Rethinking Trade & Finance- Digital Disruptions in India

Rethinking Trade & Finance- Digital Disruptions in India

09 Sep 2019 12:53 PM

The financial sector in India is undergoing rapid expansion both in terms of strong growth of the existing financial services firms and the new entities entering the market. Trends such as digital payment, Robo Trading, AI are few of the developments in the financial sector that is helping financial institutions offer innovative solutions to the businesses.  

Banks in India are trying to automate financial and transactional information exchange through various kinds of pilot projects. Financial institutions are moving from the traditional brick and mortars method to immediate payment services (IMPS) transactions, renewed contextual mash-ups, dashboards to name a few. The best part about such trends is that it is believed, the long pending issues such as process inefficiencies and notorious cost escalation in the trade finance sector are dealt with effectively. 

So what led to the growth of FinTech in India? Understanding this question is important as it gives a clear picture of why digital disruption in India was a much-required step in the finance sector as a whole and Trade finance is no different.

Growth of FinTech Revolution in India

  1. Contributive Growth Environment

The stakeholders are interested in driving cashless/ digital transactions for financial inclusion as well as control. The speed of broadband/telecom provides a platform for financial services delivery with low delivery costs and higher outreach.

  1. Rising Investments

There has been a significant increase in FinTech start-ups in India over the last few years, primarily in the payments space (driven by regulatory changes and market demand).

Besides, there is an increased willingness by domestic as well as international VCs/PEs and incubators to heavily invest in this sector in India.

  1. Responsive Marketplace

Globally, the FinTech start-ups are disrupting the business models of existing financial service players. In India, the stakeholders are adopting a range of strategies to deal with the risks and opportunities afforded by FinTech revolution. These include strategic partnerships that provide the FinTech firm with access to bank clients and infrastructure to acquire clients.

Swift India is working closely with FinTech companies to create blockchain platforms that help resolve pressing issues in the trade finance sector and scale operational efficiency to the next level. A large part of the blockchain wave was covered by us in our previous article- ‘How Can Blockchain Technology Streamline Trade Finance?’ .

The next area of development is in Robotic Process Automation (RPA) which helps streamline trade finance operations by automating mandated rule-based business processes. The automation of low-value tasks with very high accuracy rates eliminates any chances of human error and enables businesses to move people into more productive roles in trade finance offerings to customers. 

Technological disruptions in trade finance have been eagerly anticipated but full potential has not been realized yet. We still find, businesses continue to remain document-driven, balance sheet heavy and highly price sensitive. There is still a lack of disruption in the large corporate trade finance landscape. We at Myforexeye believe, extending the traditional trade finance products with sophisticated, online access and supply chain offerings will be the key for banks and financial institutions to safeguard their position and continue to drive growth. 

Development of FinTech Companies in India

India is considered as a hotbed for FinTech innovations. These companies are creating tech-enabled platforms that make delivery of information swift and record-keeping of valuable data in a systematic format. The basic principle of almost all the emerging Fintech companies is to offer faster and transparent dealings, which perhaps was, one of the missing blocks in the financial world.

With FinTech companies mushrooming in India, they have soon become a competition to the banks. This competition was a much needed step as it leads to a healthy state of growth. A large slice of the financial services that banks had a monopoly over is now being offered by FinTech firms. Corporate and retail clients are increasingly prefer the solutions offered by FinTech firms as they find these emerging smart and innovative companies are able to deliver quicker and offer higher quality service which they failed to receive from banks. 

FinTech companies are able to move faster and develop solutions that compete directly with traditional methods of delivering financial services. Financial service firms are now faced with a choice whether to build their capabilities or seek out FinTech partners to help drive innovative initiatives as the cost of customer acquisition and overcoming regulatory hurdles have become an expensive area. 

Where banks on the one side continue to sell their financial services based on trust, the FinTech companies on the other side have the advantage in terms of speed, agility and the capacity to quickly build customer experience by understanding their pain points. Businesses in the International trade sector mainly the MSMEs faced much neglect in terms of gaining adequate guidance in availing right credit solution at the right time. Banks seldom advise the Micro, Small and Medium Enterprises (MSMEs) about cost reduction initiatives. 

Myforexeye is an emerging FinTech company in India aimed to help the MSMEs in international trade in India. We have designed our Trade Finance solution keeping in mind the needs of the MSMEs in India. We witnessed MSMEs do not receive adequate guidance from the banks in meeting liquidity crunch with the help of structured trade credit product such as factoring etc. Taking this into consideration, we have designed solutions related to Buyer’s Credit, Supplier’s Credit, Export LC discounting and Export factoring.

We offer tailor made solutions with the help of a dedicated team of experts, led by ex-bankers. Clients across industries are offered personalized guidance and can also enjoy our web and mobile application interface. The culmination of manpower support and digital assistance is the interesting element of our service portfolio and adds value to make a difference.

Bottom Line

With advancements in technologies and as we move towards open-account trade, e-filling of exports and imports – digitization is fast changing the operational structure of trade finance in India. Among uncertainties, we are optimistic that technological innovations can indeed offer an exciting future for international trade landscape. However, change in the right direction is only possible with the right governing approach which helps the innovations to tap inclusive and efficient trade growth in the years to come. 

For anykind of assistance related to Trade Finance Services, you may drop your contact details in the chat box or email us provided in the Contact Us Page. Our support assistants will be happy to reach you out and offer valuable information to resolve your query. 

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