The COVID-19 pandemic spurred the digitisation of almost every activity from grocery shopping to learning to working from home and more. Industries had already been slowly inching towards integrating technologies into their operations but the pandemic demanded immediate and swift adoption. The financial services industry too faced a similar fate.
Earlier, innovations in financial technology emerged to help financial institutions stay ahead of the competition. But fintech integration quickly became a necessity over the past year with its ability to address pandemic-related risks of in-person banking operations and also support the disproportionately affected micro, small and medium enterprises (MSMEs).
Unsurprisingly, the fintech industry in India fared exceptionally well despite the pandemic. According to a report by KPMG titled ‘Pulse of Fintech H2 2020’, India witnessed the second-best year of fintech funding with 2.7 billion dollars in investment in the last year. Another report by RBSA Advisors found that India overtook China by attracting the highest investment in fintech in Asia during the quarter ended June 30, 2020, emerging as Asia’s biggest destination for fintech deals.
Aligning short-term and long-term goals
While these accelerated changes brought about exceptional growth for the industry and comfort for the customers in a short span of time, the banking and fintech industry will have to shift their approach as they emerge from the COVID-19 pandemic. From short-term crisis-driven integrations, fintech leaders should now also begin focusing on post-crisis long-term strategies, to ensure resiliency.
Fintech leaders know the importance of balancing both the short-term and long-term. A fintech leader should be able to focus on the implementation of long-term change that transforms the work they do while also managing the implementation of incremental changes that address day-to-day challenges. Only prioritising ad hoc fintech strategies can lead to expensive, and avoidable, mistakes.Fintech organisations can align both their long-term and short-term strategies for overall growth by gauging the overarching business objectives, customer expectations, and organisation culture and structure.
Realising the big picture
Gathering knowledge about the current state of the business will help fintechs identify opportunities, challenges, inefficiencies and roadblocks that they can address in a financial institution to drive long-term success. Given the expansive scope for fintech integration, leading organisations need to stay on top of changing trends in the market and engage in early identification of potential innovations for their response to be proactive, rather than reactive.
It won’t be possible for financial institutions to implement every fintech solution as it comes. This is where the assessment of business objectives, customer and employee expectations and overall direction that the industry is moving in will be handy. These factors will help in prioritising the solutions that are the most critical for the company and that might not seem significant today but will cause an impact in the future.
Leading fintech companies have a larger vision of where they want to be in a few years – a vision mostly led by their customers’ need for efficiency in operations. But a singular focus on customers is not prudent. The experience of employees is equally important as the realisation of that larger vision will rest on their contribution.Hence, it is important to assess the readiness of employees for the transformational changes planned and to address any barriers that might exist internally. The fintech strategy should accordingly be tailored to the culture of the organisation to ensure its execution and success.
All the components of studying the business objectives, identifying transformational opportunities early, prioritisation, assessing customer expectations and understanding the employee and overall organisational sentiment will fit together to form a practical long-term fintech strategy.
An ever-evolving space
Fintech is an ever-evolving space that demands leaders to look at it as such and not focus on individual initiatives. The space itself is characteristically made for bigger picture thinking where everyday incremental changes ultimately contribute to larger transformative leaps.
It is important for financial institutions to learn from the COVID-19 crisis with awareness of their past deficiencies, in order to form long-term strategies that reimagine business models fostering comprehensive digital transformations and not just quick adoption of solutions.
By Lalit Mehta, Co-founder and CEO, Decimal Technologies