FROM EDITOR'S DESK 2 - INDIAN ECONOMY OUTLOOK AND EMERGING BUSINESS TRENDS
CONTENTS
6 - GIG-ONOMICS AND INDIA 8 - WOMENT AND INVESTMENT 10 - THE WORLD'S MOST EXPENSIVE APPLE
TABLE OF
13 - AGRI-FINTECH 16 - DIGITAL FINANCE TRENDS TO LOOK FOR IN 2022
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From Editor’s Desk Editors- Mukul, Amir, Siddharth Hello fellow readers, The online classes have begun in full swing with the students gearing up for the placements season in a virtual mode for the very first time. It’s definitely a good time to brush up your basics also learning about the impact that the pandemic has on the emerging business trends and the Indian economy as a whole. This edition as usual covers some of the buzzing topics of the market whereas at the same time having the basics of finance applied to some niche sectors of the market. The article “Gig-Onomics and India” talks about the gradual shift in the culture of jobs as people tend to prefer more of liberal and free-lancing jobs rather than sticking to one single job. For the enthusiasts wanting to know about the impact of COVID on the current market, we have an article “Indian Economy Outlook and Emerging Business Trends” which gives a brief overview of the sectors that are showing a promising trend amidst slowdown of the pandemic. It also talks about the emerging businesses that are booming due to the “new normal” setup. For the finance enthusiasts we also have an article on “Agri-Fintech” which talks about how financial technology can be used to innovate and upgrade the agricultural efficiency and yield. We also have something interesting for our tech savvy readers. Do checkout our article on “Digital Finance Trends to look for in 2022” that elucidates on the transformation of digital finance that will definitely streamline the personalisation of financial services in the coming years. While covering the topics around the world in the Sofia Times, we have not left the occasion of starting our blog for finance snippets bi-monthly. SOFIA is a firm believer of imparting finance knowledge with fun. Finance is not all about credit and debit, it’s more about drawing inferences of credit and debit and having a valuable insight of the business. Driven by Society of Finance, this edition is not only for finance enthusiasts, but also for the people who would like to keep themselves updated with the current happenings in the business world. As usual we hope that this edition will enrich your knowledge benefit in your academic and career decision. Happy Reading!
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1. Indian Economy Outlook and Emerging Business Trends Global Economy Outlook The rampant spread of Novel Corona virus forcing lockdown on a global scale to contain its spread has negatively impacted the growth figures of global economy. As a result, we witnessed fall in demand of goods and services, halt in business operations involving high customer contact, since demand has fallen businesses across the globe, the global Gross Domestic Product has contracted by 2.4% (Statista) and it is further projected by Fitch Ratings that the global corporate revenue losses can mount to US $5 trillion by the end of year 2020. This has created a conundrum among various economies and we have seen unprecedented increase in vulnerability to recession, staggering job losses and a steep dip in consumer spending.
Indian Economy In nascent stage of Novel Coronavirus, similar sentiment is mirrored by India on a national scale as well. We witnessed a contraction of 8% in industrial output measured by IIP index. Output of mined products has contracted by 9.8 percent and electricity generation also declined by 1.8 percent. Whereas manufacturing sector 8.6 percent as well. Back to table of content 2|Page
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Recovery Stage and future Projections However, the market disruptions and economic avenues due to Novel Coronavirus has created financial difficulties currently for India. However, future projections and sentiments of experts see a positive ray of light. A few macroeconomic variables and industry variables have begun reflect an upsurge in growth as the impact of Covid-19 is showing a slowdown trend. These Include: • Spike in average UPI payments reflecting increase in consumer spending at 3.29 lakh crore INR against 1.96 lakh INR in the previous 12 months • E-way bill is up 9.6% year on year basis and toll collection is up 5.41% in September from February. • Railway Freight is up by 15 % in September whereas passenger car volume grew by 31% in September making it highest in 26 months. • Manufacturing Purchase Purchasing Manager Index (PMI) further saw an uptick of 56.8. • Aviation Sector also witnessed a weekly average flyer of about 1,39,000 in number in September compared to 38,000 in May 29th. • GST Collection was also pegged at 95480cr INR that is up 4 % a year ago. • As per CMIE the unemployment rate at September also saw a fall, it was 6.7% as compared that of 8.4% in August 2020.
Retail Spending • • •
Retail Spend as of September 2020 witnessed an upward trend of 12 % as compared to August 2020 largely driven by Rural Engine Biggest chunk of it was increase in FMCG, Consumer Durables, Utility Payments, Logistics, Healthcare and Transportation. As per CMS Data, Retail spend was increased to 11,624cr INR against 10,339cr INR in August 2020.
Investments • • • •
As per survey of Confederation of Indian Industry and EY of 100 Companies India has emerged among top 3 choices for Overseas Investments for coming 2 to 3 years. It was found that around a quarter of firms were eyeing an investment of $500 million. Further around half of the surveyed companies are eyeing India for a potential manufacturing destination by 2025. It is warranted that to take benefit of such outlook Government of India focuses on more infrastructure development and faster clearances ensuring better ease of doing business.
Liquidity •
To infuse liquidity and into the market with a view to increase public spending, Reserve Bank of India is going big on Quantitative Easing phenomenon.
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RBI has bought around 13,445cr INR worth of Sovereign Bonds in secondary market through open market operations between September 28th and October 1st. It was further done to ensure that yield remains pegged at a target value of 6% for sovereign bonds.
Stimulus Package • •
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Finance Minister, Nirmala Sitharaman on 12th of October announced a stimulus package of 1 lakh crore INR aiming at lifting a consumer demand by a significant magnitude. Under this government aims to allocate 25,000 crore INR over and above 4.13 lakh crore for FY 2021 budget for capital expenditure on roads, defense, water supply and urban development. Providing Leave travel Concession Cash Vouchers of around 28,000 crore INR(Composite) to Central / State Government and Public Sector Employees government sees a demand creation of around 28,000 crore INR. 12,000 crore INR by capital investment by state on a 50-year interest free loans from Centre.
Though it has been a daunting year for the economy but future projections coupled with current macroeconomic indicators shows that worst is over for India now it is time for recovery phase.
Emerging Trends in The Market During the pandemic, we have witnessed new business trends emerging in the market: 1. Gaming Industry Gaming industry has been one of the beneficiaries in this erratic phased lockdown. Several gaming platforms in India such as Esports, Mobile Premier League, Ludo king and others have reported a 30 percent increase in mobile traffic and further 40 % increase in engagement time as compared with pre-COVID levels. Gaming industry in India has grown from $0.3billion in 2014 to $2 billion dollar in 2019 and currently experts are projecting a target size of $9 billion in 2024.
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Source: Economic Times 4|Page
5 India has emerged as a fast destination for fantasy sports, pushed by the overwhelming penetration of internet, adoption of smartphones is an additional contributor towards the growth of sports across the country. Cricket continues to dominate the sports arena, other emerging shows fast developing interest in other sports such as hockey, kabaddi, football, basketball, volleyball, and baseball. Indian fantasy sports industry is currently growing at a CAGR of 32% and is projected to be $3.7 billion by the year end 2024. The Indian Premier League (IPL) continues to be the most popular league with platforms such as Dream11, Mobile Premier League, and MyTeam11 also gaining popularity.
2. Education Technology With colleges, institutions being closed as a consequence academic curriculum and classes came to a standstill. Online education technology saw an opportunity of growth that they could not have imagined, nobody could have imagined a scenario where professors have to deliberate physical lessons through an online medium. Virtual classes and online courses prepared by online education technology companies such as Vedantu, Byjus, Udemy, Coursera, Edx, Excel marks, Simplilearn and others witnessed an immense growth during this period.
3. E-retail E-commerce giants such as Flipkart, Amazon saw a spike in the sales volume particularly of FMCG Segment. As per an article of Times of India sales figures have gone up by 120-140% during COVID levels and it is likely to continue.
4. Media and entertainment Although Traditional media and advertising has taken a back seat, we witnessed a surge in media content consumption on OTT platforms more than 75 % of Indians have purchased new subscriptions. We also witnessed a large no of subscribers shifting to digital copies of print media as well. Further trends also show a shift in mass scale adoption of digital marketing tools for promotion by organizations.
5. Cloud Computing and Video Conferencing We witnessed sudden surge in the demand of cloud computing and video conferencing applications in the light of COVID – 19, it includes vast variety of applications, data storage and management. Video conferencing platform Zoom registered a whopping surge in its valuation from $0.2 million dollar to a $27 million dollar valuation within a quarter. Surge in subscribers base was further witnessed in platforms like Microsoft Teams, Cisco WebEx, Air meet and others. Back to table of content
Article submitted by- Parth Rastogi (PGDM: 20-22)
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2. Gig-Onomics and India The National Skill Development Corporation report states around 70 million are expected to enter India’s labour force by 2023, which would comprise of 59 million youth below 30 years. Taking into consideration that 65% of the Indian population is under the age of 35 we can have an estimate of the huge addition there is going to be in the coming years. So, the question is how is India as a country going to cater to such a huge labour force. The unemployment rates reached 23% after being hit by the pandemic, the economy is reviving at a very slow pace. The GDP has plunged to an all-time low. These factors add up to a steep challenge. Can the shift towards the gig economy be a welcome change for India?
What is the gig economy? A gig economy is the existence of a free market where flexible and temporary jobs are favoured over the basic 9 to 5 job structure where full-time workers are hired with long term motives. The gig economy allows different people across cities, ages, and skillsets to pick up work without being tied down to one single project. Once the particular task is complete, the worker moves to the next ‘gig’. The term might seem something new but it isn’t. Before the tremendous boom of the technology and app-based “on-demand” services brought gig work to everyone’s phones it was present in the fringes mostly being referred as freelance work, now with the current scenario and advent of more platforms and tools, it is coming closer to becoming the core of the labour market.
Why is it gaining popularity? The popularity of gig work has been constantly been increasing as more forms of businesses are transforming to make their process technologically driven and reap the benefits of low-cost operations the demand for gig workers are ought to go up. As per a report by investindia.gov.in total population in India is 1,332 million and the working-age group is between 15 and 65 years. The working-age population (66.8%) is 890 million and the labour force participation rate (51.8%) is 461 million. These numbers tell that there will be a persistent competition in the labour market in India leading to the availability of cheap and abundant labour not only for Indian companies but even global companies. One might say, the gig economy might bring down the market rates but with the benefits of flexibility and convenience, the average worker might be just able to earn at the levels of full-time work along with the potential to absorb the ever-increasing labour force of India. The gig economy in India holds tremendous potential in terms of providing jobs and catering to consumer preferences. With the introduction of digital market places like UrbanClap, care.com, Service Listing Platforms like 99 designs, True lance and not to forget the asset/service sharingbased business models like Uber, Ola, Swiggy, etc. give huge opportunities for the Indian labour force to find work in the gig-based economy. Even established companies like Axis Bank, Delloite is banking on this system to fulfil their requirement. As per a financial express article, approximately 70% of the Indian corporates have used gig workers at least once for a major organizational requirement. Back to table of content 6|Page
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Trends in India The concept of freelancers has been prevalent in India for a pretty long time but it has gained popularity in the mainstream economy since the last couple of years. The number of freelancers in India increased from a mere 11% in 2018 to 52% in 2019. India has become the fifth largest country in terms of growth in gig-based employment. Freelancer.com, which is a global platform with over 47 million registered users comprises of 11.2 million user base alone from India. With the introduction of the E-commerce industry, the number of blue-collar jobs has also seen a jump. If we talk about BFSI, IT, and retail these sectors would account for over half of the Flexi staff in India in 2021 as per a Business Insider report. As per the same report, there has been a push from the government too to formalize the gig-based job sector. The Indian govt formalized nearly 7 million jobs in the last three years, which is expected to hit 100 million by 2021. The government has also introduced the Digital India Program (DIP) which would be a further step towards creating a conducive environment for the gig workers. As the growth is being seen on the demand as well as the supply side this shift towards a gig-based economy is going to be structural and deep which is here to stay. All this being said, there would be a fair share of challenges and problems that would be needed to be addressed with the growing trend of a gig economy. There are risks of exploitation, lack of job security, no unemployment benefits schemes, etc. The brighter side of the story is that the government is working closely to integrate the gig workers into the legal purview of the Labour Laws and the social security laws. Social Security Code 2019, which was introduced in the Lok Sabha have specific mention of the gig workers and their rights. For the millions of India’s skilled labour and contract workers, this will be a welcome change and provide the stability and security. The bigger question which would remain is how the Laws and Bills are implemented and adhered to by the corporates and govt, which has always been the tougher task in India rather than that of the formulation of such policies.
References: • https://www.investindia.gov.in/team-india-blogs/gig-economy-shaping-future-work • https://www.businessinsider.in/6-million-indians-will-be-in-the-gig-economy-within-twoyears-thats-nearly-twice-the-currentsize/articleshow/69854133.cms?utm_source=contentofinterest&utm_medium=text&utm_ campaign=cppst • https://www.assocham.org/userfiles/GIG%20REPORT_2020.pdf
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Article submitted by- Pushan Mukhopadhyay (PGDM BIFS: 20-22)
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3. Women And Investment By and large, the women around the world suffer from stereotype bias whenever the subject of women and Investment is discussed and some of the commonly aired statements are, “Women are nonaggressive Investors”, “Women cannot manage Money”, “Women Invest too conservatively”. In most instances, these theories are supported with the low number of women actively involved in Investing either professionally or at a personal level. But as I continue to dig deeper, the truth comes out to be completely opposite. In most Indian households, women are in-charge of managing the household budgets like buying the right quantities at the right price and making sure that day-to-day bills are taken care of, and still being able to save some money at the end of the month for emergencies. And housewives do this skillfully even if the inflation rates move up and down and the household’s income fluctuates. Did someone say women couldn’t manage Money? Some of the basic traits of women provide them a natural advantage over men when it comes to investing. Women have a natural instinct for numbers, they are more security oriented, calm and patient, they are far-sighted, they do more research and know how to use money effectively. All Ingredients that make for a good investor! In her Book, “Warren Buffet Invests Like a Girl”, the Financial editor and writer LouAnn Lofton has studied and compared the habits and temperament of Warren Buffet to that of Women and concluded that Like women, Buffet is also very calm, has a longer-term outlook, does more research, trades less and remains steady under pressure. And to this claim Buffet also pleads guilty. Then why this reputation? The major reason behind the reputation of women as bad investors is that until recently, social conditions and mindsets had side-lined women from being active investors and taking investment decisions. Even if they had been actively involved in financial discussions, the final decision would have usually been made by male members. But with the increase in female literacy rate and employment ratio, a greater number of women is joining the work-force. And now most working women have their own bank accounts, many are actively investing in equity and now playing an equal role in the family’s buying, saving and investing decisions and considering the pace at which this change is happening, it has become very crucial for women to be proactive in learning and understanding how finance works. It has become very important to get started as early as possible because of following reasons: •
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In India women are generally younger than their husbands and since life expectancy of women is also more as compared to men, in most cases women outlive their husbands by few years. So, if women are already managing their finances in spite of being totally dependent on their partners, it wouldn’t be a challenge for them at the later stage. With the rise of divorce rate in India, women should consider their future financial security and be prepared for such eventualities.
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Leaving their jobs to manage their children and home is a common practice for women in India. So, in case of any kind of adverse situations, with proper investment and insurance, starting everything all over again would be a smooth process.
There are multiple incentives and schemes for women investors in India. Some of them are: • To cater specifically to women’s needs, there are various life insurance premium schemes providing premium waiver to women like ICICI’s Pru term Insurance Plan, Women Insurance Plans by HDFC life, Smart Women Advantage by SBI and so on. • Women can also opt for a critical illness policy along with health insurance which covers women-specific disease like breast cancer, ovarian cancer etc. • Under Section 6 of The Married Women’s Property Act, women can protect their as well as their children’s financial interests following the demise of the husband. • Many States as well as banks offer tax benefits, lower stamp duties and easier and discounted home loans for women. Also, some of the best investment options for Indian women are: Kisan Vikas Patra is a feasible and attractive option for investment for women as it offers a profitable interest rate of 7.6% and on maturity the principal amount gets doubled in short period of time. Public Provident Fund is one of the most popular Investment plans in India because of its interest rate, tenure and flexibility and it also provides tax benefits. Employees’ Provident Fund is very popular among working women as according to Govt. women employees will have to contribute only 8% instead of 12% for the first 3 years. According to section 80C of Income Tax Act, the annual contribution of up to 1.5 lakhs towards EPF is free from tax. National Savings Certificate offers profitable Interest rate of 8% and investors are not allowed to withdraw the amount before maturity. So, for working women this scheme helps save money for a specific time period and also earn good interest on a regular basis. In conclusion I would like to say that there are many such Investment Options like Post-office Time Deposit Scheme and Monthly Income Scheme, Bank Fixed Deposits, Mutual Funds, Real Estate, Gold offered by Banks, NBFCs and Post-offices to provide women the required support and advantageous results while Investing. And there are women like Vani Kola, Varsha Tagare, Padmaja Ruparel and many more, who are already playing a very dynamic role in activities that were once considered the preserve of men. So, women just have to be active, do some research and ensure to read the policy terms well before opting for one. And let’s break the stereotype that Women can’t handle money. They certainly can!
Article submitted by- Ritwit Singh (PGDM: 20-22) Back to table of content 9|Page
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4. The World’s Most Expensive Apple Don’t worry, I am not talking about some jewellery or some exotic fruit. I am talking about the apple that over 100 million people in the USA alone, carry around in their pockets. Yes, you are right, tech giant Apple inc. is the center of focus here. I will not bore you with the history of the company. For that, we have millions of documentaries, biographies and Hollywood movies about none other than Steve Jobs. We will look into some things that have happened in the recent years. The COVID-19 pandemic had severe effects on most of the economies, industries and of course companies. But as it appears some companies earned big bucks during these desperate times. Tech companies like Apple, Facebook, Google and Amazon have seen their shares prices soar like anything. And our company in focus is probably the best at this game. Apple market capitalization touched 2 Trillion Dollars in August 2020. It is the first one to do so. This is the story of how Apple became the most valued publicly traded company in the World.
Source: CNBC.com
Don’t be fooled into thinking that Apple has sold so many iPhones. Although, during these unprecedented times chances are that you may be reading this article or attending online classes using any of the Apple products. There is no doubt that the great Steve Jobs laid a strong foundation for Apple but recent happenings are the real reasons for such high worth. In August 2018, Tim Cook led Apple Inc.’s market cap had crossed 1 trillion dollars. Cook who had succeeded Jobs was proving his critics wrong. “We’re thrilled to report Apple’s best June quarter ever, and our fourth consecutive quarter of double-digit revenue growth,” said Tim Cook on 31st July 2018. Apple’s strong results were driven by sales of iPhone, services and wearables. In the following September, Apple launched the new iPhone with high expectations. Contrary to that, they missed their sales targets for that year.
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11 One of the reasons for the failure was the escalating tensions between US and China. As a result, its share price felt the heat and started following downward trend as seen below. Apple lost hundreds of billion dollars that year due to share price depreciation.
Source: Macrotrends.net
As you may have noticed in the graph there is surge in share price in 2019. So, what may have happened that convinced investors to pour money into this company? Here is the answer, Apple launched Apple TV+, Apple News+, Apple card and Apple Arcade. With these, Apple was no longer a company which was just into gadgets but it had entered into services linked to those gadgets. Apple has also not shied away from buying back huge quantities of its shares, further driving up the share price and strengthening the faith of investors in the company. You can check the past record of the same in the graph be:
Source: www.aboveavalon.com Back to table of content 11 | P a g e
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Tim Cook kicks off Apple’s March 2019 event. Now do you think that this is the end of the story? I am afraid not. You may have noticed a dip in the above graph in early 2020. Can guess what was that all about? Sure, you know what I am talking about. I am talking about COVID-19 pandemic. Just like any other company, Apple’s share price spiraled down at the start of the pandemic. As you may know the novel corona virus originated from China’s Wuhan province. Can think of anything else that is made in China? iPhones. Taiwanese companies like Hon Hai Foxconn and Wistron which play pivotal role in the manufacturing and supply chain operations of Apple products have their operations in China. Also, we cannot miss the rising tensions between US and China with trade tariffs and trade deficits. If these was not enough, “Technology companies such as Google, Facebook, Amazon, and Apple have been under the radar of governments in many countries for being big spenders and trying to steamroll competition by either buying them or pushing other vendors to avoid working with their competitors.” – Indian Express. Apple is facing antitrust issues in European countries as well as back at home, in the US. Going back the COVID-19 case, the need for use of technology was now more than ever. Employees needed laptops and tablets to work from home, students had to rely on the same to attend classes or answer exams from home. The physical presence was now replaced by virtual applications. Gyms and theatres were closed. Millions were seating at home idle or without jobs. There was a desperate need of online entertainment, upskilling thru online mode and assistance in various activities. People had started to buy/subscribe to more Apple and other tech company products and services. All these contributed to Apple’s growth in the second half of the pandemic. On July 30, Apple posted their quarterly results. It showed a revenue increase of 11% from yearago quarter. “In uncertain times, this performance is a testament to the important role our products play in our customers lives and to Apple’s relentless innovation.”- Tim Cook.
Article submitted by- Vaikunth Kossambe (PGDM: 20-22) Back to table of content 12 | P a g e
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5. Agri-Fintech “Harder the problem simpler the solution” Inspiring from the old saying Agri-fintech is rising. What is Agri-Fintech? It means enabling farmers financially by using financial technology to use the innovation and technological upgradation in agriculture to increase efficiency and yield. Today investors are seeing it as a most profitable investment because at the end of the day human being was fought, is fighting and will fight for that food only. By 2050 world population will reach 9 billion (900 crores), to cater the food for all and also to overcome its own issues within the agricultural sector, it has to adapt new methods, for that it need support both financial and technological sectors. Recent study depicts that farmer suicides are because of loan burden, no minimum support price, lack of knowledge on original or genetically modified seeds, climatic conditions, these are the areas currently addressing by the Agri-fintech startups like giving tools ,equipment on rent where in earlier days some farmers aggregate and buy the required equipment from companies but maintenance will be a burden this burden is laid off by this fin-tech startups. What made these closer to farmers? ✓ No Hidden costs ✓ Low interest rates ✓ No Land mortgages ✓ Less time process & Minimal Documentation ✓ Easy EMIs A live example is NaPanta a startup in Hyderabad providing various services like renting equipment, crop insurance, real time data on crop expenditure to reduce cost etc.;
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Likewise, there are many other companies into this Agri fintech provide finance for solar equipment, connecting buyers crop insurance, real time data etc.; Mandi Trades connecting the farmers with suitable buyers within 2 minutes, Jai Kisan which raised 30 crores from Institutional investors, Farmart. Why globally investors are luring to invest? • The ability to analyze the risk in rural areas is different from urban areas, so these Agri-fintech companies are analyzing the risk in a far better way • Mitigating the risk is another prime factor, i.e.; these companies are able to analyze and asses properly the ability to repay and willing ness to pay loan. • For instance in an interview Jai Kisan co-founder said that “it isn’t easy to recover if the people in rural areas aren’t willing to pay ,so we do Psychometric lending analysis to assess the willingness to repay like health care ,sanitation ,education ,how they are treating their girl child compared to boy child , whether buying a LED tv is more important or building a toilet is more important. • For example, in an area La salle Gao where sending a daughter to college after 12 th grade doesn’t mean much, where as in another area goatee in which tribal farmers live, if a farmer sends a daughter to school after 7th grade means he is extremely progressive and we assess credit score like that depending upon different variables.” That’s why currently investors globally seeing this as prominent investment which in turn boosting the financial markets and this pandemic has helped these fin techs to tap the migrant people who have reached their home town and many of them indulged into the agriculture activities.
These fintech companies will be a great aid in financial inclusion targeted by RBI for 2020-2025 to infuse basic knowledge into unbanked people and also increased job opportunities for many skilled people. Challenges Road ahead: ➢ Lack of digital knowledge in farmers ➢ Political factors state wise and also Unprecedented situation due to Farmer Bill ➢ Taping large institutional investors ➢ Trust building among farmers ➢ Low bandwidth in rural areas Hoping these small obstacles will be over ridden by these companies and pave a new way to revive economy post pandemic. Back to table of content 14 | P a g e
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INSURE-TECH Wearables can turn the insurance sector future into never before , we already witnessing how AI(artificial intelligence) is being used in insurance sector by companies like MANTRA LABS so wearables which track day to day fitness and other activities of a person will assist insurance companies to chart down person specific insurance schemes etc. but building trust will be the key for this type of insurance because of privacy of data is daily floating in the news since internet banking is introduced.
INNOVATION BITE SOUND-WAVE-BASED DIGITAL PAYMENTS Ultrasound is a sound wave with a frequency higher than the upper audible limit of human hearing. It is predominantly used in medical imaging, as detecting objects and non-destructive testing. Ultrasound waves can be used to process payments at retail outlets or physical points of sale. By using built in speaker in mobile devices these sound waves can be transmitted to a receiver, which uses a standard microphone to receive the waves. These sound waves carry in encryption transaction details such as payment account number, transaction amount, merchant name, and this is a contactless payment method and can be done using a mobile phone. It does not require an internet connection or Bluetooth hardware. Software needs to be installed on a mobile device that communicates (using sound waves) with similar software or a tag at a merchant’s outlet. The rest of the payment processing is similar to existing industry standards.
Article submitted by- Vishnu Teja (PGDM BIFS: 20-22) Back to table of content 15 | P a g e
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6. Digital Finance Trends to look for in 2022 Finance is undeniably one of those vast realms which has been penetrated by technology in a significant manner. With this breakthrough, it is expected to bring about multiple relevant alterations in the upcoming years too. According to one of the latest reports published by World Economic Forum, the arena of digital finance is projected to go through a massive transformation during 2020-22. Major findings that contribute to such prediction are the ones relating to the rising demand for personalization of financial services. Multiple researches conducted across the world converge at a common point where people are looking for enhanced experience pertaining to availing financial products and services. Additionally, the current pandemic situation worldwide has only aggravated the process of digital adaption. With massive responses from surveys, the need for innovations in the digital finance sector has been even more profound. In this regard, here are 7 prominent trends in digital finance that will catch everyone’s attention in the upcoming years. 1. Robotic Process Automation One of the most significant advancements in FinTech can be seen through RPA – a tool that is not only cost-effective and scalable, but also easier in implementation. Right form doing away with repetitive tasks to carrying out functions such as indexing of turnarounds, RPA has come a long way and has an even longer way to go further. 2. Touchless transactions Digital payments and online transactions are routine now. With the ease of making payments at the comfort of one’s home, these touchless digital transactions have been paving the way for advanced features in the same. It is expected that more than 55% of the consumers are likely to benefit from this move. 3. Big data availability Another major development in the financial sector is the evolution of big data. With this, researchers and finance enthusiasts have been working on to revolutionize the sector with technology. Areas like fraud detection, management of risk and segmentation of consumers are some of the key arenas that can be tapped onto with big data significantly. 4. AI enabled services Decision making has always been a key aspect in every sector and the financial sector is no exception. With Artificial intelligence and machine learning, even complex datasets can be read with ease as they help in drawing useful insights from the same. Later, based on these information, relevant decision can be made relating to the BFSI sector. Back to table of content 16 | P a g e
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5. Blockchain enabled solutions The reason that blockchain faces multiple challenges lies in its untapped potential, which makes even the biggest players in the market skeptical. However, it is expected that the penetration will be massive in these years and by 2022, the entire BFSI segment will witness a new face of banking and finance functioning. 6. Co-browsing A feature less heard of, but immensely beneficial in the finance domain is shared browsing. While there might be multiple instances of issues and problems pertaining to the banking activities, cobrowsing can save the burden of redressing the grievance of customers through specific representatives. 7. More technology Other technological advancements will include cloud computing, where financial institutions seek cloud servers that are either public or hybrid cloud to store data. Functional areas like consumer payments, financial statements, credit scores are primarily dealt using cloud. 8. Rising Regtech Data sharing is a prime concern among consumers, thereby leading to reluctancy in accepting services of many third-party service providers. However, in the upcoming years, several regulation technologies companies or Regtech companies will come up. They will investigate the data compliance, KYC, anti-money laundering activities, etc. and get them resolved. Altogether, the digital space is likely to be remarkably disrupted in the upcoming years. Technology is such a vast area, which is only dependent on advancements and once there is breakthrough in a specific area, it is less likely to witness a downfall from the same. Preparing for a Digital Future Innovations are multiple and the digital space is extensively influenced by such improvisations. Nevertheless, preparing the common mass to be at ease with such developments is the need of the hour. Unless they can adapt the advancements and derive the full potential of the features, any change is futile. Therefore, to make the finance ecosystem have a global reach of multiple service providers and service takers, it is essential that they see the changes in a favourable manner. Additionally, there have been models that provide on-demand services and the finance sector is consistently making changes to bring in and enhance the same. Out of all, insurance and other financial products are being extended to consumers with such on-demand features. Finally, these changes are few remarkable disruptions that are assumed to make their way into 2022. However, the list does not end here as there might be further additions which are yet to be developed. In the fintech sector. Article submitted by- Jeenia Bhadra (PGDM BIFS: 20-22) Back to table of content 17 | P a g e
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