Mayank Goyal, Founder and CEO, moneyHop

Mayank Goyal is the brain behind moneyHop, India’s first cross-border neo bank offering full-stack global banking solutions catering to the global aspirations of the Indian millennials. As the Founder and CEO of the company, he spearheads its vision of revolutionising banking for millennials and becoming an aggregator of financial services where the consumer’s financial needs can be addressed from a single touchpoint. A B.Tech graduate in telecommunications, a chartered financial analyst from Chartered Financial Institute and a financial engineering graduate from Imperial College London, Mayank’s inclination towards fintech was an outcome of his personal pain points experienced while conducting cross-border banking.

 

The year 2020 will be etched in history for the disruption and unprecedented chaos it created. Many businesses experienced formidable losses and surrendered under the pressure of the pandemic. The economic crisis the world experienced in 2008 was a result of the aftermath of financial turmoil caused due the fall of Lehman brothers.

Contrary to that, the economic crisis caused by the 2020 pandemic is rather a health crisis leading to a confidence crisis amalgamating into an economic crisis.

Despite being one of the most turbulent years in our living memories, on both the personal and economic front, 2020 also offered a few pleasant surprises. This disruption is causing a shift in the economic regime, driving unambiguous changes in the way business and governance were being done. The interruption and social distancing acted as a catalyst for several businesses to increase their dependence on technology which has resulted in high productivity and operational efficiency.

Unfortunately, the financial services sector has been deeply affected by the pandemic and is coping with systemic issues, like the rising levels of non-performing assets (NPAs) as well as the looming global slowdown. Amid this growing ambiguity, banks today are comprehensively focusing on the use of technology to augment their risk monitoring and management capabilities. In 2021, the sector can be reimagined by leveraging the following key trends in driving banking and financial services seamlessly in the country:

1. ‘Middle India’ opening up to neo banking:

The Covid-19 outbreak had given rise to a trend of contactless banking and transactions even in Tier 2 & Tier 3 in a bid to contain transmission of the virus. To securely navigate daily life with this behavioural change can be quite challenging. Neo banks or digital-only banking ensures a high level of convenience as it eliminates the need for physical bank visits that involve tedious paperwork and unnecessary time-consuming long queues. The additional benefits that neo banking offers include cost-effective management, prompt bill payment and cross-border remittances, real-time analytics, and quick balance evaluation. Even though India still has a long way to go in switching to digital for the majority of transactions, with the improved efforts by the regulatory bodies, more and more customers can be seen adopting digital banking every day. This might also contribute towards bringing the country’s 200 million unbanked population into the financial ecosystem.

2. Open banking to become the new norm:

Open banking is a framework which was floated in Europe with the aim to facilitate innovation in the fintech sector by giving the consumers the ownership of their transaction data and enabling third party providers to build application around financial institutions through open APIs.

Open banking proved its proficiency way back in 2013 when it was introduced in India by Yes bank and RBL bank unveiling their Application Programming Interface (APIs) even before the standards were set.  Soon after other banks followed the league.  However, RBI realised the necessity of regulating and further enabling this framework in order to build a more mature ecosystem for the digital transformation of financial services and better service the unbanked and underbanked population in India.

As the pandemic regresses, more banks are estimated to get on board with many fintech solutions for a better reach and use technology to simplify their operations. There is an increased level of trust-building with consumers especially in India where the Account Aggregation (AA) eco-system established by DigiSahamati Foundation (or Sahamati), India’s answer to Open banking regulation in the EU, is just getting implemented. This framework enables free flow of transactional data amongst financial service provider, with customers’ consent. Fintechs will now be able to use this data to create value added services for the consumers and MSMEs. With a streamlined procedure, there will be a new class of remodelled banking services and products that can help reduce debt, enable better financial decision-making, effective distribution of credit, financial inclusion of underbanked and unbanked and increase long-term wealth generation. The financial industry collectively hopes that the phase of open banking in India will grow rapidly in 2021 just like other initiatives like Aadhaar, UPI, eKYC, etc.

3. Democratisation of credit through Open Credit Enablement Network (OCEN):

India has limited access to credit, which needs urgent attention. Since the country at present has close to 500 million smartphone users due to the wide availability of mobile services and lower-priced internet access, the new credit protocol infrastructure, Open Credit Enablement Network (OCEN) acts as a common language for lenders and marketplaces to use and create innovative, financial credit products at scale. The marketplaces/aggregators using these Application Programming interfaces (APIs) to entrench credit offerings in their applications are called ‘Loan Service Providers’ (LSPs). While some of the top lenders in the country like State Bank of India, HDFC Bank, ICICI Bank, IDFC First Bank, Axis Bank and Bajaj Finserv are already onboard to adopt this protocol, more financial institutions will soon be in a state of readiness to usher in OCEN for everyone in the country to be inclusive financially.

4. Usage of newer technologies such as ML, AI, Blockchain etc.:

The banking architecture of 2021 will be remarkably different from the previous era. To remain competitive and risk-free, technology-enablement in decision-making is a requisite. The new-age banking system will emphasise digital infrastructure for the betterment of consumer services. It will be using ML to provide detailed insights into consumer spending for credit scoring and churning predictions, higher-level customer services and enhanced security. Major Banks and financial institutions are also realising the potential of blockchain technology that could massively improve the efficiency of their processes by safeguarding data sanctity, detecting fraud & eliminating risks to improve efficiencies, and reducing costs, particularly in cross-border payments. Meanwhile, with the emergence of feedback-enabled AI, there will be a paradigm change in the way consumer profiling is done and relevant financial product suggestions are made to them. Responsible AI will allow banks to maintain their ethics and governance and minimise the typical risks while driving continuous efficiencies.

5. Free movement of capital:

Consider this as one of the paramount factors for any developing economy. Though India is a capital-controlled economy where every outbound remittance across all purposes has to be facilitated by AD1 banks and need to be reported to RBI, we are seeing some early signs of liberalisation. RBI’s recent announcement to allow Indians living abroad to invest up to $250,000 a year in International Finance Centres through LRS can help domestic institutions raise money in foreign currency instead of going abroad. Whereas, for the individual investor, this will open up the door for one more new financial instrument to invest in.

Another example of this is RBI’s (Reserve Bank of India) regulatory sandbox program to drive innovations in cross-border payments: This will empower the country’s FinTechs to test new products or services in a controlled regulatory environment for which regulators may or may not permit certain regulatory relaxations for the limited purpose of the testing. This sandbox will help FinTechs and upcoming start-ups to innovate and build solid digital solutions while ensuring consumer protection.

Related Articles