How digital innovations can empower the personal finance market

The Covid-19 pandemic that swept the world in 2020 was a harsh reality and many suffered heavy losses. Not only was it human loss, but investments were also brought down. The pandemic also brought a sense of realization as to why investing and saving are vital for the future. Personal finance is about meeting your personal financial goals, which can be anything, either for retirement or buying a house or even a car. The financial goals can be both short-term and long-term. Some aspects of personal finance depend on income generation, spending, savings investment, and savings protection.

Digital financing is currently booming. The pandemic led to a surge in digital finance, with many fintech and neo-banks entering the picture. There has been a massive increase in demand for financial services such as loans, savings and investments in fintech companies. While the spread of the pandemic has slowed due to the rapid vaccination campaign, the uptick in digital finance and other fintech innovations to meet financial needs has remained resilient. Not only that, digital innovations led to doorstep banking services. After that, digital transactions have seen a sharp surge.

According to RBI data, the share of digital transactions in the total volume of retail cashless payments rose to 99.3% in 2021-22, up from 98.8% in the previous year.

In its May 27 statement data, RBI said, “The growth in digital payments has been driven by the increased availability of acceptance infrastructure, which has seen significant growth over the year, benefiting from the operationalization of the Payments Infrastructure Development Fund (PIDF). “

There are many mediums for personal finance. One can invest in market-related instruments or opt for traditional schemes such as fixed deposits or small savings plans.

Sankalp Mathur, Co-Founder and CRO at Niro, said: “Recently, particularly with the rise of the pandemic, there has been an increase in the number of people who have turned to digital finance and other fintech innovations to meet their financial needs. “

According to Mathur, this fintech revolution has seen an increasing involvement of both public and private forces to educate consumers, create easy-to-use, differentiated fintech products and make existing financial services digital.

“These efforts have become essential to ensure consumers and the general public can securely access financial services from the comfort of their own homes without having to jeopardize their time, efforts or financial health,” added Mathur.

Niro co-founder shares three methods to empower personal finance in India:

1. Increased financial literacy for the masses

Mathur said: “One of the most important steps to strengthen PF in India is to educate the masses. Our educational institutions are plagued with a curriculum that is not particularly relevant to most. Hardly anyone uses geometry in their daily lives, while most people routinely have to make financial decisions and unfortunately are not well equipped to do so.”

A large number of people do not understand the concept of inflation and thousands lose money day trading or fall victim to investment scams. Additionally, there is a major public misconception about debt and credit that needs to be addressed. Therefore, educational advice related to personal finance is vital today, he added.

2. Tailored investments and wealth management

Investing and personal wealth management are other areas where a lot of digital innovation has taken place. The sheer basis for any individual is to ensure they have an investment plan in place and have the discipline to allocate capital according to the plan on a regular basis. There are now a variety of internet platforms that allow individuals to choose (or take a SIP) from a variety of funds depending on their risk appetite and investment horizon.

There are also interesting platforms that allow a person to create a basket of investments for a specific period of time that will minimize risk and maximize returns. The posting of time deposits, stock trading, etc. has been greatly simplified by the availability of online portals for banks and the dematerialization of stocks.

Now investing in FDs is as easy as a few clicks in your internet banking from the comfort of your own home. You don’t even have to go to a bank, just collect your check or savings book, or open a bank account at your home. In addition, you can invest in numerous systems or submit your income tax return electronically in just a few steps.

“However, I believe there is much more room for innovation in this area. We need advanced technologies like AI and ML to personalize investing and financial wellbeing for individuals based on their portfolio size and financial health with accuracy,” added Mathur.

3. Greater sophistication in calculating insurance premiums

With advances in technology allowing daily tracking of an individual’s health with a fitness band, the current way of calculating insurance premiums seems fairly orthodox. There are companies outside the Indian subcontinent that have adopted advanced premium calculation models and are increasingly successful with this approach.

Mathur added, “This is another form of digital innovation that has the potential to empower and revolutionize the personal finance market in India.”

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