TLP-UPSC Mains Answer Writing
2. What are the emerging trends in the fintech industry? Discuss its locational factors. (10 Marks)
फिनटेक उद्योग में उभरते रुझान क्या हैं? इसके स्थानीय कारकों की चर्चा कीजिए।
Approach
Students are expected to write about the fintech industry and discuss the location factors affecting the it.
Introduction
The term “FinTech” is a combination of the words “finance” and “technology”. It refers to the technology startups that are emerging to challenge traditional banking and financial players and covers an array of services such as crowdfunding platforms, mobile payment solutions, online portfolio management, money transfers, etc.
Body
Emerging trends:
- Blockchain technology, that maintains records on a network of computers, but has no central ledger.
- Smart contracts, which utilize computer programs (often utilizing the blockchain) to automatically execute contracts between buyers and sellers.
- Open banking, a concept that leans on the blockchain and posits that third-parties should have access to bank data to build applications that create a connected network of financial institutions and third-party providers.
- Insurtech, which seeks to use technology to simplify and streamline the insurance industry.
- Regtech, which seeks to help financial service firms meet industry compliance rules, especially those covering Anti-Money Laundering and KYC protocols which fight fraud.
- Cybersecurity, given the proliferation of cybercrime and the decentralized storage of data, cybersecurity and fintech are intertwined.
Since pandemic there has been change in dynamics of the locational factors of IT and Fintech industry. Most of software based industry like fintech also were managed by online meeting and work from home. Still there are different factors which will impact the industry in coming days such as.
- Capital: Availability of venture capital funds, large amount of capital for up Industries overseas.
- Labour: abundance of cheap skilled labour.
- Markets: access to global markets.
- Technology: regions with good innovative climate and good access to high Levels of technology.
- Site: City centre/suburb with good amenities, near universities or research Institutes. Ex- Bangalore and Pune has large number of engineering colleges. Facilitate silicon Valley type of environment.
- Government policies: providing financial support, maintaining a favourable Business climate and innovative culture within the community, providing Good infrastructure.
- With one of the world’s fastest-growing economies, India has undoubtedly emerged as one of the fastest-growing FinTech hotspots in recent years.
Conclusion
Fintech has the potential to transform other financial services like insurance, investment, remittances. With right cyber security and internet penetration approach India should move forward to recognize the emerging virtual banking system in future.
