The revolution caused in the financial and banking industry due to the penetration of technology has been immense. We have come quite far from long-established methods of financial and banking services. Nowadays, it has become quite normal for an average consumer to be able to make international transfers, take quick loans, make everyday purchases on credit, and more. 

As fintech transforms further to accommodate more innovative solutions in this space, it has compelled a synonymous transformation of the world wide web.

The Evolution of the World Wide Web

The World Wide Web, more commonly known as the Web, has undergone tremendous developments over the years. What originated in the 1970s has become a dominant part of our lives now.

Web 1.0

In 1970 the Web came into existence when the number of participants was low, and the simple objective was to share read-only information using static webpages. There were no illustrations, just content including pictures organized using frames and tables. This generation of Web was company driven.

Web 2.0

Then came the second generation of the Web, where there were mighty changes in all its dimensions. This new generation brought revolutionary alterations as the Web could now have better reach and multitudinous users, and the objectives had also transformed to include reading as well as writing. The content available online grew astronomically both in quantity and quality. The most prevalent dimension of the Web was its integration of social tools that helped increase collaboration, communication, and information sharing globally. This generation of Web was more community driven than company driven.

Web 3.0

The third generation of the Web has recently surfaced, causing a marked disruption, where the intention is to decentralize data by empowering users with better control on the Web. The focus of the Web has shifted from company and community to a more individual perspective. Terms like virtual reality, artificial intelligence, user behavior, engagement, etc., are rapidly finding more ground.

What Web3 Means for the Fintech Industry

This is one of the most exciting spaces that has unfolded since the emergence of the third generation of Web – how Web 3.0 will strike fintech. We can already see the inclusion of blockchains and cryptocurrencies in the world of fintech, but only time will reveal the extent of its other effects. While we wait to ascertain the overall impact of Web 3.0, there are a few areas that have already surfaced as game changers with the corroboration of fintech with Web 3.0.

Personalization

The primary objective of Web 3.0 is to increase individual control and focus, which is synchronous with the aim of fintech to enhance customer engagement and services. By creating a secure network where information is decentralized, and users have better control over how they would like their environment to be, the goals of both Web 3.0 and fintech can be achieved. Artificial Intelligence has been in use for some years, but its applicability is now being tested against more profound levels to make the entire Web space more personalized for users. The technology is widely being used by companies to retain and analyze more consumer data to get insights into their behavior, needs, likes, and dislikes. Companies can then use these insights to enable personalized advertisements and products.

Security

Web 3.0 has introduced us to Blockchain technology, which is the platform used to store and operate cryptocurrencies. This technology provides a decentralized ledger that is not governed and controlled by any party except agents like transparency, documentation, and accessibility. This technology has been applauded for its incredible security and transparency that tracks and documents every activity. The magnitude of security that comes along with this technology has inspired fintech and the concept of decentralized data has gained prevalence with the emergence of open and challenger banks.

Faster Processes

Another key area that has been a common goal shared by both fintech and Web 3.0 is better user control and faster turnovers. With technologies like machine learning and artificial intelligence, the aim of empowering consumers in having better control over their financial and banking activities has materialized successfully. By automating complicated processes like financial institutions making credit decisions and investors getting market insights, Web 3.0 has significantly fastened the entire system. The lengthy procedures involved in activities like asset management, insurance decisions, and cross-border remittances have found renewed and quick solutions in fintech powered by Web 3.0.

Conclusion

With such extensive developments shaping the fintech industry, there is no doubt that what we see and experience today will change for the better, in another few years. Web 3.0 has brought an advanced level of disruption that is immensely innovative. By aiming to transform a centralized and developed market into a decentralized one, Web 3.0 has reduced all misgivings about the scope of technology to naught. The Web 3.0 technologies being implemented to take the helm of fintech are innovative, intelligent, and trustworthy, and now it is time for us to prepare for the grand revelation of how this technology shapes our future. 

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The popularity of digital payments and remittances is on the rise. Whether it is e-commerce, international payments, or money transfers, there is a wide spectrum of options available for consumers. All the payment options that are openly and readily available nowadays have mainly found their origination under the vast umbrella of customer services. With more and more businesses and startups pouring into fintech, improved customer services and efficient systems have become a must. 

What are Digital Payments?

Digital Payments or Electronic Payments are payments that are cashless and mostly contactless. These payments are implemented using digital platforms, such as electronic wallets, Buy Now Pay Later, Touch and Go, etc.

Since the pandemic, the adoption rate of digital payments has surged tremendously with the number of e-payments increasing by more than 300 billion in number since 2020. The pandemic has propelled the fintech industry unbelievably.

Different Types of Digital Payment Methods

With more participants entering the industry and a heavy focus on improving customer services, fintech has witnessed an astronomical evolution in the past few years, vis-à-vis digital services, including payments. With most big and small companies providing contactless and cashless payment options, the methods of conducting payments have changed immensely. Read on to see which payment options are gaining ground nowadays:

Credit and Debit Cards

MasterCard and Visa have been the long-standing key players in the financial world. Even with the banking and financial sectors taking a digital turn, this payment method still predominates owing to its familiarity and well-established reliability.

UPI (Unified Payment Interface)

UPIs are payment interfaces that allow customers to make transfers from one bank to another. With simple onboarding procedures, including KYC, UPIs provide cashless and contactless options, that are carried out directly from bank accounts, making them secure and reliable.

E-Payments from Banks

 Digital payments using banking portals are also reliable options that are mostly used to make international transfers and payments.

–         Online Banking- Net banking or online banking allows users to make transfers and payments using their bank accounts by accessing them online. 

–         eChecks- Electronic checks are prevalent in the US and they are mostly used for making international payments, where the entire process is built on the same concept as traditional checks but is faster.

–         Small Credits- Banks partner with third parties to provide credit options to customers, where they can choose to pay in installments or some time at a later stage for their purchases. EMIs (Equated Monthly Installments) and BNPL (Buy Now Pay Later) are examples of this method.

e-Payments Using Mobiles

With the upsurge in the adoption and use of mobile phones, fintech companies have revolutionized payments by providing different payment options that customers can choose from according to their requirements and suitability.

–         Applications- There are innumerable mobile applications that enable e-payments by linking the user’s cards, bank accounts, e-wallets, or UPI to enable quick payments and transfers.

–         QR Codes- Unique QR codes are provided by mobile applications, UPI servers, etc., for users to scan these codes using their devices and make payments using different options like online banking, UPI, and mobile wallets, etc.

–         Biometric Verification- Biometrics is a newer technology that has started making rounds in the fintech spectrum, where customer verification is done using registered biometrics to carry our payments.

–         E-Wallets- Digital wallets allow users to store their digital cards or bank details safely, using e-wallet applications. Users have the options to use their cards, or bank accounts, for contactless and cashless payments using their phones.

The Internet of Things

With fintech broadening its horizons to include digital objects, the internet of things has also taken the world by storm.

–         Smart Speakers- Internet-enabled smart-speakers like Google Home, Amazon Echo, Apple Home Pod, etc., are connected to the users’ smartphones via Bluetooth, allowing them to converse and make purchases without even operating their phones. 

–         Smart Watches- Smartwatches too are connected to the users’ smartphones enabling them to make payments through them.

NFCs

Near-field communication is a technology similar to Bluetooth that connects devices in defined proximity. This cashless technology uses a chip system where devices are connected to make payments and transfers. For example, multi-utility stores have payment devices that allow customers to touch their cards instead of swiping and entering their passwords, making it quicker and more efficient. 

Cryptocurrencies

Cryptocurrencies are decentralized currencies that are secure and not governed by any agency. These currencies operate and are stored in digital journal ledgers called blockchains. As these currencies are decentralized, they allow easy international transfers, especially for large amounts, which would otherwise not be possible. 

The Takeaway

With the extensive downpour of fintech technologies disrupting traditional systems, the world has witnessed incredible change in the way we bank, purchase and pay. The wave of fintech has just started rising in the past few years, and it is a long projection of which trends and technologies would eventually become our future. Most of us have come across and used one or more of the technologies mentioned above. It is only with time that we would be able to evaluate which ones are most user-friendly, practical, and secure.

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As fintech continues to revolutionize banking and payment methods, there are a myriad of services and products are offered to users ranging from simple e-payments to international transfer involving cryptocurrencies. With fintech picking up steam, the world is gradually becoming smaller and faster. Countries like USA, UK, Singapore, Japan, and China lead the way for fintech builders and consumers, while countries like Indonesia, India, Thailand, and more gradually make their way up on the fintech ladder.

One of the fintech technologies that has captured everyone’s attention recently is BNPL- Buy Now, Pay Later.

Breaking Down the Concept of BNPL

BNPL, short for Buy Now Pay Later, is a credit arrangement offered by companies which allows users to make purchases without paying for them upfront. This process involves instant approval of credits at the point-of-sale without the hassles of KYC and verifications, making the purchasing system much simpler and more efficient. 

Facts & Figures

–         The total valuation of the BNPL market stands at $100 billion USD.

–         BNPL started gaining ground sometime in 2020, after which it gained immense popularity, propelling its adoption rates to increase manifold by 2021. With its rapidly growing traction on the world, the BNPL market is expected to cross the $700 billion USD mark by 2026. 

–         Sweden has the largest market share in BNPL, followed by the USA. India is progressing towards becoming the largest market for BNPL in the near future.

–         Affirm, AfterPay, Klarna, Sezzle, and Square are the key players in the BNPL industry.

Benefits of BNPL

There are a number of reasons why BNPL has become a popular payment option offered by companies. Not only companies, BNPL has several uses for customers that involves a customer-centric solution focusing on simplifying purchases.

Easy Purchases

BNPL allows the consumer to make the payment for their purchase at a later stage or in installments, which makes the overall journey of purchase much easier and more enjoyable.

No Need for a High Credit Score

Unlike credit cards, a user looking to exploit the benefits of BNPL does not require a high credit score. As the user gets instant approval on their request for BNPL, the verification carried out is majorly superficial, that does not include analyzing the credit history of the user.

Simple Procedure

Opting for BNPL involves an easy process, where the user selects the BNPL option on the vendor’s website and provides a few personal details, enabling an instant approval for BNPL services. The user can then make the required payment as per a pre-decided calendar. 

Helpful in Times of Need

Having a backup in times of need is a big reason behind BNPL’s growing popularity. BNPL helps resolve issues where the customer is unable to make payment upfront for various reasons, giving the customer a boost by enabling them to purchase without needing to pay instantly.

Promote Purchase

Not only for customers, BNPL has proven to be a boon for companies as well. With more companies and vendors offering BNPL, customers are getting more accustomed to the idea of not having to pay instantly, which has promoted purchases substantially. 

BNPL is Not the Same as Credit Cards

Though built on similar concepts, BNPL and credit cards are quite unlike each other right from the basics. BNPL is like the simpler version of credit cards, where all the processes involved are not as complicated or exhaustive as the ones in credit cards.

Verification

The verification process for credit cards is quite intensive, where the customer’s income statements, credit history, behavior and expenditure trends are closely analyzed to ascertain the potential profitability of the consumer. It is not the same in the case of BNPL, where the verification process is minimal, and the approval is instant.

Purchase

The purchase made using credit cards involve making payments using the consumer’s allowed credit limit, where the credit card server charges interest on the amount used.

In BNPL, the credit is allowed only for that particular transaction, mostly involving no interest or fee.

Payment Process

The payment process in credit cards, is mostly determined by the consumer, where they make payments to their credit card servers, as per their suitability. In BNPL, the payment procedure is well-defined, and the user is intimated about the time and amount of payment, failing which the user is penalized.

Credit Scores

The approval of credit cards requires the user to have a high credit score. And the user’s credit card usage also affects their credit score. This is not the case in BNPL, where the user’s credit score is mostly not taken into account during the approval of BNPL.

Bottom Line

BNPL is a concept that has revolutionized the way people are making purchases, including cross-border payments. With easy options offered by vendors and companies to grant instant purchases without paying, the level of consumer satisfaction has reached a significant high. Because of its simplicity and usability, it is easy for users to opt for this option. But the consumer should be weary of getting consumed in debt because BNPL only helps delay payments, not evade them.

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With the astronomical rise in the adoption rate of fintech, the focus on customer services and user experience has magnified dramatically. As more participants enter the service market of fintech, providing excellent, efficient, and competitive user interfaces has become a popular mandate. 

There are more than 6 billion smartphone users in the world presently. The key USP of fintech is digitalizing banking and financial services to enable easier transfers, payments, investments, and more, across the globe. The medium that is more popularly used to bring consumers and fintech services closer is- smartphones. Such an affair directly opens doors for fintech providers and servers to create user interfaces that could help build instant bonds between financial institutions, fintech providers, and customers. 

This is where user experience comes into play.

UX Explained

UX, short for User Experience, is the interaction and engagement of potential and existing customers with a company’s services and products, through their user interfaces (UI). All processes and activities involved in the user exploring different products and services of a fintech and using them make up for the whole user experience. 

Consumers base their experiences on the design, engagement level, and quality of the interfaces, making it essential for providers to create relevant interfaces that are intelligent in different aspects like language, theme, graphics involved, loading time, etc.

5 Factors Influencing UX

All online services and products require good UI that can cater to an average consumer’s UX expectations. As more consumers interact and integrate internationally, the competition level increases manifold. Someone having experienced excellent banking services while studying in the UK would expect similar standards when they are back in their home country like, Canada or India.

Not only internationally, but the level of competition in the industry is also very high, compelling fintech providers and technology companies to offer innovative and disrupting interfaces that speak the customers’ languages. Some of the factors that directly influence UX are:

Intuitive Content

To provide a seamless experience with content that resonates with customers, fintech providers need to focus on the intuitive aspect of the design of the application or website. The intuitiveness and simplicity of the website or application content decide how seamlessly a customer would be able to navigate through them.

Customization at Every Step

With more information, fintech servers have the power to provide personalized content for their consumers. All consumer activities and expectations are different, which makes it crucial for fintech servers to offer customized services and content, to prompt a better experience for their users.

More Power to The Consumer

By building interfaces that give consumers better control over their banking activities and accounts, fintech can unleash a different level of UX. Consumers seek easier interfaces that allow better control for the consumers on their banking and financial activities.

Data Security

Boosting the security of the website or application is a necessity more than a want. The level of trust consumers place in fintech providers reflects the importance of data security for UX.

Application Interplay

A key advancement that plays a huge role in determining UX levels is the application’s or website’s ability to interplay and integrate with other applications and websites. It is built based on acceptability, like in the case of credit cards, where they are widely accepted by vendors both online and offline. 

How Fintechs are Enhancing UI

To boost the UX level of consumers, the key for fintech providers is to upgrade their UI. Fintech world over has employed strategists, designers, and UX/UI experts to create and enhance UI that caters to the explicit and implicit needs of customers. Some of the methods of enhancing UI are:

Simple Designs

Simple and relevant designs that complement the goals of the fintech provider are an essential element that reflects maturity and trustworthiness in a brand.

Engaging Text

Internet usage of people has fiercely increased globally. With more time being spent on the internet, there is a huge change in the way websites interact with consumers nowadays which has led to an unconscious mass absorption of the way applications and websites interact, giving way to similar expectations. Such expectations require fintech to create engaging and interactive content for its consumers.

Theme

In creating a good UI, fintech must determine a color theme that reflects the organization’s goals and caters to the targeted audience.

Tone & Voice

Gone are the days, when the tone of voice was the deciding factor for content creators; nowadays both the tone and the voice of the organization play independent and equal roles in determining the company’s content language, level of friendliness, formal to informal ratio, etc.

Loading Time

Because fintechs are expected to be equipped with advanced technology to provide easy and quick solutions to consumers, any lag in the loading time of the UI can have a damaging effect on UX. 

The Takeaway

User experience in fintech is a key component of customer services, which has been an integral part of the foundation of fintech. With users becoming more acquainted and accustomed to online processes, the focus on UX UI is growing rapidly. UX and UI have now become business investments for fintech, that help them offer better services, resulting in prosperity.

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The Retail Payments Activities Act (RPAA) is an initiative by the Canadian federal government to regulate the retail payment services space in the country. Introduced on the 30th of April, 2021, as a part of the budget Bill C-30, this Act aims to create a framework that oversees retail payments activities going to and fro the Canadian market.

The intended initiation of this Act has been in the direction of creating a space that promotes innovation and competition while maintaining and complying with regulations and set standards.

In 2017, the Department of Finance published a consultation to the people of Canada, named “New Retail Payments Oversight Framework”. This consultation paper highlighted the evolution of fintech and retail payment services and how the daily actions of Canadians had also gravitated towards a fintech-enabled world. The purpose of this paper was to redress the existing regulatory system by bringing in better transparency and compliance.

The Department of Finance issued a consultation to the people of Canada seeking their opinions and perspectives on the oversight of retail payments. Since then the Finance Department has been working on creating a systematic policy framework to monitor the retail payments sector.

The Major Parties Affected by RPAA

The Canadian Federal Government has had clear intentions of regulating the Canadian retail payments space that complies with national and international standards while promoting innovation. The main parties that get affected by the issuance of this Act are:

–         Retail Payment Servers that are housed in Canada, and provide retail payment services to the people of Canada.

–         Retail Payment Servers located outside Canada but have their services extended to Canadian residents.

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The Canadian Government’s Role

Payments are an integral part of an economy. For a smooth functioning economy, its participants must be presented with appropriate payment options. For individual consumers and businesses, retail payments play a significant role. All the payments conducted using various methods play a prominent role in the economy.

Here is where the Canadian government steps in. The Government believes in ensuring that their economy functions in smoothly. By overseeing the operations and activities of retail payment providers, that are functioning in the Canadian space, the Government can ensure the security and interests of consumers. 

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The Regulatory Body

The Bank of Canada (BoC) is the official regulatory body that monitors the activities of various entities that function as retail payment servers in the Canadian space. The BoC is responsible for overseeing whether the entities comply with the regulations laid out in the RPAA or not. The RPAA has also authorized the BoC to issue advanced guidelines to entities, entailing how the RPAA applies in various situations and activities.‍

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Key Points in Regulating Retail Payment Servers‍

The RPAA is here to protect the interests of users and regulate payment activities across Canada. To achieve this, a holistic journal has been laid out defining procedures for registering with the BoC before performing any activities, providing adequate documentation, and creating a proper response framework where entities report any operational risks that occur during their operations. ‍

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Closing Notes‍

The emergence of RPAA in Canada is similar to many regulatory bodies in various economies like the Monetary Authority of Singapore (MAS). The issuance of such regulations and policies not only makes the environment safer but also helps provide a proper direction to the units that are relentlessly innovating to compete globally. With fintech disrupting the payment sector, government and other regulatory bodies must step up and become torch bearers. This act by the Canadian authorities has received tremendous appreciation from all over the world, and we only hope to witness similar progress globally.

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Although most of us fall into the category of banked individuals, who have access to and operate several services and products offered by banks and financial institutions; however, all over the world, there is a large percentage of individuals who are unbanked or underbanked. In the USA alone, more than 24% of the market remains unbanked or underbanked, giving rise to many questions and opportunities.

Although most of us fall into the category of banked individuals, who have access to and operate several services and products offered by banks and financial institutions; however, all over the world, there is a large percentage of individuals who are unbanked or underbanked. In the USA alone, more than 24% of the market remains unbanked or underbanked, giving rise to many questions and opportunities.

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The Unbanked Sector

Unbanked people do not use traditional banking services and products; they only use alternative methods for carrying out transactions with zero percent reliance on banking services, including holding savings accounts or debit cards. Such practices majorly occur because of several reasons like not having access to banks, community beliefs that lead to mistrust in the banking sector, etc. 

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Reason for People Remaining Unbanked

There are around 1 billion people who remain unbanked to this day. There are multiple reasons for the sustained existence of this segment:

Lack of Trust and Low Incomes – People don’t have enough trust in banks owing to their need for privacy or some negative prior experiences, because of which they refrain from associating with banks altogether. Some people believe that their earnings or income is not substantial enough, to put anything in their bank accounts, making these the most common reasons for people remaining unbanked.

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Social Restrictions – When people grow up in setups where there is a lack of social normalcy, it makes it very difficult for them to follow social obligations and methods. With the absenteeism of proper role models, it becomes impossible for them to understand the relevance of social setups like banking systems.

Accessibility and Unmet Requirements – There are many regions, especially in developing countries, where people don’t have access to banks and their products/services. Such gaps in the banking system make way for the unbanked sector.

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The Underbanked Sector

The underbanked sector is a much larger segment of people, comprising more than 20% % of the world market, where people have partial access and operations in banks. People who use or have used alternative means of financing in the past are underbanked individuals. 

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Reasons for People Remaining Underbanked

There are several reasons for families and individuals remaining underbanked, such as:

High fees – Some people undergo negative banking experiences, which compel them to move away from them, like banks charging a high fee, people overdrawing and not paying back, etc.

Lack of savings and assets – People have a lack of savings for their retirement or emergencies, and they do not have direct deposits, or assets like homes, making them withdraw from the obligation of operating banks.

Although both these terms are used as synonyms, there is an evident difference in both these sectors, where one group is completely devoid of banking-related services, and the other group has partial access and operations.

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Facts & Figures

-         There are about 1 billion individuals who do not have a bank account.

-         More women than men remain unbanked or underbanked.

-         Countries like China, India, Pakistan, Indonesia, Brazil, Bangladesh, Nigeria, Kenya, and Mexico have the highest number of unbanked individuals.

-         Most of the unbanked individuals are adults above the age of 25.

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Benefits of Being Banked

Underbanked and unbanked people have often faced discrimination based on their financial status or beliefs, because of which, they naturally opt out of the social structure of the banking industry. There are numerous advantages of having bank accounts and managing finances through banks. The primary reasons to avail of banking services are:

Protection – The biggest reason for people opting for banking services is the high level of protection a consumer gets for their money and assets against theft and fraud.

Accessibility – Operating banks and associating with them gets people to stay within the social structure, where they can make deposits and withdrawals, improve their credit histories, and get loans.

Accumulation – With proper financial management, people can accumulate enough savings for emergencies and medical expenditures, which would otherwise cause a big dent in their future.

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The Opportunities for Fintech

With such a large population without any basic infrastructure and access to banks, the opportunities for fintech to bridge this digital and infrastructural divide are immense. Fintech can use this wide gap to offer remodeled setups that provide customized services. 

One of the most profitable ventures that could help lessen this gap is mobile banking. With mobile banking, customers can be assured of having increased access and control over their bank accounts and finances. There can be a better education system set up for the unbanked and underbanked sectors to understand their woes and advise on their future possibilities. With mobile banking, banks do not need to set up traditional brick-and-mortar branches, which could also help them reduce their fees substantially. Online and mobile banking can also help facilitate P2P transfers, which could help resolve any issues.