go. He also shares his vision of a neobank that works like your relationship manager on the phone.Here are key nuggets from Devang’s wisdom.<h2 class="heading-node" id="852f" style="text-align: justify">What are the wins?</h2>First off, neobanks enable online transactions round-the-clock, 365-days. They offer easy, convenient, and on-the-go services. Users can transfer funds instantly at any time, from anywhere, without worrying about bank working hours/days. The business model is usually transparent and delivers real-time notifications detailing the reasons for the charges and penalties incurred by the customer.They have low operational costs due to the absence of physical branches, minimal credit risks, and fewer regulations. Thereby, customers benefit from lower prices and higher interest rates. With its lean business models and superior technologies, neobanks greatly emphasize customer orientation by offering personalized services and products.<h2 class="heading-node" id="eae8" style="text-align: justify">Where do neobanks fall short?</h2>Generally, neobanks operate on an exceptionally low margin as they tend to offer competitive low-cost pricing, higher deposit rates, and incentives to increase their customer base. With no revenue-generating products such as credit cards and loans, neobanks fail to make a profitable and sustainable enterprise. Having no solid revenue model is one of the biggest downsides of a neobank business.Building trust with the customers of the legacy bank is another key challenge for neobanks. The customers feel traditional banks are safe and reliable compared to the new-age banking technology. Although neobanks put forth quick, accessible, and round-the-clock services, a significant share of customers uses neobanks as their secondary account.Aside from the above, lack of standard regulatory framework, superlative customer expectations, and cost involved in the technology and development are some of the challenges that neobanks face.<h2 class="heading-node" id="2ba2" style="text-align: justify">Quest for profitable and sustainable neobanking - The “why” and “what”</h2>Devang believes the quest for a profitable and sustainable neobank starts with two questions:<ol class="list-node" id="gbcty8qf5"><li>Why do you want to create a neobank?</li><li>What do you want the neobank to be known for?</li></ol>Today’s consumers are presented with a gamut of financial services to choose from. Potential customers are keen to know what problems you are solving for them. A compelling vision for your neobank will make the right customers see how your “why” aligns with their pain points, goals, and objectives. “What” your neobank is will help you tap into the right customer segment to fulfill your purpose.For example, assume you are packing your bags and moving to another continent for a successful educational or career experience. It is one thing to assimilate the new environment but being tugged into a totally unfamiliar ecosystem for essential services and financial assistance like banking or debit card usage can knock you sideways.Imagine, you receive a sim card, a bank account, a checkbook, a debit card, and perhaps even insurance as your onboarding kit. Wouldn’t that be the ultimate welcome kit?That’s exactly how Devang envisages a neobank that caters to students, blue-collar job holders, and working professionals. Drawn from his experience as an expatriate, he aspires to build a neobank that offers quick and seamless financial services to immigrants arriving in a new country.Understanding your “why” and “what” will form the fundamental principle of your neobank’s vision. Once you have a clear conception of your vision, you must support it with comprehensive planning based on:<ul class="list-node" id="fmgvwr81y"><li>A defined target customer segment</li><li>Regulatory compliance in the respective market</li><li>Data protection/localization</li><li>Application with customer-friendly UI/UX</li></ul>Devang highlights that beta testing is paramount and the key to boosting the performance of a neobank application. Unfortunately, most players fail to include beta testing in their development life cycle in a rush to go to the market soon.Though neobanking is the perfect example of how convenient banking can be for users, it is still in its nascent stage. Whether you are an incumbent or a new player, agility and responsiveness to market trends are critical to surviving in an increasingly crowded digital financial services ecosystem. Therefore, it’s extremely imperative to understand, analyze, and constantly refine your vision to carve out your place in the market. The key is to remember what you want to achieve and why.Check out our blog on&nbsp;<a class="link au lg" href="https://m2pfintech.com/blog/7-steps-to-start-a-neo-bank-from-scratch/" rel="noopener">how to start a neobank</a>&nbsp;for step-by-step guidance.Curious to know how you can create a powerful vision and value proposition for your neobank? Write to us at <a class="link au mv" href="mailto:business@m2pfintech.com" target="_blank" rel="noopener ugc nofollow">business@m2pfintech.com</a>.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Strategy to Reorient Neobanking for Sustained Profitability

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Blog-Banner_Wearable-in-Banking-payment.webp" alt="M2P Fintech" title="" width="100%" height="383">The global wearable market size is projected to reach USD 931.31 Billion by the end of 2030, and wearables are here to stay.Not just in healthcare, retail, and telecom, but also in banking and payments. Changing customer priorities and fintech advancements accelerated the market for wearables in the pandemic era. With millennials, gen X, and gen Z consumers wanting secure, convenient, instantaneous transactions, contactless wearables are the way to go.Projected to grow at a CAGR of 11.5%, the future of wearables is likely to evolve further as consumers and financial institutions transition into the cashless, digital universe. Some wearable payment devices have the potential to become a “one-stop-shop” for several services.Disney’s Magic Band for instance is a wearable that Disney Land provides its visitors. Designed in the form of a funky wristband, the magic band functions as an access key, a payment device, and a personalized tracker. And it is also compatible with diverse smartphones and technologies.<h2 class="heading-node" id="7ff3" style="text-align: justify">What are wearable payment devices?</h2>Wearable payment devices are apparel, gadgets, and accessories we use to make contactless payments. The most common types are smartwatches, belts, jackets, fitness trackers, and even rings. They use services like Apple Pay, Samsung Pay, and Google Pay to connect the device with the consumer’s bank account.<h2 class="heading-node" id="0774" style="text-align: justify">Top wearable payment devices in the market</h2><h4 class="heading-node" id="peflro9so" style="text-align: justify">Apple Watch</h4>The Apple Watch is one of the most popular smartwatches on the market, and it features NFC (Near Field Communication) technology. This technology allows the watch to communicate with other NFC-enabled devices, such as smartphones, to exchange data, make mobile payments, and do other contactless transactions.<h4 class="heading-node" id="zefu7xngv" style="text-align: justify">Samsung Galaxy Watch 6 Classic</h4>Samsung Galaxy Watch 6 Classic offers contactless payment services through Samsung Wallet. This smartwatch enables users to make contactless payments at stores that accept NFC-enabled transactions.<h4 class="heading-node" id="7zin33oqj" style="text-align: justify">7 Ring</h4><a class="link" href="https://seven.ooo/">7 Ring</a> is India's most advanced form of making contactless payments, utilizing Near-Field Communication (NFC) technology. Co-certified by EMV, 7 Ring has the same security standards as the payment instruments used worldwide by leading banking networks.7 Ring uses <a class="link" href="https://www.livquik.com/">LivQuik</a>&nbsp;(powered by M2P)&nbsp;as their wallet provider, which works seamlessly with a tap at the PoS terminal, enabling convenient payments without the need for a phone or Bluetooth connection.<h4 class="heading-node" id="vknjub99i" style="text-align: justify">Ringly</h4>Ringly offers rings and bracelets that connects to your phone via Bluetooth. Partnering with MasterCard, they allow you to make contactless payments apart from tracking your activities. They allow you to make contactless payments with just a wave of your hand.Now we’ve seen only a sample of wearable devices. Belts, jackets, and even shoes are used as wearable payment devices today.<h2 class="heading-node" id="f558" style="text-align: justify">How do wearable payment devices work?</h2>To use a wearable payment device, say a smartwatch, the user needs to link the device to a credit card or bank account. Once the device is linked, the user can make payments by simply tapping the device against a payment terminal. The payment is then processed through the credit card or bank account that is linked to the device.<h2 class="heading-node" id="cb0d" style="text-align: justify">Wearable payment technologies</h2>Wearable payment systems are quite commonly used in e-banking and payment platforms. They operate on technologies such as HCE, Barcode, Contactless Point of Sale, Radio Frequency Identification (RFID), and Near-field Communication (NFC) to enable payments and cash transfers.<h4 class="heading-node" id="8264" style="text-align: justify">Host Card Emulation (HCE)</h4>Host Card Emulation (HCE) enables payments that are activated by NFC technology. ​​It allows a device to emulate the functionality of a smart card to provide contactless payment capabilities using the ISO/IEC 7816–4 APDU command set. It communicates with a reader and stores data in the same way that a smart card would. A key benefit of using HCE is that it does not require a physical smart card or a built-in NFC reader. And it can be used for loyalty programs and access control too.<h4 class="heading-node" id="387a" style="text-align: justify">Barcodes</h4>Some wearables are encoded with scan-and-go application barcode scanners for payments. It allows the customer to check out quickly without conventional processes. Barcode technology offers several advantages in wearable devices. They are secure, can be read quickly and easily, and can store a large amount of data. Newer barcode standards, such as QR codes can be deeply encrypted to prevent unauthorized access.<h4 class="heading-node" id="aae0" style="text-align: justify">Contactless Point of Sale (CPOS)</h4>The contactless point of sale (CPOS) is a new technology that uses Radio Frequency Identification (RFID) technology to communicate with the POS terminal and make payments. The CPOS system is fast, convenient, and secure. You just hold your card near the POS terminal, and the payment will be processed automatically. It uses the latest encryption technology to protect personal information.<h4 class="heading-node" id="e897" style="text-align: justify">Radio Frequency Identification (RFID)</h4>RFID wearables such as rings, wristbands, and dongles comprise an embedded chip with an RFID tag. The tag is a unique identifier that an RFID reader can read. The reader can track the tag’s location or access wearer information. RFID-enabled wearables offer many advantages over traditional ID payment devices. They are more difficult to lose or misplace and can be read from a distance, making them ideal for tracking assets or people.<h4 class="heading-node" id="4a4c" style="text-align: justify">Near-field Communication (NFC)</h4>NFC ​​ is a short-range wireless technology that enables two devices to communicate when they are near each other, typically no more than a few centimeters. It is a convenient way to share small amounts of data between devices and works great in wearable payment devices, such as smartwatches, fitness trackers, and clothing.<h2 class="heading-node" id="4re67ozcs" style="text-align: justify">Wearables, IoT, and Fintech</h2>As with many things to do with digital transformation, the pandemic pushed businesses to explore and invest in Point-of-Sale (POS) technology, making wearables more than just useful tools. Readily available and user-friendly in usage and navigation, payment apps such as Google Pay and Apple Wallets, have made it easy for all demographics to transition smoothly into wearable technology.In the current mobile climate, using the Internet of Things (IoT) in banking is the way to attract new customers and retain existing ones. Wearable payment devices and IoT helps the financial sector to gain deep customer insight and improve user experience. Banks implementing IoT have seen benefits in cost savings, higher efficiency in business processes, and better customer experience. They have also been able to build new revenue models.There is no doubt that fintech needs wearables, as it opens up new opportunities to transform their businesses and remain strong contenders in the market. We see the increasing use of wearables and in a way, they may even replace mobile phones in the future.<h2 class="heading-node" id="51ef" style="text-align: justify">How wearables benefit banks and fintechs</h2><h4 class="heading-node" id="2062" style="text-align: justify">Access to data</h4>Wearables provide banks access to voluminous data as they are worn by customers most of the time. Customer intelligence gained can be used to enhance experiences and personalize products and services. Wearables are critical to data extraction and analytics.<h4 class="heading-node" id="f3b5" style="text-align: justify">Personalization of customer service</h4>Financial institutions and fintechs today recognize the need to be customer centric. And data extracted from wearables have proven to personalize and optimize customer interactions. Wearables can help predict customer behavior through real-time data and target them with recommendations and personalized offers.<h4 class="heading-node" id="135f" style="text-align: justify">Omnichannel user experience</h4>A combination of IoT and wearables can make all the difference in omnichannel customer experience. Fintech and banks can gain a competitive edge with wearables, for example, using smartwatches to make ATM withdrawals and biometric-enabled transactions.<h4 class="heading-node" id="072a" style="text-align: justify">Risk assessment</h4>Banks and fintechs need to mitigate risk by assessing potential factors. Analyzing customer data extracted from wearables can help enhance risk management decisions on lending, or insurance, among many others.<h2 class="heading-node" id="661d" style="text-align: justify">Banking Wearables in India</h2>India is fast catching up in the wearables market, especially after RBI increased the limit for contactless transactions to Rs. 5000. Both SBI and Axis Bank have launched their wearables Titan Pay and Wear n’ Pay, respectively.<h4 class="heading-node" id="92aa" style="text-align: justify">Titan Pay</h4>Titan Pay is a wearable collaboration between Titan and SBI that offers watches to enable contactless payments. It comprises a mobile app that allows users to send and receive money instantly. Using the watch and the app, users can transact in multiple currencies, track spending, and even set up a budget.<h4 class="heading-node" id="8fae" style="text-align: justify">Wear n’ Pay</h4>Wear n’ Pay devices include accessories like key chains and watch loops from AXIS Bank. It allows you to pay for purchases by just swiping your wrist. The system uses a special wristband that you can wear while you shop. You simply swipe your wristband across the payment terminal to pay for your purchase.<h4 class="heading-node" id="94vghp82w" style="text-align: justify">Indus PayWear</h4>By enabling consumers to easily tokenize their IndusInd Bank credit or debit card onto a chip-enabled wearable device, Indus PayWear is poised to completely change the payment experience. This will do away with the requirement for a physical card or even a payment app for purchases and enable quick and safe tap-and-pay transactions at any contactless Point-of-Sale (PoS) terminal worldwide.<h2 class="heading-node" id="9h5ne3vh6" style="text-align: justify">Real-time adoption of Wearables</h2>During the 2024 IPL, the <a class="link" href="https://www.npci.org.in/PDF/npci/press-releases/2024/NPCI-Press-Release-RuPay-Launches-Exclusive-On-The-Go-Contactless-Payment-Collectible-for-2024-TATA-IPL-Playoffs-and-Final.pdf">NPCI launched an NFC-enabled wristband</a> for payments and access to the playoffs and finals. As a part of the “RuPay On-the-Go” series, the wristband provides seamless access management during events and functions as a versatile contactless payment device post-event.This first-of-its-kind initiative links access management for live events and payments into one exclusive collectible for select attendees of the playoffs and finals.<h2 class="heading-node" id="6f11" style="text-align: justify">Conclusion</h2>The integration of wearable &amp; contactless payments is an emerging trend in the modern payment system. While <a class="link" href="https://m2pfintech.com/blog/the-rise-of-digital-payments/" target="">digital payment</a> trends keep on changing, the need to provide the best consumer experience across the platform is always constant for Financial Institutions and Payment Service providers.At M2P, we provide the best customizable payment experiences for businesses. Using our end-to-end API stack, we ensure that modern innovations and technology are seamlessly integrated into your ecosystem. Our APIs enable channel management and limit management across PoS, contactless payments, ecommerce, and withdrawals on your payments platform.Want to know more about integrating contactless payments and other customizable features on your payments platform?Write to us at&nbsp;<a class="link au lo" href="mailto:business@m2pfintech.com" target="_blank" rel="noopener ugc nofollow">business@m2pfintech.com</a>.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Rise of Wearables in Payments and Banking

Central Bank Digital Currency (CBDC) 101- A Primer

API -The Power that Drives New-Age Banking Ecosystems

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-8-12.webp" alt="M2P Fintech" title="" width="100%" height="253">Three years into the pandemic, amidst the Omicron wave, the Indian Union Budget 2022 promises resiliency, growth momentum, and long-term sustainability measures. At a 9.2% GDP, India projected the highest growth rate among world economies. Great stat to start the budget highlights with right?<h2 class="heading-node" id="b7ef" style="text-align: left">Digital Focus</h2>The key focus areas of the budget were&nbsp;digital and technology for the next 25 years.&nbsp;The Finance Minister’s budget speech promoted digital and technological innovation across industries. It offered a sharp increase in public investment and capital expenditure provision that is expected to aid future growth and help businesses recover from the pandemic-induced slump.Initiatives focused on ‘accelerated growth’ for technology-led development, energy transition, and climate action while balancing the needs of an inclusive welfare society.<h2 class="heading-node" id="857d" style="text-align: left"><a class="link" href="https://m2pfintech.com/blog/fintech-101-discover-the-3ws-of-fintech/">Fintech</a> Impetus</h2>For the financial services industry, this budget promises greater investments, is fintech-friendly and <a class="link" href="https://m2pfintech.com/blog/fintech-a-catalyst-for-financial-inclusion/">pro-financial inclusion.</a>Honoring India’s 75th year of independence, the Finance Minister announced the establishment of 75 Digital Banking Units (DBUs) across 75 districts in India. This move is expected to extend <a class="link" href="https://m2pfintech.com/blog/fintech-a-catalyst-for-financial-inclusion/">financial inclusion</a> and fintech services to remote areas.Initiatives are also underway to make the <a class="link" href="https://m2pfintech.com/blog/ready-to-sneak-peek-into-global-cashless-societies/">cashless payments ecosystem</a> safe and seamless for consumers and businesses by enlarging digital infrastructure, boosting internet access, expanding touchpoints, and enhancing cybersecurity. The Finance Minister also stated that financial support for the digital payment ecosystem announced in the 2021–22 budget would continue in 2022–23.<h2 class="heading-node" id="3689" style="text-align: left">Other Highlights</h2>Budgetary Allocation<ul class="list-node" id="dss3o91dh"><li>6.4% fiscal deficit is projected for India in FY23</li><li>Revised fiscal deficit estimated at 6.9% of GDP</li><li>Rs 1 lakh crore as 50-year interest-free loans allocated to states to help fund PM Gati Shakti-related investments</li><li>Rs 10.68 lakh crore effective capital expenditure is expected in 2022–23, which is about 4.1% of GDP</li><li>35.4% rise in outlay for capital expenditure is estimated — from Rs 4.54 lakh crore earlier to Rs 7.50 lakh crore in 2022–23</li></ul>Venture Capital Investment<ul class="list-node" id="8tce85bkj"><li>Regulatory framework for Venture Capital to be reviewed by an expert committee</li></ul><a class="link" href="https://m2pfintech.com/blog/central-bank-digital-currency-cbdc-101-a-primer/">Digital Currency on Blockchain</a><ul class="list-node" id="zmbivw63m"><li>Reserve Bank of India (RBI) to introduce the digital rupee using blockchain in 2022–23</li></ul>Digital Banking<ul class="list-node" id="gygmtbnsd"><li>Launch of online bill system to reduce delays in payment for all central ministries</li><li>Credit growth increased by Rs 5.4 lakh crore this year, the highest in several years</li></ul>Crypto Tax<ul class="list-node" id="602bt55yq"><li>Cryptocurrencies and NFT will be taxed at 30%</li></ul>So, what do you think of the budget? Let us know in the comments below.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox.Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Key Highlights: What does Budget 2022 mean for Fintechs?

Top 14 Neobanks that Reinvent Banking Experience in India

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/06/Artboard-1-copy-8-3.webp" alt="M2P Fintech" title="" width="100%" height="358">As technological advancements promote growth in our country, lack of financial literacy still prevails. In a recent incident, a farmer has reportedly lost his savings worth two lakhs to rats. He stored his money as cash in his house. The farmer wouldn’t have lost his savings if he was aware of a financial institution. The eradication of financial illiteracy and improving maximum financial inclusion help us overcome such situations.<h2 class="heading-node" id="45b6" style="text-align: justify">What is Financial Inclusion?</h2>Financial inclusion aims to offer primary financial products and services to all individuals and businesses and makes these services more accessible and affordable.Financial institutions aim to offer basic services that include payments, transactions, savings, credit, and insurance sustainably to drive more financial inclusion. New technological innovations in fintech have caused organizations to offer cost-effective services to their customers.<h2 class="heading-node" id="fb52" style="text-align: justify">Measures to improve Financial Inclusion</h2>The Reserve Bank of India started taking measures in 2005 to improve financial inclusion in our country. The government initiated the National Mission for Financial Inclusion (NMFI), including Pradhan Mantri Jan Dhan Yojana (PMJDY), which provides services to unserved areas.Furthermore, the “Digital India” initiative, which provides accessible digital banking services with simplified formal verifications using unique identification (Aadhaar), is also a bold move towards improving financial inclusion in the country.<h2 class="heading-node" id="6804" style="text-align: justify">Fintechs boosting Financial Inclusion</h2>Indian fintechs are the biggest drivers of achieving financial inclusion, with an adoption rate of over 87%. In the recent decade, fintechs have widened operations to provide personalized services without opting for the traditional route. Also, the rise of the popularity of smartphones around the globe led to the establishment of new financial services. “As of February 2021, there is a record of 2.3 billion digital payment transactions made worth over 4 trillion rupees.” From Demonetization in India to the Covid-19 outbreak, people are now more interested in using financial services such as digital payments, lending solutions, etc. Digital financial services help many small and medium-income businesses to offer cashless payments option to their customers.<blockquote class="block-node" id="wp01kwej7">According to an annual report for FY 2020–2021 by RBI, the volume of digital payments is at 453 crores in India.</blockquote>With increasing ideas and innovations, fintechs ensure more inclusion. With the growth in the industry, a wide range of products and services are set to enter the market to offer customized services. Products such as<a class="link" href="https://m2pfintech.com/blog/the-rise-of-digital-payments/"> digital payments</a>, digital credit, <a class="link" href="https://m2pfintech.com/blog/neo-banking-101-all-you-need-to-know/">neo banking</a>, <a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">API banking</a>, <a class="link" href="https://m2pfintech.com/blog/prepaid-cards-101-a-definitive-guide-for-growth-and-profitability/">prepaid cards,</a> etc., have established effective financial inclusion.<h2 class="heading-node" id="acff" style="text-align: justify">What challenges do we face?</h2><ul class="list-node" id="30k5oemaa"><li>The excluded sections, such as rural, poor areas, often don’t have access to a financial institution and often approach moneylenders.</li><li>A constant need to improve financial literacy as many rural people have less or no awareness of financial institutions.</li><li>Lack of formal identification documents is also a significant challenge when people reach out to a financial service. Poor sections lack access to financial services, as they lack various documents such as proof of identification, birth certificate, etc.,</li><li>Even though people&nbsp;have a financial account, most users still prefer cash. Lack of trust and reliability prevents a customer from accessing the available financial services.</li><li>Gender inequality to access financial services as women pay higher interest rates than men.</li><li>Low-income levels indulge in a myth that financial institutions only offer services to high and middle-income groups.</li><li>Some people are uncomfortable due to language barriers, formal documents, and the formalities that we go through before a financial transaction occurs.</li></ul><h2 class="heading-node" id="e955" style="text-align: justify">Overcoming the Challenges</h2>To alleviate the challenges faced by consumers, there arose a need to innovate new and simplified products. New technologies, fintech innovations, and the digital finance revolution have now become the constant drivers of financial inclusion. There is a constant growth in the sections of digital finance over traditional finance methods.<blockquote class="block-node" id="zr04eywdz">Digital Financial Inclusion ensures that the excluded and unserved population has digital access to financial services.</blockquote>Digital services focus on affordability, customer satisfaction, and sustainability. New digital platforms run by the institutions now accommodate small levels of cash flow. These services allow the low sections to make transactions, thus preventing the use of informal services. Understanding the potential and risks such as operational risks, financial crime risks, etc., while improving digital services can contribute to the growth of digital financial inclusion. Similarly, technological innovations have increased financial inclusion. These innovations aim to regain customers’ trust, rectify geographic and accessibility issues to bring in new consumers. Information technology, smartphone-enabled services have reduced the need for physical banks. With technological development, we can develop a rural information infrastructure that provides financial services to the underserved. Fintechs have also played a significant developmental role in achieving greater financial inclusion. Fintechs acts as a catalyst for financial inclusion as it creates more opportunities for the unbanked population. The shift of digital transactions from traditional transactions has improved self-employment, rural entrepreneurs, small borrowers, mediums, and enterprises. Lack of financial awareness, high cost of traditional services, and other policy gaps were significant challenges while achieving financial inclusion. Fintech startups play a critical role in overcoming these challenges in the economic landscape. The tremendous growth in fintech has shown a positive shift as a report shows that 99.5% of consumers are now aware that they can transfer money and make payments with fintech platforms.<h2 class="heading-node" id="b97f" style="text-align: justify">Fintech products driving inclusion</h2> New fintech products have helped consistently in driving the financial inclusion of the country. As discussed earlier, these products allow the work of financial services and offer a streamlined process. These fintech products applied to reality are the main drivers of financial inclusion.<h3 class="heading-node" id="e38e" style="text-align: justify">Embedded Credit</h3><a class="link" href="https://m2pfintech.com/blog/beginners-guide-to-embedded-lending/">Embedded credit</a> focuses upon integrating ‘lending as a feature’ in digital platforms. Customers receive their credit with the involvement of a familiar interface and eradicate the need for a third-party site. Micro, small and medium enterprises (MSMEs) face difficulty offering small credits, increasing demand here. The B2B e-commerce marketplaces provide the ultimate <a class="link" href="https://m2pfintech.com/blog/factors-and-psychology-behind-the-great-bnpl-allure/">BNPL (Buy Now, Pay Later)</a> option for the retailers while they checkout. BNPL offers these MSMEs to purchase on credit and pay later. BNPL is one of the fast-growing payment options which also helps MSMEs to expand their business. The BNPL would account for 3% of the global e-commerce spend by 2023. Thus, this system provides a convenient platform for consumers to experience new market products.<h3 class="heading-node" id="f250" style="text-align: justify">Digital Payments</h3><a class="link" href="https://m2pfintech.com/blog/the-rise-of-digital-payments/">Digital payments</a> (also called electronic payments) are the method we transfer one point value from one account to another using a digital device. Digital payments are end-to-end digital transactions, and also, they don’t require the usage of physical cards, thus reducing costs.For example, the latest introduction of <a class="link" href="https://m2pfintech.com/blog/e-rupi-indias-digital-upgrade-for-the-underbanked/">e-RUPI</a> which is a digital payment solution created by the Government of India to allow cashless payments. e-RUPI is powered by the National Payments Corporation of India (NPCI), and the one-time payment mechanism is easy, highly secure, and entirely confidential. The distributions are also made easy, safe, and contactless.<h3 class="heading-node" id="7d7d" style="text-align: justify">Neobanking</h3>Neobanking is an innovative method of approach in which financial institutions offer services without physical presence. <a class="link" href="https://m2pfintech.com/blog/top-14-neo-banks-that-reinvent-banking-experience-in-india/">Neo banks in India</a> operate on a low-cost model with minimal to zero monthly fees on deposits and withdrawals, and rock-bottom balance requirements. These drivers bring consumers and businesses across income levels into the fintech fold, fostering financial inclusion. Neo banking is highly famous among the millennials and Gen Z as they no longer use outdated processes. Neo banks use Artificial intelligence and machine learning to create a customer-centric Banking experience, with the aim to reduce human dependence.&nbsp;Neo banks provide millennials and Gen Z their own customized product set, making the process fuss-free. Millennials and Gen Z prefer simplified and easy- manageable finances, thus proving neo banks are a blessing in disguise.<a class="link" href="https://m2pfintech.com/blog/7-steps-to-start-a-neo-bank-from-scratch/"> Curious to know how you can start a neo bank? Check out these 7 steps.&nbsp;</a><h3 class="heading-node" id="3aa0" style="text-align: justify">API Banking</h3><a class="link" href="https://m2pfintech.com/blog/api-the-power-that-drives-new-age-banking-ecosystems/">API Banking</a> provides better means to share data, helps in integrating systems, and makes services more personalized. In API banking, tailor-made products improve the overall customer experience.With the help of API banking, new fintech innovated products offer features and services aligned to provide flexible services. Innovations in API banking have reduced costs and now made it economical for the unbanked and underserved as they can now experience better products and services.<h3 class="heading-node" id="921d" style="text-align: justify">Open Banking</h3>To offer better services, open banking offers third-party financial service providers access to financial data with the help of APIs. <a class="link" href="https://m2pfintech.com/blog/open-banking-a-primer-2/">Open banking</a> is highly prevalent in Europe. Open banks help achieve more financial inclusion as it allows small, medium businesses access particular tools and services that target the needs of their consumers. Innovations in open banking and the experimentation of products can foster higher financial inclusion in the long run.<h3 class="heading-node" id="9d8d" style="text-align: justify">Prepaid Cards</h3><a class="link" href="https://m2pfintech.com/blog/prepaid-cards-101-a-definitive-guide-for-growth-and-profitability/">Prepaid cards</a> help us process payments quickly as we have better cash flow management, easy reimbursements, and more security than cash or cheques. They are a super alternative to carrying cash around. They are available as gift cards, meal cards, and also as travel cards. Prepaid cards are a great way to control business expenses, improve efficiencies and generate revenue streams.&nbsp; However, the time, cost and effort involved in card issuance in-house are huge.The best way to manage card issuance is by <a class="link" href="https://m2pfintech.com/blog/why-should-apis-be-your-holy-grail-for-prepaid-card-issuance/">deploying the right APIs.</a><h3 class="heading-node" id="ee0a" style="text-align: justify">Mobile Wallets</h3><a class="link" href="https://m2pfintech.com/blog/how-to-implement-the-best-prepaid-payment-instrument-ppi-for-your-business/">Mobile wallets</a> are famous and convenient due to their accessibility. Transactions are made easy as we can send, receive and store money easily with the help of our smartphones. In reality, right from a vegetable vendor to corporate and digital firms, every one of us can easily transact if we have a mobile wallet.Mobile wallets ensure that every person can participate in a financial transaction with its cashless and contactless technologies. The whole process boosts the economy while achieving more financial inclusion.The future ideas of the fintech industry will result in product innovations while improving existing ones, thereby offering more affordable and accessible services to both the unbanked and underbanked. Furthermore, the coupling of fintech and financial institutions will help eradicate financial illiteracy and promote financial inclusion. With the acceleration of fintech and its budding ideas, the future of financial inclusion is bright and holds many opportunities that come with new beginnings.Need more info on how fintech can help you? Write to us at <a class="link au mg" href="mailto:business@m2pfintech.com" target="_blank" rel="noopener ugc nofollow">business@m2pfintech.com</a>.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

Fintech- A Catalyst for Financial Inclusion

<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/04/banner-1251.webp" alt="M2P Fintech" title="" id="pwxzxj8z1" width="100%" height="661">A few years ago, banking was always considered an arduous task with its complexity. But now, when we think of banking, ‘digital transaction’ springs up to our minds immediately, which makes our job simpler. Thanks to Neo banks, it redefines banking in the most user-friendly way and makes it more popular in recent years. Ergo, many customers now prefer using fingers for banking rather than their feet to visit the brick-and-mortar banks.Why such hype for Neo banks?What makes it stand out in the banking sector?We have unraveled everything you need to know about Neo banks in this blog. So, let’s get started right away.<h2 class="heading-node" id="299c" style="text-align: justify">What is a Neo Bank?</h2>Neo Bank is a type of digital bank that works entirely online without a physical branch. It is a customer-focused banking sector that attracts present-day tech-savvy users. They are also recognized as fintech that is demystifying the financial ecosystem actively. With Neo banks’ advanced features, the users can manage money wisely by using only their mobile phones. Moreover, compared to traditional banks, neo banks offer cheaper and faster banking services that include money transfers, lending, mobile-first financial solutions, and many more.<h2 class="heading-node" id="8b98" style="text-align: justify">Three working modes of Neo Banks</h2>Though Neo banks appear to be an app that controls financial services, the working is differentiated into three modes.<h3 class="heading-node" id="c677" style="text-align: justify">(i) Partners with Traditional banks</h3>It is a&nbsp;front-end focused&nbsp;neo bank which does not carry a banking license on its own and partners with a traditional bank to offer a wide range of core banking services. These types of neo banks include non-licensed fintech companies affiliated with existing licensed banks that offer seamless services and products for the bank’s customers. This collaboration ensures banks as their partner and not their opponent.<h3 class="heading-node" id="b6a7" style="text-align: justify">(ii) Bank’s Digital Avatar</h3>Here, the traditional banks develop their own digital-only initiative like neo banks to offer their services more digitally to their customers. They also go on par with the technology advancements to launch neo banking services. The banks that offer digital services through online portal comes under this category of neo banks.<h3 class="heading-node" id="c67b" style="text-align: justify">(iii) Neo Banks with a digital banking license</h3>They are called a&nbsp;Full-Stack&nbsp;neo bank that works only in countries that approve stand-alone digital entities and acquire a license from the Central Bank or the corresponding authority.<h2 class="heading-node" id="8e50" style="text-align: justify">Neo Banks Vs. Digital Banks Vs. Traditional Banks</h2>Banking is now a field where people are offered a lot of options to choose from. There are different kinds of banks that offer different services and qualities. The below image brings out the characteristics between three popular banks — <a class="link" href="https://m2pfintech.com/blog/neo-banking-the-rise-of-new-age-banking/">Neo Banks</a>, Digital Banks, and Traditional Banks.<img src="https://m2p-website-file.s3.ap-south-1.amazonaws.com/m2p-website-file/marketing-cms/m2p-blog/2022/04/int.webp" alt="M2P Fintech" title="" id="69y0499an" width="100%" height="529">As the name says, traditional banks are the oldest of all with the most trustworthy customer relationship. They also specialize in a wide range of services and products but with tons of paperwork and, at times, online data, which demands extremely long wait times. But nowadays, traditional banks have also adopted digital tools like e-mail, SMS, application, website, etc.The next entrant is the digital banks, which are similar to Neo banks since they also offer banking services online. To simply put, they are traditional banking with a digital touch that allows users to manage finance 24/7 via an electronic/online platform. Digital banks eliminate customers’ visits to physical bank branches and automate traditional banking services with no paperwork. They uplift traditional services with a simple equation —&nbsp;Online Banking + Mobile Banking = Digital Banking.As you can see, Neo bank is an upgraded version that suits the present-day banking needs digitally and is user-friendly. Neo banks stand out with their simplified customer-centric banking approach with wise financial management. Users are satisfied with their 100% quick and easy digitized services with anywhere anytime accessibility, making them the most profitable business model.<h2 class="heading-node" id="9b30" style="text-align: justify">What makes Neo banks a lucrative fintech offering?</h2>Neo banks are one of the profitable business models that emerged in the recent few years. With their ingenious services, these financial institutions are hitting the jackpot in ways that benefit themselves and their users. The below-listed features substantiate neo banks’ success:<ul class="list-node" id="kzvx0pa02"><li>Fewer fees and faster banking services make it more popular and cost-effective even among underbanked sectors.</li><li>Neo bank is a customer-centric banking avatar as they automate services according to their users’ preferences.</li><li>They blend emerging technologies like Artificial Intelligence and Machine Learning to end the tedious banking process.</li><li>Customers enjoy various financial services like account creation, international transactions, or any services, quicker at any time and any place.</li><li>AI and data insights-driven app that tracks every transaction and generates reports as per user’s requirements.</li><li>Smart saving and Investment options are now possible with just a smartphone.</li><li>Neo banks act as a digital crust, making the core banking services crisper and accessible for their users.</li><li>They fill the digital gap and enable traditional banking services to Gen Z.</li><li>Collecting and analyzing data to give their users highly personalized and customized services.</li></ul>As a result, banking turned smarter with neo banks and easily reached out to unbanked and underbanked sectors. It also impacts banking today and tomorrow with its unmatchable digitized financial services.<h2 class="heading-node" id="smmjd1o8d" style="text-align: justify">Neo bank and its rising popularity</h2>The Covid-19 pandemic was the main reason which triggered its popularity when people were concerned about physical cash for safety reasons. People were more exposed to digital banking, which made brick and mortar banks have a healthy collaboration with neo banks. Their out-of-the-box strategies gave sudden popularity for neo banks.Starting from targeting the Gen-Z audience with product marketing, neo banks focus on the end-user experience by tailoring their User Interface to give the best possible user experience. Also, the customer gets to enjoy a better interest rate minus the need for lengthy paperwork.Furthermore, neo-banks have the ability to offer services based on popular customer opinion, and they further improve the stickiness by tailoring the services individually. When customers feel their opinions are being heard and fulfilled, they stick with the service provider. Neo banks now deploy this strategy to target specific audiences.These digital-only banks are ruling the banking space since 2017 with their innovative strategies and methods. We have&nbsp;Finin&nbsp;India’s first consumer-facing neo bank, fueled by our own <a class="link" href="https://m2pfintech.com/">M2P’s</a> API, which gives users a better track of their finances. Finin offers features like a detailed break-up of user spending and completely digital services with high bank-level security.Backed by banking licenses of the traditional banks, neo banks are adding increasing value by the day to the financial ecosystem; in fact, they can be termed as the new-age banks of today.<h2 class="heading-node" id="1101" style="text-align: justify">Turning stumbling blocks into stepping stones</h2>Even though it is one of the profitable business models in the industry, challenges are to everyone. Neo banks have limited banking services and products, unlike traditional banks, since they are relatively new. Indeed, we could see this challenger bank with a wide range of products and services in few years.Traditional banks being a string participant for decades with unbeatable trust relationships with their customers, neo banks find it difficult to gain trust. But, with collaboration with traditional banks, they are definitely coming up with great strategies and services to establish as a trustable one among customers.Neo banks are withstanding in this ambitious field with many robust financial institutions around. Every entrant, including traditional banks, would have faced their stumbling blocks and crisis, which led to the products and services we enjoy now. So, neo banks being an active player is turning every stumbling block into a stepping stone in its way.<a class="link" href="https://m2pfintech.com/newsletter/">Subscribe</a>&nbsp;to our newsletter and get the latest fintech news, views, and insights, directly to your inbox. Follow us on&nbsp;<a class="link" href="https://www.linkedin.com/company/m2pfintech/mycompany/">LinkedIn</a>&nbsp;and&nbsp;<a class="link" href="https://twitter.com/m2pfintech">Twitter</a>&nbsp;for insightful fintech tales curated for curious minds like you.

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