Gone are the days when you had to visit a bank to get a loan. If you ask people who applied for an education loan before FinTech came into existence, they will tell you how tiring the process was. You had to visit the bank, ask about schemes, stand in long queues to get and submit forms, and more. Furthermore, close scrutiny and stringent processes would lead to many months’ waiting period.
Now, with FinTech platforms like Vidya Lakshmi Portal, National Scholarship Portal, Madhya Pradesh Scholarship Portal, West Bengal Student Credit Card (WBSCC) Portal, etc., you can fill out loan applications, fill out scholarship applications, get a student credit card, and more. Even banking has become so much easier with banks using FinTech features. You can check your bank passbook in seconds on a mobile app, send or receive money instantly with UPI, and even open or close a bank account from your phone.
This is what FinTech does; it changes how we use financial services. In this article, we will look at how FinTech is improving these services for everyone.
Pros & Cons of FinTech
Like every technology, FinTech also has its advantages and disadvantages. Below we have provided the pros and cons of FinTech.
Pros
- FinTech has made financial services more accessible thus we can access our bank accounts, make payments, and send money anywhere even after banking hours.
- FinTech has replaced the old banking system which is why it is much cheaper and convenient to use. Thus, FinTechs offer us financial services at a very low fee.
- FinTech has made transferring money faster and more secure. With UPI, you can send money within seconds. For international transactions, e-wallets like PayPal are making cross-border payments seamless and efficient.
- With the rise of FinTech, the competition in the financial industry has increased thus consumers are able to get faster and better financial products.
Cons
- Since FinTech offers financial products and services in online mode only, they are vulnerable to cyber-attacks. Customer data can be leaked which can result in scams and cyber-crimes.
- Due to the nature of FinTech products, consumers may not be able to get human interaction, which often boosts human confidence.
Changes in Financial Products After Introduction of FinTech
According to the leader of FinTech and Alliances and Ecosystems, PwC India, around 9,9001 FinTechs have registered as of June 2023, and India ranked third in terms of the number of FinTechs after the US and the UK. The financial market has changed a lot after the introduction of FinTech. Now, applying for loans, buying stocks, and managing your bank account have become much easier. You can access all of these things at your fingertips with the help of technology built by FinTech companies. Below, we have provided more information about these changes in the world of finances after the emergence of FinTech.
FinTech Banks
Imagine a bank which has no physical address and operates completely online. You can use its services anytime and anywhere you want through its mobile application or website. These kinds of banks are called Neobanks. It has replaced the traditional banking environment in India. With more and more people getting access to the internet in India the use of Neobanks has increased over the years. Some of the popular Neobanks are Freo, Fi Money, Jupiter, Instantpay, FamPay, etc.
With these banks, you do not have to stand in long queues to update your passbooks or withdraw/deposit your money. Also, there is no human interaction so the banking hours are not limited to 9 to 5 thus you can access your bank 24/7.
Also Read: Education Loan Interest Rate – A Detailed Analysis for Popular Banks
Making Payments
With the introduction of payment apps like PhonePe, Paytm, Gpay., etc., the way we make payments has changed drastically. These apps have inbuilt e-wallets which you can recharge using your credit/debit cards and pay using the e-wallets on different online websites.
In addition, the National Payments Corporation of India (NPCI) launched the Unified Payments Interface (UPI) in 2016 which changed the way we use digital payments. After it was launched the use of e-wallets diminished and people started using UPI payments everywhere. Recent data by the Ministry of Finance shows that in October 2024, ₹23.49 Lakh Crores were transacted across 16.58 billion financial transactions, reflecting a 45% increase in UPI payments compared to 11.40 billion transactions in October 2023. UPI and other online payment methods have revolutionized the way we make payments and it has replaced traditional cash payments in India to some extent.
Applying for a Loan
Before FinTechs started offering loans in online mode people had to visit physical bank branches and then apply for loans. You had to plead to the loan officer for a loan if you did not know the application process. However, after the introduction of NBFCs and Banks offering online loans, the process of applying for a loan has become very easy. For example, if a student wants to apply for an education loan they only have to visit the official website of a bank or NBFC and read the eligibility criteria and if you qualify for it then you can simply apply for it. There is no need for human intervention in the process. The loan application form is available online and you need to fill and submit the application on time with the required documents to complete the process. The underwriting process is completed and the loan amount is sanctioned to you in your bank account in online mode.
Also Read: Education Loan – Everything You Need to Know
Wealth Management
FinTech has revolutionised how we manage our wealth. Before FinTech, when people had to buy any stock they had to contact their broker who would send their men to the stock exchange to buy or sell stocks using hand gestures and handwritten notes. This method was efficient but was very time-consuming and required a lot of human effort.
With the growth of FinTech in the wealth management industry now we have access to broker apps like Groww, Fisdom, Zerodha, etc. These apps bridge the gap between stock exchanges and customers. This makes the process of buying and selling stocks much easier and people can execute buy or sell within a few seconds.
Types of FinTech Users
FinTech is used in multiple industries but if we talk about users then there are three types of users the first is B2C and the second is B2B. Below we have described these types of users of FinTech below.
The B2B Users
FinTech companies offer their services to businesses under the B2B model. For example, a bank offers current account services to a local business. Compared to a regular bank account of an individual, the number of transactions and the amount of money per transaction is much higher in a current account.
The B2C Users
When FinTech companies offer their fintech services to regular customers like us then it is called B2C. One of the best examples of B2C FinTech is a regular bank where you open an account and use its services to make online transactions and open fixed deposits.
The B2B2C Users
Business-to-business-to-consumer (B2B2C) is a much-advanced use of FinTech. In this type of FinTech users, a company or a business may open a bank account and get a credit line approved by the bank. Then they would assign individual credit cards to their employees who would then make purchases required for the business, for example, buying inventory for the company, buying team lunches, spending on client meetings, etc.
FinTech & AI
Artificial intelligence (AI) has taken the world by storm and is now making a big impact in the FinTech industry. Leading companies are using AI to analyse their customers’ spending patterns, where they spend money and what influences their spending. This helps FinTech companies improve their products and make them more user-friendly.
With AI, FinTech companies can also help customers save money smartly. They identify services that customers pay for but hardly use. This allows consumers to cut unnecessary expenses and save a significant amount of money.
Government Initiatives for FinTech Startups in India
The government of India has dedicated itself to promoting the startup culture in the FinTech industry. To make this possible the government is promoting various schemes and signing MoUs. One recent MoU signed by the government of India is with the Paytm Foundation. The Department for Promotion of Industry and Internal Trade has signed an MoU with Paytm Foundation for developing India’s manufacturing & fintech startup sector. The MoU was signed in February 2025 which will help FinTech startups to get the required funding through investor connections and incubation programs.
In addition, founders will also get access to mentorship programs, guidance regarding the regulatory process, industry-focused workshops, and periodic tracking and impact assessments.
Back in 2023, there was a sudden decline of 49% in the money raised by the FinTech companies in India compared to 2022. This decline meant that the FinTech sector in India is not doing well. To elevate the FinTech startups from this problem, the Indian government introduced a Rs 1 lakh crore ($12bn) fund for extending loans to FinTech companies. This loan is somewhat unique because it offers a 50-year interest-free loan.
Also Read: Top Bank Loans for Education Funding in India
FAQs
Q. What is finTech and how does it work?
FinTechs are companies that use technology to deliver financial services. With the help of FinTechs, we can now access financial services in online mode through our mobile devices and PCs. They have developed websites and mobile applications to access their financial services.
Q. What is the primary goal of FinTech?
FinTech aims to bring revolution to financial services by providing faster and more efficient ways to make financial transactions. With their help, you can use financial services like opening a bank account, applying for a loan, buying/selling a stock, etc in online mode in just a few clicks.
Q. What are some of the best FinTech companies in India?
Some of the best FinTech companies in India are Bajaj Finance Ltd., Paytm, PhonePe, Razorpay, CRED, Pine Labs, etc.
Q. How does FinTech affect financial management?
With the help of FinTech managing your personal finance has become much easier than before. You can simply download your bank app to check your bank statements and make payments. You can also install any stock broker app to buy or sell stocks and mutual funds.
Q. What are some of the best FinTech products?
Some of the best FinTech products available for customers are online banking systems, online bank loans, online payments, ancillary work, accounting, etc.