Fintech or BFSI is going to play important role in the economy of entire world including India. Artivatic conducted Fintech research to understand the sector specific problems, growth and opportunities and also the use of technologies. #fintech #banking #insurance #payments #accounts #bfsi #deeptech #artivatic #startups #technology Visit: https://artivatic.ai/ or write us at contact at artivatic dot ai

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Contents
Preface...................................................................... 3
Reasons for collaboration......................................... 3
The exploding ecosystem......................................... 3
Entities which are likely to be the most disruptive in
the next five years .................................................... 4
Opportunity areas for technology trends................. 6
Challenges faced by Fintech companies .................. 7
Impact of Technology on Banks .............................. 8
Most relevant technologies that businesses plan to
invest in within the next 12 months ....................... 10
A step towards FUTURE BANKING.................... 12
Banking in 2020..................................................... 12
Global instability.................................................... 13
Banking in 2030..................................................... 15

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Preface
“Worldwide fintech software market is estimated to
reach $45 billion by 2020. There are more than 1000
fintech companies in the world.”
FinTech’s growing influence on financial services
FinTech and financial services are coming together
The core business of a bank is to gather deposits and lend money. Attracting customers is vital to
their business. To do so, banks are increasingly using fintech solutions to focus on customer
service and convenience.
Reasons for collaboration
Banks find it cost-effective to collaborate with fintech companies instead of building the
technology on their own. “For every bank, the last mile is important when it comes to customer
interface. It would have been costly if banks had opted for traditional ways. Fintech has enabled
the banks to do it in a cost-effective way. Banking industry has upped the ante on digital
banking.
You can see the outcome of the collaboration in your banking transactions. “We work with Chillr
(a mobile banking app) for payments, Bankbazaar for lending, MoneyView for mobile banking,
Niki for chatbot on Facebook messenger and UltraCash for payments using soundwave
technology. The idea is to add additional features or introduce a new product for the consumers,”
said Nitin Chugh, country head-digital banking, HDFC Bank Ltd.
Source: http://www.livemint.com
The exploding ecosystem
FinTech has evolved from start-ups that want to take on and compete with incumbents to a
broader ecosystem of different businesses that are, in many cases, looking for partnerships.
FinTech start-ups don’t just need capital, they need customers. At the same time, incumbents
need new approaches to drive change and deliver innovation

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Entities which are likely to be the most disruptive in
the next five years
Entities India Globally
E-retailers 51% 43%
Financial infrastructure
companies
33% 41%
Startups 87% 75%
Traditional Financial
Institutions
22% 28%
Social media/ Internet
platforms
60% 55%
ICT and large tech companies 33% 50%
This highlights how innovation is coming from outside financial services and being driven by a
variety of sources, including tech companies, e-retailers and social media platforms. While the
new partnering approach offers alternative strategies for both new entrants and start-ups, it also
carries with it a new set of risks. In India, though FinTech start-ups are still viewed as the major
drivers of disruption, other players like social/Internet platforms and e-tailers are also driving
innovation and the adoption of nontraditional financial services.
Source: pwc.in/fintechreport
More than 60% believe business is at risk
Consumers are increasingly getting attracted to non-traditional financial service providers,
starting with payments and funds transfers. Personal finance and loans are the next avenues that
are ripe for disruption in India. The industry incumbents are privy to this trend and 67% of them
acknowledge that non-traditional FinTechs pose a threat to their businesses.

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Do you believe that part of your business is at risk of being lost to standalone
FinTech companies within the next five years? (percentages shown
correspond to ‘Yes’)
Source: pwc.in/fintechreportFinancial activities customers already
conduct with FinTech companies
Source: pwc.in/fintechreport
69%
83%
80%
95%
91%
82%
89% 88% 88%
93%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
North America Europe Asia Africa Latin America
96%
79%
50%
42%
21% 21% 21%
33%
8%
84%
68%
60%
56%
49%
38% 38%
26%
8%
0%
20%
40%
60%
80%
100%
120%

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This graph is an indication that the market in India is not yet as mature as it is globally,
particularly in the non-payments segment.
Opportunity areas for technology trends
DOMAIN FUNCTIONS CLOUD
TECH
ADV.
ANALYTICS
BLOCK-
CHAIN
AI IoT
BUSINESS
MANAGEMENT
Cost transparency YES
Business continuity
management
YES
DATA
MANAGEMENT
Market news and data YES YES
Reference data YES YES
RISK CONTROL
AND
MANAGEMENT
Credit, market and
liquidity risk
YES YES
Enterprise risk
management
YES YES
FINANCIAL
CONTROL
Capital management YES YES
Independent price
verification
YES YES
Product control YES YES
Financial/regulatory
reporting
YES YES
COMPLIANCE KYC YES YES
IT Cyber security YES YES
Identity and access
management
YES YES YES
China and India are far ahead of the rest of the world in fintech adoption.
When it comes to the adopting the newest digital methods for managing their personal finances,
Chinese and Indian consumers are way ahead of the rest of the world.
About 69% of people who are active online in China have used two or more fintech services in
the past six months and in India, the share is 52%. That compares with 42% in the UK, 33% in
the US and just 14% in Japan.
Source: Capital Markets: innovation and the FinTech landscape – Executive summary
Quartz India https://qz.com/1021361/china-and-india-are-far-ahead-of-the-rest-of-the-world-in-fintech-adoption/

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Challenges faced by Fintech companies
Challenges faced by financial service incumbents
Source: pwc.in/fintechreport
50%
44%
50%
39%
61%
22%
33%
11%
28%
48%
55%
40%
34% 36%
33%
16%
0%
10%
20%
30%
40%
50%
60%
70%
IT security Regulatory
uncertainty
Differences in
management &
culture
Differences in
business models
IT compatibility Differences in
operational
processes
Differences in
knowledge/skills
Required
financial
investments
Chart Title
India Globally
37%
42%
32%
47%
16%
37%
16%
21%
58%
54%
40% 40%
34%
24% 24%
17%
0%
10%
20%
30%
40%
50%
60%
70%
IT security Regulatory
uncertainty
Differences in
management &
culture
Differences in
business models
IT compatibility Differences in
operational
processes
Differences in
knowledge/skills
Required
financial
investments
Chart Title
India Globally

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Impact of Technology on Banks
Technology has brought drastic changes in Gross Profit of different Indian Banks.
Growth has been observed in few banks and so has the depletion.
HDFC tends to have the highest Gross profit when compared to other banks.
1,12,601 is the gross profit for 2016, HDFC.
Source: www.equitymaster.com
Annual Reports

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Non-performing asset (NPA) is defined as a credit facility in respect of which the interest and/or
installment of Bond finance principal has remained 'past due' for a specified period of time. NPA
is used by financial institutions that refer to loans that are in jeopardy of default. Punjab National
Bank has the highest NPA in 2016 i.e., 8.6. HDFC has the lowest NPA i.e., 0.3
Source: www.equitymaster.com Annual Reports

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Most relevant technologies that businesses plan to
invest in within the next 12 months
Most incumbents in the industry are focused on data and analytics and mobile and AI
technologies because, so far, many of them have found it difficult to manage their data and
offer customer-centric and insights-driven digital services. However, developments around
emergent technologies like chatbots, natural language searches and digital KYC can enable them
to enhance and expand their portfolio of services.
Apart from the adoption of solutions that are focused on providing improved client service, there
will be a focus on improving efficiency, reducing costs, increasing security and making
processes more agile. Cyber security and blockchain are poised to be the next wave of
emerging technologies.
Developments in IoT can be beneficial to financial services too, especially for the insurance
sector, which has traditionally been lagging behind in terms of innovation but is ripe for
disruption in India.
Source: pwc.in/fintechreport
Blockchain to move into the mainstream
69%
55%
36%
26%
21% 21%
74%
51%
34%
32%
20%
14%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Data analytics Mobile AI Cyber-security Blockchain IoT
Chart Title
India Globally

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56% seek to engage in blockchain in some form and eventually make it a part of their core
business
As the understanding of the technology increases, blockchain will enter the mainstream and be
adopted on a greater scale. In fact, 32 new blockchain companies were founded in India in 2016,
as against just 23 in the preceding years.
2017 might be the year when blockchain is widely incorporated into core processes. The
most likely use cases for blockchain, as reported by our respondents, are funds transfer (50%),
digital identity (47%) and payments infrastructure (41%)
Source: pwc.in/fintechreport
Data analytics, mobile and AI will emerge as key FinTech capabilities
The focus of FinTech investments revolves around data analytics, mobile and AI. A
significant minority of financial services companies are also focusing on a gamut of other
FinTech capabilities. Data analytics and mobile are more contemporary capabilities that each
player in the industry is spending on to remain competitive, However, several players are also
focusing on revolutionary technologies like AI, cyber security, biometrics and identity,
blockchain and Internet of things.
69% to spend on data analytics (74% globally)
41%
50%
47%
19%
25%
22%
55%
50%
46%
25% 24%
14%
0%
10%
20%
30%
40%
50%
60%
Payment
infrastructure
Funds transfer
infrastructure
Digital identity
management
Trade finance Securitization Syndication in
lending
Chart Title
India Globally

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55% to spend on mobile technologies (51% globally)
36% to spend on AI (34% globally)
21-32 % globally to spend on cyber security, robotic process automation,
biometrics and identity, blockchain and the Internet of things
ICICI, completed its successful blockchain pilot.
Axis Bank Ltd., and Kotak Mahindra Bank Ltd., are two of the latest banks to join the growing
number of global financial institutions jumping onto the blockchain bandwagon.
HDFC Bank today announced the launch of an electronic virtual assistant (EVA), an artificial
intelligence-driven chatbot, for customer services.
ICICI Bank- Using BI and Analytics to Reduce Credit Losses.
Axis Bank – Analytics for Customer Intelligence & Risk Management
Yes bank has adapted blockchain and so as IDFC bank
Source: 1.pwc.in/fintechreport. 2.Analytics in Indian Banking Sector – On A Right Trackhttp://www.indiabitcoin.com/two-more-indian-banks-
conduct-blockchain-pilot-transactions India-bitcoin
A step towards FUTURE BANKING
Banking in 2020
Impact of global macro-trends on retail banking
The following four mega-trends we consider to have the greatest impact, although our thinking is
informed by them all:
• Rise of state-directed capitalism – regulation reshaping the industry and dictating business models.
• Technology will change everything – becoming a potent enabler of increased service and reduced cost;
innovation is imperative.
• Demographics – changing priorities and opportunities for growth.
• Social and behavioral change – rising customer expectations and the need to regain public trust.

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Global instability
Regulatory environment Fiscal pressure Political and social unrest
Plan
Demographic Changes •Population growth
discrepancies
•Ageing populations
•Changing family structures
•Belief structures
Technological Changes •Disruptive technologies
impacting FS
•Digital and mobile
•Technological and scientific
R&D and innovation
Social and behavioral
Changes
•Urbanization
•Global influence
•Talent
•Changing customer behavior-
social media
•Attitudes to FIs
Rise and
interconnectivity of the
emerging markets
•Economic strength
•Trade
•FDI
•Capital balances
•Resource allocation
•Population
Rise of state-directed
capitalism
•State intervention
•Country/ city economic
strategies
•Investment strategies
•SWFs/development banks
War for natural
resources
•Oil, gas and fossil fuels
•Food and water
•Ecosystem
•Climate change and
sustainability
Source: PwC Retail Banking 2020
Six priorities for 2020
Each bank needs to develop a clear strategy to deal with this transforming landscape. They need
to decide whether to lead, to follow fast, or to manage defensively, putting off change. They need
to create agility and optionality, to adapt to rapid change and future uncertainty. Yet, whatever
the chosen strategy, success will come from successfully executing the right balance across the
following six priorities.
From research into the macro-trends impacting banking and from survey of global banking
executives, Six priorities are identified for retail banks to win in 2020:
Developing a customer-centric business model.
Optimizing distribution.
Simplifying business and operating models.
Obtaining an information advantage.
Enabling innovation, and the capabilities required to foster it.
Proactively managing risk, regulations and capital.
Source: PwC Retail Banking 2020

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Areas of significant effort over next 5 years
Enhancing customer data collection 54%
Evaluating bank performance metrics and best practices from
customer viewpoint
53%
Allowing for increased customer choice in configuring product
features, including pricing
50%
Using social media to monitor customer preferences 48%
Conducting customer segmentation using a dedicated group
that supports strategy development across
44%
Offering a mix of self-directed and personal interaction
channels to customers
41%
Creating a flexible and agile product portfolio adapted to
customer segment
38%
Creating and filling an executive-level Customer Strategy
Officer position
15%
Source: PwC Banking 2020 Surve
Financial institutions globally believe simplification will deliver a
myriad of benefits.
Bankers believe simplification will:
Improve service 69%
Improve profitability 59%
Decrease costs 58%
Increase customer base 46%
Improve time to market 42%
Banks need to ensure that they truly understand what customers want, and what they are unhappy
with. They need to consider their business models in light of this – the package of products and
services they offer. They need to consider their organizational capabilities and alignment, their

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operational processes and their technology platforms. Redesigning the bank operating model
requires a fundamental shift in how retail banks think about their operations – product
simplification; integrated distribution; shared service infrastructure; risk management at a
customer not product level; streamlined compliance processes. Banks that move towards
solution-oriented integrated operations will be the winners in 2020
Source: PwC Retail Banking 2020
Banking in 2030
Banking in 2030: Invisible Banking?
By 2030, technology will drive an even deeper fundamental shift in banking – moving it from
being hidden to completely invisible. However, it will be more intertwined in the lives of
consumers than ever before. It's time to meet EVA, Enlightened Virtual Assistant, and vision of
the future of invisible banking.
The Platform Layer
Standing for Enlightened Virtual Assistant, EVA is the platform through which consumers will
connect with the Bank. EVA is made possible by technologies that are all available today –
advanced data analytics, voice authentication, artificial intelligence, connected devices,
application programming interface (API) and cloud technology.
The Product Layer
Banks currently fulfil three vital economic functions: they ‘create’ money through making loans,
they give people a safe place to store cash and they facilitate maturity transformation.
These functions are possible because of a strong regulatory and risk management environment,
access to government support and an understanding of credit risk. Banks are well placed to build
on these core strengths and develop bespoke products that suit the lives of customers in the new
landscape of 2030.
In the vision of banking in 2030, large parts of the traditional bank have disappeared. Customer
service call centers, branches, sales forces, IT, swathes of the back office – gone. To own and
optimize the Product Layer, banks must be willing to undergo the necessary evolution and put
customer needs first.
Source: KPMG: Banking in 2030

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