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GS 3, MAINS: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.


  • Financial technology (Fintech) is used to describe new tech that seeks to improve and automate the delivery and use of financial services. ​​​At its core, fintech is utilized to help companies, business owners and consumers better manage their financial operations, processes, and lives by utilizing specialized software and algorithms that are used on computers and, increasingly, smartphones.
  • It primarily works by unbundling offerings by such firms and creating new markets for them. Startups disrupt incumbents in the finance industry by expanding financial inclusion and using technology to cut down on operational costs.
  • Fintech now includes different sectors and industries such as education, retail banking, fundraising and nonprofit, and investment management to name a few. Fintech also includes the development and use of crypto-currencies such as bitcoin.


  • Better payment systems: this type of technology can make a business more accurate and efficient at issuing invoices and collecting payment. Also, the more professional service will help to improve customer relations which can increase the likelihood of them returning as a repeat buyer.
  • Rate of approval: many small business ventures are starting to use the alternative lenders like those involved in financial technology because it has the potential to increase accessibility and speed up the rate of approval for finance. In many situations the application process and time to receive the capital can be completed within a period of 24 hours.
  • Greater convenience: the companies involved in financial technology make full use of mobile connectivity. This can significantly increase the number of people who can access this type of service and also increase the efficiency and convenience of transactions. With consumers given the option to use smartphones and tablets to manage their finances, it is possible for a business to streamline its service and provide a better all-round customer experience.
  • Efficient advice: many of the latest systems rely on robo-advice to give people guidance on their finances. This can be a very quick and low-cost option to get useful information on investments, as well as to limit a person’s exposure to risk. However, this type of service won’t be able to give the most in-depth advice that would come from a professional adviser.
  • Advanced security: Using the latest security methods is necessary to ensure more people are confident in using this type of financial service. The need to harness the latest mobile technologies has resulted in a major investment in security to ensure customer data is kept safe. A few of the latest security options used by those in this sector include biometric data, tokenization and encryption.


  • Strategy for banks: A core business of banks and financial institutions is lending and borrowing money. Today, traditional banks are competing with fintech firms, but banks should not consider fintech as a threat but an opportunity to grow faster.
  • Big data analytics: Banks need to develop a big data warehouse where they can capture potential customers’ transition patterns through applications like Google, WhatsApp, Facebook, debit and credit cards etc, so that they can targets potential customers and customise their products and services accordingly.
  • AI and robotics: Banks need to develop software application based on AI, which may be useful to perform complex tasks relating to customer transactions, like small-value loan appraisal, KYC-related issues, loan monitoring etc—in the future, in order to provide quick services in a cost-effective way, there will need to be lesser human intervention. Banks also need to develop customer-friendly mobile apps as mobile banking will generate more revenue than other channels in the long run.
  • Digital marketing: Mastering digital media, content marketing, digital customer lifecycle, management and marketing operations will be critical for success. For building these capabilities and recruiting and retaining talent, banks need to invest a significant amount of time and money.
  • Digitisation and auto processing: Traditional banks can reduce costs and deliver services faster by digitising account opening and loan applications.
  • Collaboration and co-invention with fintech firms: Innovative ideas and cutting-edge technology will be the deciding factors for success. Considering this, banks need to invest more money and time towards technological innovation, and need to develop a talent pool accordingly.

The Steering Committee on Fintech related issues recently submitted its Final Report. The recommendations are as follows:

  • The Committee has highlighted the positive impact of Fintech innovations on sectors such as Agriculture and MSMEs. And it has recommended NABARD to take immediate steps to create a credit registry for farmers with special thrust for use of fintech along with core banking solutions (CBS) by agri-financial institutions, included Cooperative societies.
  • A special drive for modernisation and standardisation of land records by setting up a dedicated National Digital Land Records Mission based on a common National Land Records Standards with involvement of State Land and Registration departments, with a view to making available land ownership data on an online basis to Financial Institutions.
  • A comprehensive legal framework for consumer protection be put in place early keeping in mind the rise of fintech and digital services.
  • Adoption of Regulation technology (or RegTech) by all financial sector regulators to develop standards and facilitate adoption by financial sector service providers to adopt use-cases making compliance with regulations easier, quicker and effective.


  • Among several factors for India’s potential growth, savings rate is the most effective one. Do you agree? What are the other factors available for growth potential? (2017) 
  • What are the salient features of inclusive growth? Has India been experiencing such a growth process? Analyse and suggest measures for inclusive growth. (2017)
  • Pradhan Mantri Jan-Dhan Yojana (PMJDY) is necessary for bringing unbanked to the institutional finance fold. Do you agree with this for financial inclusion of the poorer section of the Indian society? Give arguments to justify your opinion. (2016)
  • Comment on the challenges for inclusive growth which include careless and useless manpower in the Indian context. Suggest measures to be taken for facing these challenges. (2016)
  • “Success of ‘Make in India’ programme depends on the success of ‘Skill India’ programme and radical labour reforms.” Discuss with logical arguments. (2015)