Indian Financial Market Trends

Financial Markets

For a tech-driven future, the banking and financial services business is focusing on innovation. AI and robotics are driving digital transformation and fintech collaboration. To adapt to consumer preferences, demographics, and lifestyles, banks, and financial institutions are becoming nimble technology firms.

The COVID-19 pandemic drove banks and financial institutions to rethink their technology strategy and improve branchless/digital banking and customer service. They redefined financial inclusion and customer interactions. Technology investments and value creation were the most crucial factors in banks’ 2021 performance and the industry’s future growth.

Let’s examine India’s financial market drivers.

Read: Consequences of Trade Finance

1. Economic Recovery and Regulation

The epidemic caused severe disruption to the Indian economy, but a growth of 6.5% is predicted in the fiscal year 2022-23. Increased foreign direct investment (FDI) flows have contributed to the expansion of the economy, making India a prime location for foreign capital.

The Reserve Bank of India (RBI) has placed an emphasis on digital banking models and financial inclusion and is adding new laws that will make banks increasingly regulation-aware.

There is a growing need for further consumer protections as a result of the threat posed by big tech companies that have established a presence in the lending industry by either operating independently or in conjunction with regulated financial firms.

The Reserve Bank of India (RBI) has been attempting to regulate banking and lending procedures through the introduction of technical and compliance standards to facilitate a more rapid economic recovery.

2. Consumer Connections Reimagined

Banks and financial organizations stressed consumer anticipation during the pandemic. Being customer-centric and customer-first would assure market survival, customer retention, and market growth. Banks will shift from transaction-focused to value-driven consulting services to develop long-term customer relationships.

To provide appropriate advice services, banks must train and upskill relationship managers. Banks must leverage their vast internal data to better understand clients and their preferences.

Banks and financial institutions will use the correct technology to efficiently and securely collect internal data. This will let banks adapt their advisory services, give consumers the proper guidance, and build relationships beyond transactions.

3. New Consumer Lending: “Purchase Now Pay Later”

India’s fintech ecosystem has grown to the third-largest in the world. Buy Now Pay Later (BNPL) has transformed India’s banking sector by providing consumers with either interest-free or spaced-out interest-bearing credit.

4. The Rise of a New Environment Fueled by Digitization

To improve operational efficiency, speed-to-market, and customer experience, the financial industry is digitizing and adopting new technology.

With mobile and online banking increasingly popular, banks are slashing branch costs to invest in self-service digital channels. Banks can target clients using digital wearables.

Data-sharing regulations are being developed worldwide. Fintech companies have transformed India’s financial and demographic environment in recent years, introducing digital transformation.

India recently implemented an account aggregation architecture to make financial data exchange and user access easier. UPI drove 90% growth in digital transactions from FY19 to FY21, according to official data. Digital payments in India will reach $1 trillion by 2026.

5. FinTech Business Is Growing

Financial institutions are changing the industry. Companies are using digital technology in-house or working with FinTech companies to capitalize on the digital potential. Formerly competitive bank-FinTech partnerships now offer marketing, administration, loan servicing, and other services with tech-enabled banking products. Bank-FinTech agreements provide assets and clients to banks.

6. Making Business Cognitive

Banks must digitize and cut costs to maintain operating margins. AI and robotics are helping banks meet their objectives as regulatory constraints and data protection rules strain resources.

AI powers chatbots and 24/7 customer assistance at banks. Banks are saving money and boosting operations by automating anti-fraud and regulatory compliance. RPA and ML are helping banks replace labor-intensive, manual workflows with dependable, cost-effective, and efficient operations.

Biometric authentication and voice commerce are affecting industrial workers due to these technologies.

7. New Money Concept

Blockchain, peer-to-peer lending, smart contracts, and digital payments are disrupting established business models by eliminating intermediaries and speeding up processes. Blockchain is predicted to save the BFS industry USD 20 Billion in yearly operating expenses, prompting more banks to use it.

Blockchain, cryptocurrencies like Bitcoin, Ethereum, and Ripple, and new rules are reviving the business.

Banks must use technology and change quickly to survive the next revolution and secure a role in the technologically enhanced future.

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