Is Fintech Missing the Human Element? A Hard Look

Fintech occupies pride of place and mindshare in today’s narrative of the performing sector. Riding on the back of continuously disruptive technologies like Blockchain, AI, ML, and Big Data, the Fintech sector has delivered more innovation in the last 5 years than that has happened in the last 50. But the question that lingers is, has this reliance on technology gone too far? At the recently concluded Femvest 2021 virtual summit on women’s financial empowerment, Mr. Hemanth Gorur, Co-founder and CFO of HerMoneyTalks, through his thoughts conveyed the role Fintech plays in our lives today and how the human element can be the cherry on the cake


Birth of the Fintech sector


BFSI industry has always been an economic engine for India and relevant to all investors. It has always been an early adopter of technology and latches on to technology trends because of the nature of the industry.


“There is a fine DNA that runs in the banking financial services and insurance industry when it comes to adopting technology. And in the last decade and a half, it has given birth to Fintech. Financial technology initially had its birth as an ancillary industry to support financial services and banking.


Over the years, the industry started to mature into playing a central role in the scheme of things. Today, Fintech is one of the main drivers of the banking and financial services industry as well as insurance. It has created a compelling arc over the period,” explained Mr. Hemanth.


“India has one of the highest Fintech adoption rates. At 87%, it beats the global average of 64% by at least 23 percentage points. This is a huge difference in how investors have lapped up and welcomed Fintech. The Fintech industry alone is expected to reach around 6 trillion rupees by 2025; the growth rate is 22% on a CAGR basis.


For an industry that had been held back in the early 2000s, this 22% growth rate is auguring well, given that the country is just out of a Covid year. If it continues at the same rate, this industry can be seen outstripping most other forward-looking industries,” added Mr. Hemanth


Is Fintech an oxymoron?


Quoting a conversation with one of his professional contacts who opined that ”Fintech sounds inhuman”, Mr. Hemanth explained that Fintech had been disruptive in more ways than one. This was more so in the context of the human element in fintech.


At the core of Fintech is a financial transaction between two people aided by technology. Earlier, these transactions used to take place directly due to the absence of technology and this process involved a lot of human touch throughout the transaction.


When Fintech came in, automatically the people who facilitated the transaction disappeared. Looking at it from this perspective, Fintech seems to be an oxymoron. On one hand, it is trying to facilitate a financial transaction between two humans. On the other, it is reducing some of the personal touch or the human element that facilitates this transaction.


The missing element in the unfolding Fintech story 


“One of the trends emerging in the Fintech industry is invisible payments, which include, contactless payments, NFC, etc. There is a lot of digital integration and data collection that is taking place. And this will only get deeper in future where an entire web of digital linkages form to facilitate any transactions can be seen.


The second trend that is emerging is the Omni service platform where technology and financial apps are getting integrated onto single platforms. This can lead to one platform providing banking and financial services, advisory, insurance products, etc.


The third trend would be an intense focus on cyber security; today’s cyber security protocol might be tomorrow’s legislation. The fourth trend is artificial intelligence and machine language, which can aid the BFSI industry.”


The common thread in these trends is the disappearance of 80-90% of human element in fintech. Mr. Hemanth concluded by adding, “This raises a question whether we are missing the human element. Is accelerating too fast in the path of technology creating an irreversible situation, making it impossible to bring back the human element? This creates a larger question for which there is no answer present today.”