The Indian banking system handles all aspects of the banking and asset management processes from end to end. It provides the backbone for all of your financial activities, and its sophisticated features make it more streamlined and user-friendly than ever before. In this guide, we’ll run down all the major developments and changes that occurred in the banking and asset management industry in the past year.
Many new technological advances
It’s well established that new technologies emerge, gain popularity, and then become obsolete. The smartphone, for example, saw overwhelming adoption in the early 2010s, but now we’re seeing the beginnings of a technology backlash. Smart devices have actually seen a slowdown in growth, while biometrics and voice assistants have become commonplace.
As a result of this digital transformation, the finance industry has seen advancements in areas like robotics, artificial intelligence, and virtual reality. The latter two are already generating excitement among consumers, investors, and business executives – encouraging them to seek out new ways to interact with the markets.
Fintech startups are hot.
Fintech is a portmanteau that stands for financial technology. Started as a buzzword in the late 2010s, fintech startups created innovative new products and services that disrupted traditional finance. Many financial products and services are now available to consumers as a result of fintech innovation.
The fintech market is growing, and early indicators suggest that 2022 will mark the start of a new era. According to CB Insights, a leading research firm focused on the financial services market, the fintech industry grew 62% in 2021 and is on course to double that figure in 2022. The number of fintech companies increased from 952 in 2019 to 1356 in April 2022, with the total value of the market skyrocketing from $16.9 billion to $26.9 billion in the same period.
Fintech startups are leading the charge in creating innovative products, and the business world has responded with open arms. Many large financial institutions are now collaborating with fintech startups, as well as establishing in-house fintech hubs to stay ahead of the curve.
Payments are evolving
One of the most fundamental changes to hit the industry in the past year has been the evolving role of cash. At first, everyone used cash for purchases and receipts. But, in 2022, more and more people are using contactless payments via credit cards and digital wallets.
Contactless payments eliminate the need for cash. Instead of swiping a card to make a purchase, customers can simply wave their smartphones in front of the card terminal. As a result, less cash is being used and there’s less of a chance of it being laundered. Contactless payments aren’t just restricted to retail either. Large companies like PwC, Hewlett Packard Enterprise, and Accenture are working with financial institutions to adopt and implement contactless payment solutions.
The evolution of payments is just one example of the industry adjusting to the growth of online shopping and the rise of cryptocurrencies. These two dynamics have forced the industry to adapt, and some of the most prominent changes have been for the better.
Blockchain technology is booming
Since its inception, the world of cryptocurrencies has been growing at an incredible pace. In 2022 alone, the value of all cryptocurrencies soared by more than 1150%. At the beginning of 2023, the value of a single Bitcoin was more than $100,000. It’s fair to say that the entire blockchain market has never been in better shape.
The technology behind most cryptocurrencies is blockchain. Basically, a blockchain is a distributed ledger that records and stores all transactions (instructions) that take place within it. Blockchains are totally transparent, and they’re also highly secure. As a result, the entire global financial markets have been forced to take a second look at this technology. It’s enabled the development of new digital banking and investment products, as well as entire new industry verticals like crypto-assets management.
Many mainstream financial firms now offer blockchain-based investment vehicles. They provide the security and transparency of the technology, while also delivering the speed and efficiency of centralized platforms.
The rise of crypto-assets
One of the major events of 2021 was the crash of Bitcoin (BTC) and other major cryptocurrencies. The price of BTC fell by 80% in the last quarter of 2021, and it currently trades at around $6000, which is a fraction of its $15,000 peak value in 2019.
The reason for the crash was simple – as the value of cryptocurrencies soared to record levels in 2019, many speculators and day traders unwittingly helped fuel the price rise by flooding the market with buy orders. When the bottom fell out, they were left holding massive losses.
It’s a harsh lesson for everyone – including the finance industry – to learn that digital currencies aren’t a permanent fixture on the financial landscape. The industry is still adapting to the new paradigm, and many crypto-related securities and derivatives are still considered risky investments.
Risk-averse investors are leading the way
While the value of cryptocurrencies declined sharply in the last year, a large number of retail and institutional investors have begun to realize the many advantages that these currencies offer.
Firstly, the risk of losing cryptocurrency value is dramatically lower than traditional investments. Most importantly, the industry is still in its early stages, and a lot of volatility is to be expected.Many professional investors now consider cryptocurrencies and the blockchain technologies that underpin them to be lowest risk/highest return investments around at the moment.
In the coming months and years, as more investors gain confidence, we can expect to see a massive influx of capital into the crypto markets. Just consider the fact that over 100 financial institutions are now actively trading crypto-based securities and derivatives. That’s a combined value of $11 trillion in just these products and services.
FCMs are more important than ever
The last 12 months have seen the emergence of firms that operate as fiduciary companies. FCMs must operate with high standards of transparency and integrity, and they must also comply with regulatory requirements. In the eyes of the finance industry, fiduciary companies provide investors with a more stable and secure alternative to traditional venture capital and private placements.
FCMs provide a legal mechanism for secure and regulated issuing and selling of securities and derivatives. Not only that, but they can also operate as a verification and approval organization for regulatory firms, like the SEC. As a result of the growing popularity and demand for products offered by fiduciary companies, many prominent banks and financial institutions have set up specialized FCM teams.
EMV adoption
EMV (Chip and Signature) is the global standard for contactless chip and signature payments. The standard, which is also used in Australia, Canada, Ireland, and the UK, was developed by the EMV organization, a collaborative effort between MasterCard, PayPal, Visa, and other major credit card brands. It’s considered a safe and secure way for financial institutions to process card transactions. While many US financial institutions have adopted the standard, it is still considered a relatively new technology, with only a small number of retailers and restaurants having switched to the chip and signature model.
