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Transformations in the worlds of money and technology are converging, as described in the book by Sanjay Phadke, Fintech Future: The Digital DNA of Finance.

The material is spread across 17 chapters, and makes for an informative read for beginners new to this field. However, the choice of font could do with considerable improvement, and there are several typos; more figures would have been a welcome addition to improve readability as well.

Sanjay Phadke is the Head of Global Platforms and Alliances at Vayana Network. He describes himself as a “tinkerer (almost) and teacher (hopefully)”. He graduated from Jamnalal Bajaj Institute of Management Studies and Sardar Patel College Of Engineering.

Here are my takeaways from the 190-page book, summarised as well in Table 1. See also my reviews of the related books Prediction Machines; Seeing Digital; A Human's Guide to Machine Intelligence; Machine, Platform, Crowd; and The AI Advantage.

T

Table 1: Fintech transformations (image credit: YourStory)

Evolution of money

The invention of language and money are key contributions to the evolution of society, Sanjay begins. Money acts as a bridge from past to present and future. It is a form of payment and trust, and even a way to acquire more money through financial investment.

Money is a means of exchange and way of comparing the worth of different assets and services. It has deterministic, probabilistic, and even emotional connotations. Evolving from shells to coins and banknotes, currency and its governance are being transformed in the digital era.

While coins did not need numbering, banknotes do. Banknotes today account for only five percent of monies globally, Sanjay explains; the rest is stored in digital or ‘dematerialised’ form.

“Digital money is data,” the author observes, it is a string of characters, and does not derive trust from its physical form any more. New risks arise, of course. “No digital property can be guaranteed to be foolproof from digital theft,” he cautions.

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Key players

Banks, big tech giants, and fintech startups are the three categories of players in today’s financial scenario, Sanjay explains. The industry is tightly regulated, so governments and exchanges play a key role as well.

There are significant differences in the mindset and operations of banks and tech-led firms. Tech DNA is about rapid change, agile development, and learning quickly from mistakes to develop easy-to-use offerings. Bank DNA is about being cautious, paranoid, careful in experimentation, and slow change.

One chapter traces the evolution of the “finscape” in the US, China, and India. The US already had a mature system in place in the pre-digital era, with social security numbers, credit cards, and credit bureaus. “China and India, in contrast, had vastly underdeveloped ecosystems,” Sanjay observes.

The US tech players have now set high expectations for engagement among the younger generation of mobile-connected always-on users around the world. “Silicon Valley is coming,” in the words of Jamie Dimon, CEO of JP Morgan.

The market value of US tech giants like Apple and Amazon is around half of India’s GDP, and they are entering the world of finance along with Google and Facebook as well, Sanjay explains.

Fintech 1.0

Mobile payments and digital-only banks are some forms of Fintech 1.0, Sanjay explains. Alibaba’s Ant Financial set up MyBank as a digital-only bank to offer loans to small businesses in just minutes. It draws on transactional and social media data, fed into AI scoring models.

Neo-banks do not have a banking license but partner with banks to offer banking services. Some existing banks have also rolled out their own digital-only banks, such as Fidor by JPMorgan Chase and Kotak’s 811.

Payment via QR codes has accelerated mobile payments even more. IoT and the emergence of 5G will speed up the momentum further. IoT sensors in vehicles are being used by automobile insurance firms; voice-based assistants and face-recognition technologies are other trends to watch in fintech.

Paypal was one of the first “native-Internet” fintechs. Microsoft is more likely to be a collaborator with banks than a competitor. Softbank is another player to watch, thanks to its investments in fintech startups, the author writes. Fintechs in other countries include Adyen (Netherlands) and Klarna (Sweden).

China has a highly-innovative landscape at scale, as seen in Alibaba’s Alipay, Yue Bao (money-market fund), and Sesame Credit (social credit rating). Ant Financial is the first of the “super fintechs," according to Sanjay. (See also my reviews of the related books Tech Titans of China, China's Mobile Economy, and AliBaba.)

There are new active players in wealth management, consumer loans and insurance. Alibaba also expanded into finance for logistics services, a move copied by other players around the world. Thanks to not having legacy baggage, China has created a “futuristic fintech ecosystem,” Sanjay explains. However, it is siloed into the BAT trio worlds.

India has emerged as a laboratory for global big-tech players, along with local firms like HDFC Bank and Bajaj Finance. Among startups, the book focuses largely on Paytm and not the broader spectrum of players. Paytm’s fortunes were boosted by events like demonetisation, and also received India’s first investment by Warren Buffet.

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Fintech 2.0

The world is awash with money, yet few get loans, the author laments. Cautious banks need collaterals, guarantors, or credit history data based on past records. Unfortunately, the aspirational needs of low-income or poor people cannot be fulfilled in such a system, even though India has 120,000 bank branches – the highest number in the world.

“The poor pay the highest for a loan and gets next to nothing on deposits,” Sanjay observes. Even remittances of foreign labourers are charged relatively high service fees.

Frauds and false identities have plagued the banking system. Digital transformation can help in this regard, but there are also risks regarding theft of data, money and reputation, the author cautions.

India’s larger fintech moves have been cautious and led largely by the government, as seen by inter-connected developments in the B2C and B2B sectors like biometric UID, UPI (Unified Payment Interface), and GST. The author identifies other developments as well, such as DEPA (Data Empowerment and Protection Architecture), PCR (Public Credit Registry), and AA (Account Aggregator).

Aadhaar helped Jio acquire a million customers a day, and reduced activation times. Jio is forging alliances with a range of tech giants, Sanjay observes. Digital technology and finance innovations helped spur the Chinese economy and created a vast pool of SMEs; it is hoped that a similar boom can take place in India as well.

The API architecture is spurring a range of innovations on top of existing digital infrastructure, driven by the talent of entrepreneurs. Hopefully, these combined developments can make access to capital easier and more automated, given the rapid growth of data communications in India.

The success of emerging economies like India depends on democratising access to capital as raw material for the needy, the author emphasises.

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Fintech 3.0

The author charts a range of technologies in the next wave of fintech, clustered as the new ABC: AI, algorithms, autonomous operation; big data, blockchain, bitcoin; and cloud, crypto, cybersecurity. Other trends to watch are quantum computing, which can also pose risks to security via the ability to crack codes.

Continuous feeds of data and powerful algorithms can improve automation and robustness of financial processes at scale. For example, they can improve assessment of ability and willingness to pay by better understanding social psychology (though overcoming bias will be a challenge). Spotting anomalies and outliers can improve fraud detection defences.

Bitcoin regulations vary around the world, but some blockchain features are being implemented. Hybrid systems may emerge in such a context, the author observes.

Platformisation combined with AI is a powerful combination. But countries have adopted varying positions on cloud infrastructure and data sovereignty as well (eg. EU’s GDPR), and trade wars have triggered off new moves in geopolitics.

If all goes well, however, the dream of making financial security and prosperity for all can become a reality when arteries of finance become unclogged, the author sums up. Innovation, agility and scale can be enhanced through financial ecosystem partnerships and progressive regulation.

Edited by Kanishk Singh

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Original Source: yourstory.com

The coronavirus outbreak has not only brought about a global health threat but is also crippling the economy. Several organisations, factories, and businesses are unable to operate normally, forced to cut down their costs by deducting salaries and/or reducing their employee strength. 

According to media reports, 27 million workers within 20-30 lost their jobs in April 2020 amidst national lockdown. 

Paytm job

Paytm is looking to hire more than 1,000 tech and non-tech roles and 50 key senior-level hires. [Image Credit: Shutterstock]

Also ReadHiring in India picks up pace during April to June: LinkedIn

However, Noida-based fintech unicorn Paytm is looking to hire people for 1,000 positions within the next two to three months. Apart from this, the company is also looking to bring in over 50 key senior-level hires for vice president and above positions for tech and business roles.

Speaking with YourStory, Rohit Thakur, Chief Human Resource Officer, Paytm, says, “The ongoing global pandemic has not impacted our hiring plans and we have continued with our interviews, as well as inductions of new joinees through WFH mode even during the lockdown. We believe the hiring process would be complete in the next two to three months.”Growth and expansion amidst crisis

According to Rohit, Paytm and its other group businesses — lending, insurance, wealth management, and offline payments — have been expanding operations, creating the need to hire people for both tech and non-tech roles. 

“This team expansion would play an essential role in launching innovative financial services and technology to fuel Paytm’s growth journey and digitally serve the residents of the country in the troubled times of COVID 2019,” he adds. 

Paytm is not only building solutions to survive and sustain its business amidst the pandemic but is also aiming to empower the citizens to deal with the crisis. Riding on the accelerated digitisation wave, the fintech unicorn claims to have grown by 35 percent combining offline and online transactions, while its Gross Transaction Value (GTV) has grown by 50 percent over the last few months. 

The company’s offline merchant transactions and P2P transactions have increased by 122 percent and 50 percent, respectively amidst the pandemic situation. 

The fear of contacting COVID-19 through currency notes has forced people to shift to online transactions. Transactions through Paytm Payments Gateway have also increased, especially for gaming, OTT, and essential services. 

Paytm, jobs, hiring

Paytm and its other group businesses have been expanding operations thus creating the need to hire people. [Image Credit: Shutterstock]

Also ReadHow Paytm’s Rs 250 Cr ESOP policy will help the fintech giant drive growthEnsuring wellbeing, financial security of employees

To ensure the physical and mental wellbeing and financial security of the employees, the fintech unicorn made efforts to not opt for salary cuts or layoffs. This also ensured that employees gave their undivided attention towards innovating new solutions rather than worrying about their jobs.

“We have cut down on a lot of overhead costs, streamlined our operations and real estate, and managed to save on resources in other areas. We have ensured that all levels and categories of staff remain safe, motivated, and energised as earlier with minimal impact,” says Rohit.

The company is giving up leases of 19 facilities across the country that can help Paytm save over Rs 40 crore yearly in rent, maintenance, and other operating expenses. According to Paytm, this money will be utilised for tech development, employee, and other initiatives. 

Further, to maintain the productivity of the employees, senior managers and team leads try to stay connected with teammates and support them in completing their daily tasks. The company has also joined hands with professionals to organise mental health webinars, online yoga classes, and other workshops to ensure the health of its employees.

“Every week our founder [Vijay Shekhar Sharma] addresses a video-townhall meet with a large number of colleagues to keep everyone informed about all the latest developments in the company. Throughout the week, the HR touches base with various teams to hear out their concerns and address any work-related issues that they might have,” he adds.

When asked about the appraisal plans, Rohit reveals that Paytm is looking to opt for an ESOP-based appraisal plan, which will be applicable for all the new joinees and existing employees, who were given ESOPs 2019 onwards. This new process has been linked with individual goals, which are reviewed and approved by the HoD or business head.

“Linking it to the performance of our colleagues helps us get the best out of them and also sets the benchmark for goal setting. We follow a point-based performance structure that is transparent and done purely on the basis of achieving the set goals and targets. The higher the points scored in each assessment, the more percentage of ESOPs the employee gets allocated,” he says.

New business opportunities 

Paytm has launched several new products and services such as Paytm Postpaid, Scan to Order, contactless ticketing service, COVID-19 insurance, Recharge Saathi programme, credit shell for flight tickets, and free cancellation of bus tickets, among others. 

“Early on, we understood that social distancing norms and safety measures would have a lasting impact on the movement of migrant workers across the country. Things that they were able to do earlier, including standing in a queue to pay utility bills, going for shopping, and even touching currency notes would become difficult. Keeping all these things in mind, our team worked dedicatedly to revamp the Paytm app UI with a ‘Stay at home essential payments’ section to include Mobile and DTH Recharge, electricity, water, gas, credit card, and insurance premium payment among others,” Rohit says.

This offering led to over 50 percent increase in mobile recharges, 60 percent increase in DTH payments, and over 200 percent increase in broadband bill payments, claims the company.

To cater to the growing need for contactless services, the fintech unicorn launched the ‘Scan to Order’ feature to promote safe dining and hygienic food ordering experience. It also developed a unique QR to be displayed at restaurants, which can be scanned by users to browse the menu and place orders using their mobile phones. 

Paytm also launched a contactless ticketing service for state-run local transport buses, which will benefit state transport corporations such as DTC, BEST, Punjab Roadways, CTU, OSRTC, and KSRTC, among others.

“We are already in talks with 20 state transport departments to ensure that citizens are able to travel safely within cities following all social distancing norms. We are targeting to enable a contactless ticket-buying experience in over 20,000 state-run busses in the first phase of going live with this service,” adds Rohit.

He adds that a deep understanding of user needs, along with the capability to develop innovative solutions helped the company find new opportunities during these turbulent times.

(Edited by Saheli Sen Gupta)

Want to make your startup journey smooth? YS Education brings a comprehensive Funding Course, where you also get a chance to pitch your business plan to top investors. Click here to know more.

Original Source: yourstory.com

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