You can invest in a mutual fund, fill up an IPO, invest in gold ETF, invest in NPS, and invest in consumer loans etc in such a short time as the documentation hardly takes any time online.
Technology adoption and upgradation has transformed the world and has highly impacted the lives of individuals. It’s fascinating how each and every aspect of our lives, including investing and personal finance is influenced by new technologies.
In India, financial literacy remains a pressing issue. As per S&P Global Financial Literacy Survey, only 24 per cent of the nation’s population is financially literate and it indicates the level of opportunity cost in terms of lost savings and investments. RBI has recently launched the National Strategy for Financial Education (NSFE) 2020-2025 to drive up the literacy rate by inculcating financial concepts among people and seeking active savings and participation in financial markets.
With the increase in the volume of investments, there needs to be a superior alternative to the conventional investment models and intermediaries which can attract more investments. This has led to a new era of investing. According to a recent MEDICI Global Report, there are over 2100 fintech apps and they are growing at a tremendous rate. Good apps for investing coupled with increasing internet and smartphone penetration have made it easy and convenient for investors to invest their money.
New technologies need to be simpler and more comprehensive for investors to make an educated choice. In the digital era, some people feel overwhelmed by the complexity of Fintech apps and resort to using the traditional channels to invest like doing all paperwork, meeting brokers/agents to invest and they can end up paying commission in the form of regular plans that can ultimately drag the overall returns of their portfolio. Investors don’t find the confidence to invest on their own due to the complexities of apps. Fintech apps are definitely a better medium to invest through as they are more cost-efficient and have an edge over the offline service providers, but the apps need to be simpler and more investor-friendly.
The other problem of the Fintech apps or online financial services is that they are not comprehensive, which means almost none of them to provide all types of financial services at a single place. Investors find it difficult to manage and monitor their portfolios in different apps and, hence, prefer to have a single place for all their needs and solutions. There is a shortage of such apps. The combination of streamlined offerings with technology will enable fintech companies to be more efficient and get more traction and ultimately cut down on costs associated with each transaction.
There is ample potential booming in the insurance sector, cryptocurrency, P2P lending, foreign exchange, alternative investments and apps can add these services to the existing portfolio of services. The first ones to implement and provide a comprehensive investment platform can surely gain a first mover’s advantage. Along with those services, apps should have a section for financial/investment articles and blogs to increase the financial literacy rate of investors. Only if the investors have all the knowledge, they can make an educated investment choice.
New technologies such as predictive behavioural analysis, online risk assessment, machine learning, and artificial intelligence and data analysis can help apps to identify consumer needs and behaviour. This technology will help the apps in inserting an automated assistance function which can guide the investors and advise them about which portfolio is suitable for them.
In this tech era, investing is no longer only for wealthy people only but actually, millennials, and Gen Y are taking front seats in this show by starting to invest when the first paycheck hits their bank account. They are highly inspired to invest and recent technological advancements in the financial sector have made investing available on their fingertips. You can invest in a mutual fund, fill up an IPO, invest in gold ETF, invest in NPS, and invest in consumer loans etc in such a short time as the documentation hardly takes any time online. The potential is enormous in this sector but new technologies need to be simpler and more comprehensive and we are glad to see that most of them are on the right track.
by Saumya Shah, Founder, Tarrakki (incubated by Afthonia Lab)