Financial institutions are not always known for their excellent customer service or speed of doing things. But things have changed phenomenally in the past few years thanks to disruptive technological developments. Today, all institutions, including banks, have integrated the latest technological advancements to make services better for their customers. They provide a variety of services like banking, insurance, and investment. All these are possible due to fintech, which is a sector that is growing at a fast pace. We look at the industry and career prospects in it.
Why FinTech is the future of finance?
Table of Contents:
- Importance of Financial Services
- Importance of Financial Services in An Economy
- What Is Fintech?
- The Evolution of Fintech
- How Customers Benefit From Fintech?
- Fintech in India
- What Are Fintech Companies?
- Fintech Career Opportunities
- Careers in Fintech
- Skills Needed for a Fintech Job
- Wrapping Up
Importance of Financial Services
Before we look at the brand new sector called fintech, let us understand financial services. Various institutions like banks, NBFCs, insurance companies, credit card companies, payment wallet facilitators, etc., provide financial services. Some of the services like banks and insurance have been around for centuries. These have been in existence from the time that humans turned to use cash to buy things instead of bartering. Financial institutions help people use and keep money safely.
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These institutions offer various products and services that form part of the financial services. There are credit cards, debit cards, shares, etc., which are standard products. Services include investment, leasing, credit, hire purchase, etc. It is financial services that help a country to develop economically. Finance certification courses in India teach students how financial institutions help businesses expand and grow. They also help people to manage their money better and invest it wisely. Let us see the various ways in which financial services help a country and its people.
Importance of Financial Services in An Economy
1. Enables Investment
People are always looking at various ways to invest their money profitably. It is financial services that help in providing multiple means for investment. Merchant banks help companies to sell shares which is an excellent means of investment. Such bankers also facilitate businesses to invest money to make profits. This is done by providing advances based on the company’s earning capabilities. Stock trading companies help ordinary people invest in shares and earn profits.
There are various other investment products. Many insurance companies offer multiple products that provide excellent returns to investors. Mutual funds are a perfect way for people to put their money in and reap good benefits. Banks also help people invest their money in various deposit schemes and gold purchases. Such financial services help people to keep their money safe and earn from it. All finance courses in India deal extensively with investment services and products.
2. Promote Savings
Saving money is essential to tide over difficult situations. Industrial recession, low economic growth, and sudden occurrences like the pandemic teach us that saving money is vital to lead a comfortable life. When people put away a part of their earnings, it comes as a great help in times of difficulty. Low and middle-income earners can purchase high-value commodities by saving money regularly. But it is not safe nor productive to keep cash at home. This is where banks play a significant role.
Savings schemes offered by these institutions help people keep their money safe while also earning a small amount of profit. Mutual funds are an effective way to save money and get it back as a lump sum when required for purchasing expensive stuff. Various financial products help salary-earners to save money for life after retirement. A financial analytics course teaches how experts can use data to find the most profitable investment.
3. Protection from Risks
Various unexpected events happen in life. The current Covid-19 situation taught people that their near and dear ones could suddenly depart, leaving them alone. Sometimes they are not just alone but also financially poorer. Some may find it challenging to continue with life the same way as before. Money is needed to fulfill the most necessities of life. When an earning member departs, the rest of the family may find itself unable to sustain. This is when products like insurance help them tide over the situation.
Those attending a financial risk management course in India know that insurance doesn’t just help individuals who have lost a close one. These products are also available for companies. They can insure their property and machinery so that no calamity can disrupt the business. They will be back to work soon. Vehicles can get involved in accidents leading to substantial repair expenses. Insurance companies offer compensation for such incidents. Insurance services help many people get over severe financial crises.
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4. Improve Returns
Business is all about investing money to get better returns. But not all companies have cash in hand to start a business or continue it. But most of them have excellent ideas to make profits. They have products or services that can be sold at good margins. Financial companies offering credit to these companies at very reasonable rates help them get good returns. As the interest rates are meager, even borrowing money to do business ensures good profits.
Those who have studied advanced finance also help people get better returns. Many experts use financial analytics to forecast the way markets will move. Many companies offer such services. They allow individuals and companies to know how the financial markets will behave in the future based on past data. The insights these people provide will help in making better investments that earn higher returns. Financial analytics services are in high demand as more companies understand the benefits of getting it done.
5. Improved Living Standards
People are no more happy living the way they did many decades back. Everyone wants more comfort and luxury in their lives. Whatever be their financial status, everyone is looking to improve their living standards. There are so many modern gadgets that make life much easier. But purchasing these need money, and someone who earns a fixed monthly salary may not afford such luxury items. But financial services are coming to their rescue.
Students of IIM finance courses can tell you how much the sales of various electronic devices, electrical appliances, cars, and other items have increased in the past decade. Thanks to financial services like leasing, hire purchase, and credit cards which offer easy ways to buy things and pay for them later. Various companies are even offering such credit facilities without charging any interest. Cheaper home loans have enabled more people to own homes.
6. Benefits The Government
It is not just private individuals or companies that benefit from various financial services. The government needs money for multiple projects. The central government or the various state governments need money to construct roads, provide water and other facilities, and improve communication. They also undertake other projects that will help industries work more efficiently. All these need money. Banks and various other financial institutions support the government to raise the required amount.
The money market provides necessary cash to governments for short-term needs. Banks purchase government security and give them money for various long-term projects. Financial institutions enable governments to sell multiple types of bonds and raise money. Such money helps them execute projects that are necessary for the country’s citizens. The foreign exchange market also helps governments fulfill their foreign currency needs to purchase various defense and other machinery.
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7. Help Financial Institutions Grow
Banks and financial institutions must function profitably too. They use the money earned for improving facilities for customers. These companies must also make money to pay salaries to their staff and expand their operations to more locations. When such establishments are present in villages and interior areas, people can also benefit from the services and live a better life. But where will banks and financial institutions make money from?
Such organizations can earn more by offering financial services. These services help the companies apart from the public. When banks provide other services, those availing of the facilities pay a fee. When someone buys a credit card, there is a fee to be paid to keep it operational. Every service offered by the institutions earns money, enabling them to function smoothly and improve their service to the customers.
8. Catalyzes Economic Growth
Various indicators show whether a country is prospering or not. When a country’s population is living at a higher standard, it implies that the economy is growing. An increase in industrial activity is another indication of growth and development. Financial experts look at the capital market to see how a country is performing. When there is a vibrant capital market, it means that a government is financially stable.
Financial services like easy availability of funds to companies result in a strong capital market. The country prospers when people can easily buy things using hire purchase schemes, credit cards, and other financial services. Export of goods is also taken as an indication of better growth. Financial services help companies produce more and export them to other countries. A developing nation needs financial services to aid its growth.
We have seen how financial services are helping people, companies, and the nation grow and expand. These services make it much easier for people to handle money and use it for beneficial purposes. All these institutions have been adopting the latest technology to improve their services and make them more attractive to customers. Students of the IIM risk management course know how technology has made financial transactions easier and much safer.
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What Is Fintech?
It is obvious that the term “fintech” comes from combining finance and technology. But apart from being just a term for adopting technology, fintech has assumed much higher importance as more firms dedicated to this phenomenon are coming into existence. The name applies to any new technology that helps financial institutions deliver faster and more efficient services to customers. The difference between walking to the bank to check your balance and knowing it from the comfort of your own home is Fintech.
Nobody pays cash at restaurants anymore. Even your local panwala doesn’t insist on fresh and crisp notes. He points to the QR code proudly displayed at his shop. All one must do is point their phones at it, and he has got his money in seconds. Want to pay back the money you borrowed from your friend? Just send it to her mobile phone. Many people don’t even carry their wallets anymore. Why should they when there are wallets inside the phone?
It is not individuals that fintech is helping. Various financial institutions have been able to offer their services in a better way. Lenders can make far better decisions by utilizing technology to identify and minimize dangers. Bank services are better, and there are fewer people at the banks demanding various services. Insurance companies can get more customers as there are various ways to compare schemes and pick the most beneficial ones.
The Evolution of Fintech
Though the term itself is new, technology has been invading the financial sector for a long time. ATMs have been there for a long time now. People have been using credit cards for more than a couple of decades now. The way these cards are being used has changed a lot, though. Technology has been continuously disrupting the way banks function. Nobody needs to go to a bank to transfer money today. International money transfers are much faster. Banks are also benefited as they use technology to make their lending safer.
From simple technology advancements today, fintech is using the most modern methods like AI, IoT, machine learning, etc., to ensure that customers get the best services. Using such technologies is also helping financial institutions to remain more profitable and safe. They can use advanced analytics to understand the repayment habits of customers. Technology is helping them assess various other factors that may affect the profitability of their investments. Fintech is one of the industries that many investors are looking at as the future for earning better returns.
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How Customers Benefit From Fintech?
Most bank services are much faster than they were. Many customers don’t visit their banks for months together. They can open accounts without stepping out of their homes. That is not all? Giving and taking money from others takes no effort at all. All you need is a mobile phone. Fintech is also helping people get their credit scores within no time. This way, they can get a loan or a credit card quickly. Finance certification courses teach that this advancement is helping more people get into investment areas like stocks.
Fintech doesn’t just help the wealthy. In many countries, there are large sections of people who don’t have access to banks or their services. Mobile phones and service providers are helping these people easily send and receive money. It has now become easier for even the most financially illiterate persons to understand insurance and its benefits. Thanks to various sites providing such information and guiding people to insure wisely.
Fintech in India
India is way ahead of many others in adopting this technology. India is in the third position only behind the US and UK. The recent policies that put much stress on digital payments helped the fintech industry to develop. The major use of fintech in India has been in purchasing daily needs. Most establishments today accept digital payments. This includes even small traders who sell their wares from mobile shops. Finance courses in India teach that various companies have made it easy to make and receive payments digitally.
The cost of adopting this technology is also very less. This is leading more businesses to accept payments through various digital methods. Mobile POS devices are facilitating companies to deliver goods to homes and collect payment using the method chosen by the customer. Public sector oil companies are accepting online payments for domestic cooking gas cylinders, which makes it unnecessary for cash transactions at home. Most government services can be paid using net banking or credit cards. Technologies like AI, blockchain, and IoT are commonly used by fintech companies.
This brings us to the main point at hand – that is, fintech companies and career prospects. Before looking at career options, it is necessary to understand what fintech companies are.
What Are Fintech Companies?
Fintech companies are those that use the most modern technology to improve financial services to customers. A financial analytics course can teach you how these companies integrate technologies like artificial intelligence, blockchain, and data science to make tasks faster and more efficient. This integration has helped both the financial services companies and customers to get a better understanding of products and use them more effectively. Finance is one sector where technology is being used the most, and it is also the fastest-growing industry.
Fintech companies are helping banks make their operations easier and get a better reach to customers by offering innovative banking solutions. Most users of bank services are now able to make their transactions using mobile phones. The other area where fintech companies have made great inroads is in payments for the purchase of goods. Cash payments have reduced greatly with the introduction of payment wallets, credit cards, and money transfer apps. It is much easier to get credit scores now. Loans can be secured without visiting any of the institutions.
Though many fintech companies are startups and new firms, they are offering their services to many of the traditional segments as well. To know the career potential in this industry, one must know how the technology is affecting existing services.
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Banking
The banking sector has undergone drastic changes as it functions, thanks to the integration of technology. Gone are the long lines to withdraw money or getting passbooks updated. The newer banks identified the customer pain points and offered them solutions that attracted customers easily. These banks came with digital services even before they established their physical branches. Customers can open bank accounts and operate various accounts using their mobile phones. Many customers of these “new banks” may not even know where their branches are located.
Net banking is no more a novelty. It is mobile banking that attracts people. Following the footsteps of new banks, older banks, including those giants that functioned more like government departments, are offering mobile banking. Services such as opening savings accounts, transfer of money, checking balance, and paying various bills can be done from one’s mobile phone. Many banks are also offering payments to merchants using QR codes. This has made purchases easy as payment can be donewithout carrying cash.
Cash Transactions
The digital drive by the Indian government has reduced cash transactions drastically. Carrying cash is not safe, and there are many chances of losing money. Even credit and debit cards are a burden to carry around. Everyone carries a mobile phone as it has become a necessity. Fintech is making it possible to pay merchants or others money using one’s phone. Most shops and establishments accept payments using apps like Gpay and Paytm. It is less time-consuming and much safer.
Even shops need not receive all the money and keep it on the premises. They can get the payments directly in their bank accounts. Most establishments like Ola, Uber, and Amazon have their payment integration. One can load money and make payments as and when they use the service. Tolls have also become completely free of cash transactions. There are lesser chances of a robbery at these sites as payments are electronically transferred as per toll charges. A financial risk management course in India can teach how much such cashless transactions have reduced the risk of cash loss.
Insurance and Investment
With everything looking so uncertain in life, insurance has become a necessity. It is also an attractive method of saving for many people. One can purchase insurance policies that will assure a comfortable life after retirement. People also need insurance against illness, vehicle damage, home theft, damage to expensive appliances, etc. One had to go through voluminous documents to know which scheme was best for them. But today, insurtech, which is a segment of fintech, is helping people buy their insurance themselves by providing valuable information.
Investment has also become easier with the integration of technology. There are various platforms that provide guidance to investors. There are close to 500 startups that come under the personal finance management segment. These include platforms that help people invest in stocks. Not knowing how the stock prices will move is the danger of investing in shares. Technologies like machine learning and AI are helping to predict the share price movement trends with better accuracy.
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Fintech Career Opportunities
Leading finance companies like JP Morgan and Goldman Sachs have started calling themselves technology firms. Such is the impact scientific advancements have on the finance sector. These companies have recruited a lot of young people who are especially talented in technological innovations. The finance sector has always been quick to adopt technology, and it is no different now. The main areas where opportunities can be expected are data science, artificial intelligence, machine learning, and blockchain. Let us see some of the most lucrative jobs in this sector.
Careers in Fintech
There is no doubt that fintech is a growing industry, and job opportunities will be on the rise in this sector. Those completing courses like the IIM risk management course can hope to land a good job in this industry. Let us look at the career opportunities existing in India for this segment. There are various avenues for those specialized in the subject. They can get a job at financial institutions, fintech startups, accelerators, advisory firms, or educational institutions. FIs see fintech as partners for improving their service instead of as competitors.
Fintech startups offer various exciting posts like UI/UX designers and product managers. The financial firms also offer posts like innovation drivers. They also offer jobs to experienced programmers who can design hackathons to attract talents. These professionals will also collaborate with the fintech firms to create new products. Consultants are in demand at both fintech firms and FIs. Accelerators offer mentors to fintech companies for their growth and developing new products. Seasoned educationalists can tap into opportunities at educational institutions for teaching skills needed for fintech experts.
Fintech Innovation Consultant
Adoption of any technology depends on innovation. A person who has successfully completed any of the IIM finance courses and has technical qualifications can become a consultant for financial institutions looking to provide innovative solutions to their clients. Such persons must keep scanning the financial sector to know the customers’ pain points and offer solutions for the same. They must know where the FIs are struggling to keep their customers happy. Offering such innovative answers to these problems will improve the value of a fintech innovation consultant.
These professionals must also wear a marketing consultant’s hat to attract fintech startups that can provide the answers to the FIs. It is essential to use social media and other digital marketing methods to lure technical experts into offering their solutions. The consultants must also have excellent knowledge of both the financial industry and technology to help them assess the firms to design innovative products. Fintech innovation consultants must be able to provide an environment for FIs and technical firms to co-create innovative solutions.
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UI / UX Designer
The aim of any innovation should be to reduce customers’ efforts to execute a task and improve their experience with the application. As many applications are offering similar features, businesses are looking at ways to minimize the time required for making a transaction. It is towards this end that UI/UX designers are hired. Today’s professionals adopt the principles of design thinking. Designers for UI/UX in fintech are expected to know both the business and the users’ state of mind when creating products.
A good UI is appealing to users and attracts them. But only an excellent UX will make their journey through the application smooth and easy. Designers must understand the user persona very well to design the most suitable product. Different users make transactions in different ways, and their needs are not the same. Such an understanding is essential for a UI/UX designer. They must conduct a thorough research about the existing products and see where they frustrate users. Designers must also look at what competitors are offering.
Product Managers
This is another exciting career for fintech specialists. These people work with the fintech company and act as a single point of contact with financial institutions. They are part of the collaboration from the beginning and till the products are deployed in the market. They will typically create a product roadmap to meet consumer needs while collaborating with the technical teams for timely execution. They will assess an opportunity for the alliance by interacting with field representatives of the FI and finding customer needs.
The challenge in this job arises due to the working nature of the FIs the fintech is collaborating with. Financial companies operating on a very lean model will present a lot of issues. Product managers are expected to participate in discussions and work with the FI in incubator and funding meetings. They are instrumental for driving sustainable innovation at the fintech firm and ensuring good brand visibility resulting in more business. They must possess skills like project management, product management, relationships development, and market knowledge.
Innovation Driver
While an innovation consultant can help FIs launch new products, the job of an innovation driver at the financial institutions is equally exciting and challenging. Many of these firms have set up innovation centers of excellence. The aim is to launch products that can grab the customer’s attention and gain them an edge over competitors. These centers are led by innovation drivers who must govern the process of developing new products. While the banks may be controlled by time-consuming and age-old systems, these innovation centers enjoy more freedom.
The job of the innovation driver is to supply what is demanded by the FI’s customers. Because of their unique position, they are able to collaborate with various fintech startups that can provide the necessary solutions. The team at the innovation centers collects the requirements from those who regularly interact with customers and convert them into innovation themes. These themes form the basis on which the centers of excellence work. They are tasked with formulating long-term strategies for innovation in line with the institution’s goals.
Data Scientists
Almost all organizations today use data to find solutions for various business problems. The company’s cache of information can be used to arrive at valuable insights that will help make better decisions. Fintech companies are no different. Instead of using their data, they depend on external sources and financial institutions. The available data can be used to find patterns that will show how customers behave and what are the reasons for their reluctance to use certain services.
But data cannot be used as it is. The information is available in an unstructured manner that needs to be cleaned and arranged for analysis. This is where data scientists help, they know how to collect data and what information will be helpful to find solutions for specific problems. They are also experts in cleaning the data and making them good for analysis. The experts will then analyze the data and present the findings to the fintech companies. The findings will show customer needs and help in developing innovative products.
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Sales Managers
Every product must be sold, however innovative it must be. Unless there is a channel to reach these items to the customer, they are as good as useless. Sales managers and their teams are responsible for selling the product to the customers in such a way that the company reaches its revenue goals. The sales team is also responsible for finding out customer needs and conveying them to the product managers. These specialists know the areas where a financial institution’s customers find difficulty and look at competitors.
The sales team must use all marketing methods to reach the product to the people. They must plan campaigns through electronic and other media. Sales managers must be familiar with the latest marketing methods and use them suitably to improve the sale of the product. The leaders must also be able to motivate their teams to reach the sales objectives of the company and ensure that revenues targets are achieved. They must also find new customer segments to market the products.
Certain skills are highly essential for a fintech expert. Let us see what they are.
Skills Needed For a Fintech Job
Blockchain Expertise
Blockchain and cryptocurrencies have been disrupting many businesses. Banking is one of the prominent ones affected by it. The blockchain industry is not as spread out as many others. This is especially true in India. However, the demand for experts in this technology is on the rise, and soon we will find companies in India also seeking such professionals. Knowledge of blockchain technology, along with completion of finance certification courses, can greatly improve one’s chances of embarking on a fintech career.
Programming
What is technology integration without software, applications, and websites? Excellent coding skills are essential for getting into the fintech profession. Excellent proficiency in common languages like JavaScript, Python, SQL, C++, and C# can boost your chances of getting a good job in this industry. Fintech companies and financial institutions are constantly looking for those who can innovate while building an application or a payment platform. While attending finance courses in India, it is advisable to take up classes to master coding and computer languages.
Math and Finance
The world of finance is all about numbers. If one must succeed in this profession, it is necessary to have excellent mathematical skills along with knowledge of finance and its intricacies. Even if one is only building an application for an FI, it is essential that the person knows about finance to be able to understand clearly what the customer wants. A knowledge of mathematics helps when calculations need to be built into an application or platform. Attending a financial analytics course is essential for data scientists in this industry.
AI, Machine Learning And Big Data
The three are the leading technologies that are helping businesses become more efficient and customer-friendly. Fintech is all about making it easy for customers to use financial services. Analyzing data generated by a financial institution will help in finding solutions to make the firm function more efficiently. AI and machine learning help in forecasting market trends that will guide investors to put their money where it can bring maximum returns. Financial risk management courses in India teach how to use these technologies to forecast investment risks.
Communication
Anyone learning advanced finance courses in India knows the importance of communication in a fintech job. These jobs involve a lot of innovation and experimenting. Analyzing data is another important part of fintech jobs. This means that many people need to be convinced about the effectiveness of your work. Good communication is essential if one must stress the need for new solutions and get the necessary funding for the same. Communication is also necessary for those working in the fintech companies to convince FIs about their ability to design the best products.
Wrapping Up
Technology advancement is so fast that it is not easy for many to cope with. The journey from finance to fintech is high-paced, and being a part of it can be both exciting and rewarding. But one must prepare to function successfully in this field. Attending the IIM finance courses can be a good way to equip oneself with the necessary skills and knowledge for this job. One must be aware of the latest trends in this industry and upgrade oneself continuously.
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