Trends and innovation in Fintech
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Transcript of Trends and innovation in Fintech
Mahesh Ramachandran18th Nov 2016SPICON 2016
Trends & Innovation in #FinTechthat will change customer expectation and experience forever
Hello!I am Mahesh Ramachandran
Mahesh Ramachandran
Distinguished Sloan Fellow of London BusinessSchool
Masters ofScience in Leadership & Management from London Business School, University of London
MBA from University of Westminster
Director, Commonwealth Inclusive Growth Services Ltd
Chartered Member of TiE (www.tie.org). Chair TiE #FinTech SIG.
Director (International Business), Commonwealth Investment Corporation (CIC)
Serial Entrepreneur in theareas of Targeted Messaging, Peer to Peer Foreign Exchange portal. Mentor for several startups and SocialBusiness.
Corporate experience includes Dun & Bradstreet, Ford Motor Company (UK), TCS (EMEA)
Change is not only inevitable, but essential too…
Change is not only inevitable, but essential too…
… especially after demonetisation of Rs.500 and Rs.1000 J
DemonetisationCustomer Service @ Doorstep
In the Villages
Use Tablet with Biometric
Connect to Aadhaar Server
Connect to Core Banking
Accept Deposit
Disburse Cash
Trends in #FinTech(that will alter customer
expectation and experience)
The Future Is Already Here…
It’s Just Not Evenly Distributed
Strong integration with Smart phones• Biometric • User-Friendly • Convenient
Mobile Payment’s Kissing Cousin
Challenge in Predicting the Future
“The horse is here to stay but theautomobile is
only a novelty – a fad.”
President of the Michigan Savings Bank advising HenryFord’s lawyer, Horace Rackham, not to invest in the Ford Motor Company in1903
“… there is a world market for maybe fivecomputers.”
Thomas Watson, IBM Chairman in 1943
“Cellular phones will absolutelynot replace local wire systems.”
MartinCooper, Inventorof CellPhone in 1981
FewPredictions
The best way to predictthe future is
“The best way to predict the future is to invent it” –Alan Kay
To invent it
Mobile First Banks On Rise
Peer-to-Peer Lending getting regulatory approval
Say Hello ToYour New Broker- RoboAdvisor
BLOCKCHAINTECHNOLOGY
Appliances will reorder
Digital Money will Permeate
Wallet will transform
Payment Queues will bereduced(after Dec 30!)
Interchange fee will reduce
Crowd Funding will Dominate
Biometrics will take over
Quick Service Restaurantswill be really quick
Connected Cars will be commerce platform
Micro Businesses will go Digital
How Many Trends did IPredict?
Unified Payments Interface (UPI)
innovation from
What is Unified Payment Interface ?
• Unified Payments Interface (UPI) is a simple and effective way to transfer money between two bank accounts in India by using a Smartphone.
• Built on IMPS
• Uses Virtual Payment Address (VPA)
• No need of account number and IFSC details of beneficiary.
What is Unified Payment Interface ?
• The payments can be both sender (payer) and receiver (payee) initiated and are carried out in a secure, convenient, and integrated fashionPush & Pull Payments
• The unified payment system is expected to further propel easy instantpayments via mobile, web, and other applicationsEasy Instant Payments
• This next generation payment system provides an ecosystem drivenscalable architecture and a set of APIs taking full advantage of massadoption of smartphone
1 Click 2FA & Virtual address• Virtual payment addresses, single click 2 factor authentication, Aadhaar
integration, use of payer’s smartphone for secure credential capture,etc. are some of the core features
Scalable Architecture
What’s New in UPI that makes payment experience seamless?
Pull Payment for P2P – Hitherto not available
Virtual Address (‘[email protected]’) – Unique single identifier for both Push & Pull
Transfer using Single identifier like Mobile No, Aadhaar No (It will use NPCI Mapper)
New Entities i.e. Payment Service Provider (PSP), who will provide App to customers of any bank
One App for all Payments
1 Click 2FA – seamless customer experience
Steps
Steps 2.1: Generate PIN for Transactions
Step 2: Adding Bank
Account
Step 1: Download of PSP App and
Profile Creation
Benefits – Ecosystem Participants
Simplified (Single click 2FA)
Universal App for Payments
Leveraging existing Infrastructure
Secure
Payments basis Single/UniqueIdentifier
Opportunity to tap C2B segment
Opportunity to tap E-commerce & M-commerce
Benefits to Banks
No risk of storing customer’s virtual address like in Cards
Can tap customers not havingcredit/debit cards
Suitable for e-Commerce & m-Commerce
Single click 2FA facility to thecustomer leading to seamless Pull
In-App Payments (IAP)
Benefits to Merchants
Seamless fund collection fromcustomers using single identifiers
Single click 2FA – Seamless check out
Can work across various interfaces (PULL):
Payments through Single Identifier
Choice of a single interface with multiple bank accounts
Benefits to CustomersPrivacy: Transfer funds using justtheir personal details like MobileNo.
Multiple Utility: Collect Request can be initiated to pull funds
What are the Implications of UPI?
Before UPI - Low volume, High Value, High Cost
After UPI - High Volume, Low Value, Low Cost
40
Expected population growth, Internet andMobileInternet Penetration present attractiveopportunities
354M213M 314M
500M
Mobile InternetUsersInternet Users
2015 2017 2015 2017
India : 1.27b
Population
China : 1.35b US : 318m
India is a unique and exciting market
41
• Youngest economy in the world• 68% of populationunder
• the age of35
• 3rd largest internet
• user base• 460M internet usersgrowing to 700M+ in2020
• Mobile-first access Smartphone
penetration 54% in2020
• 76% of incrementalinternet
• users from mobile
• E-commerce growth potential ~$800B retail,• only 8% organized and <1% is online. Etail totouch 159B in2020
• Limited use of cards Only ~20M
credit cardsand stagnant
• 450M debit cards but<10% active
• Cash on delivery dominates e-tail• ~60% of e-tailtransactions are CoD, mainly driven by trust
A changing society where cash stilldominates(though Demonetisation will change user behaviour)
TRUST AND SOCIETY FINANCIAL CLIMATE
SOCIAL ATTITUDETOMONEY
SAVING VS CREDITCASH FOCUS
FINANCIAL EDUCATION
Aadhaar UPI
PaymentsBank
BBPS
Be Prepared for a Platform PlayBe aPlatformOr be the Platform
Uniform Payment Experience
Identification
Web Mobile
Authentication
Offline New Channel
Frictionless Invisible
Habit Velocity
Loyalty
Data is the new Oil, new Gold. Don’t Just sit,Analyse
Regulation, Mindit!!
PEOPLE & TRUST
AcknowledgementThe content of this presentation has been assimilated from contacts who are considered industry veterans in payment system process and have been in various Leadership – in particular, Mr. Ramesh Vijayakumar of National Payment Corporation of India (npci.org.in ), Unique ID Authority of India (uidai.gov.in), Nandan Nilekani’s presentations on #FinTech, Pradeep head of PayPal Incubation (paypal.com), Innovative Startups, Christopher Woolard of Financial Conduct Authority, UK
Mahesh RamachandranChairperson, FinTech Special Interest Group
The Indus Entrepreneurs (TiE)
Place your screenshot here
CONTACT
Email: [email protected]
Mobile: +919940660409
Landline: +914430989999 Ext199