The Future of Fintech: What Lies Ahead in 2025?

Speaker A: Hi everyone, and welcome to the Credex podcast series, Fintech X, where we deep dive into the world of innovation, technology and finance. I'm Meghna Gupta, product lead at Credex, and I'm excited to be your moderator for today's discussion. Today we will be discussing on the future of fintech and what lies ahead in 2025. Fintech has undoubtedly been a driving force of change in the global economy, reshaping how we manage, spend, save and invest on invest our money. In 2024, we witnessed some significant shifts, like advancements in AI blockchain applications becoming mainstream and an increasingly digital first approach adopted by a lot of financial services in India as well as across the globe. As we step into 2025, what does the future hold for this dynamic industry? What trends will dominate and how will fintech adapt to meet new challenges and opportunities? So today's episode is going to be all about this and a lot more. Um, we will start by reflecting on the key milestones of 2024 and then we will, um, discuss some probable trends in 2025 around decentralized finance, quantum computing and artificial, um, intelligence. Beyond that, we will also talk about where the money is flowing, the hottest areas, attracting venture capital and private equity funding in 2025, and how fintech companies are diversifying their revenue streams to stay ahead. And in the end, uh, we will wrap up with some predictions and trends to watch for in the immediate future as fintech continues to redefine the future of finance. Now it's my pleasure to introduce our esteemed panelists who bring deep expertise and unique perspectives to this discussion. So we have with us Mr. Kunal Nandwani, who is the co founder and CEO of you trade solutions, uh, trailblazing fintech company driving innovation in trading through AI and ILGOT algorithmic technologies. We also have Mr. Carlin Presto, who is the CTO of Mobileware Technologies, now known as 86400, a leader in delivering advanced digital payment solutions for the BFSI sector. A very warm welcome to both of you to Fintech X, which is powered by Credex. Without further delay, let's, um, dive into today's discussion. I would like to invite Mr. Kunal Nandwani first to share his insights on the current fintech landscape and provide a brief recap of the major advancements we have witnessed in 2024.

Speaker B: Hi. Um, so I think, um, worth recapping. First, what is FinTech? Um, the two largest segments of Fintech are payments and lending. Uh, payments, uh, as we've Seen especially in Indian context with PAYTM leading the way and then over time so many players coming with the UPI and other payment gateways. The digital wallet and online payments have went through the roof in the last one to two decades, uh a decade or so. So uh Payments is one of the large large segments of the fintech and the second largest is the lending where the banks are fairly conservative in lending to only credit worthy customers whereas the demand for credit is very high across the country uh from tier 2, tier 3 cities, from non credit worthy customers who don't have records or fixed salaries etc but they do also need some money for different goals and they do not get serviced by the banks. So they would go to typically in the past to unorganized lending market where they would pay interests as high as 3 to 4% per month. And that market has become digital as well uh which has been the fintech drive of India. After these payments and uh lending spaces then there are capital markets in which how you trade in different stock exchanges, uh option trading has become a big theme in the last few years. Um and then insurance aggregators like Phonepe has gotten into insurance aggregation. So these are primarily what defines a fintech in India and worldwide it's a similar story. Um I think these are the broad segments at a very high level. Now in these what we have seen is of course in time regulation has become clearer and clearer like RBI has uh regulated uh very reasonably and ah fairly for a country like India that fintech lending players uh cannot just use the social data of their customers and then uh for the lack of a better word harass them if they don't pay. So there had been issues there. So the uh fintech companies have had to go through a full RBI uh led uh process in terms of compliance and approvals that has been a big change. Payments has been ever evolving um it is the largest well established segment, um all the businesses e commerce, uh thanks to digitization and variety of other reasons

Speaker A: uh

Speaker B: have gone to digital payments and there has been a large segment that has grown for everyone. Um FNO trading has become a big thing in the last few years. So players like PhonePe, Pay, PayTM, PayTM money besides Zerodhas and grow of the world uh have moved from broking to now eventually trying to possibly get into wealth management. Um that segment has grown but the 2, 3 major changes in the last year if we talk about 2024 had been around number one would be AI so artificial intelligence. Thanks to ChatGPT since its launch in November 2022 has become, has tried to democratize intelligence very widely at a very low cost. Um, so I'm just talking 2024, 2025. January has been a very different month, uh, because of deep SEQ and other things that are coming in, which I hope will cover in the predictions and currently what's going on. But in 2024, with AI, the fraud detection, uh, uh, within the financial institutions, fraud detection, customer customization journeys, m, uh interaction, the chatbots, uh, the interface between any customer and their financial institution has been digitized and made intelligent thanks to AI. So AI has started to play a big role there. Um, and AI will continue to play probably the largest role in my mind. Um, AI has been a big thing. The second big thing which has come back because of the Donald Trump election, uh, selection as a US President, uh, has been cryptos. So Donald Trump has been very pro cryptos, uh, so to say. And um, I believe he's launching his own coin. And even before he was elected he was uh, campaigning, uh, for all the crypto holders and uh, people that, you know, he would make it legal and he would promoted. So that has clearly reflected in the price of Bitcoin and many other cryptocurrencies. Though whether there is any real use case with cryptos or not, that is a separate matter altogether. But at least the world is believing in it and its value is going up because everyone is buying. So cryptos have come back into the space and lot of attempts to use crypto and technologies behind crypto like blockchain and others may come back and they may get, they may attract some seed capital to build, uh, more into those technologies using and trying to solve any world problems which they are calling Web3 now.

Speaker A: So that is, yeah, on, on this point, which is a very interesting point that you have raised, uh, with the Donald Trump coming back into power and his emphasis on crypto. So where do you see, um, India in terms of, um, you know, adoption or the regulatory m, uh, you know, blocks that we have for crypto to come in India in. In its full sense. I mean, what. What are your thoughts on that?

Speaker B: So honestly, what I'll have to answer with first is my view on cryptos, which is that at the end of the day, uh, what is the core idea for Bitcoin or which was the first crypto? The core idea was that you want to have a system of payments and trust built in communities which could be global, borderless, and they will not depend upon any central, uh, system, central organization, centrally elected leaders. So crypto had come about when the trust in banking was lost in 2008, when Lehman Brothers had gone down. Uh, so 2009 is when Bitcoin was conceived. Um, now in principle, if crypto's use cases digital payments, frankly, India already has it. India's way ahead. Uh, and probably similar levels of China where the digital payments are just the norm. It's in your phone, it's in your variable devices, it's everywhere. So digital payment problem India does not have. So India in principle does not need cryptos. The second feature of crypto is that it could work without any centralization. So there should be nobody in the middle, no central bank governor, no president, no prime minister ever determining that whether this note is valid or not, whether this currency is right or not, whether it should be taxed or not, that is the whole idea of a currency like Bitcoin. But unfortunately, in time, the way cryptos have evolved, they have evolved as with the decentralization as a core idea, but they have implemented it in a way that it has become as centralized as it gets today. If you think about Ethereum, one other thing about currencies is any currency, any money that it has to be limited in supply. Uh, if you look at Ethereum, very few people know that this is the second largest known cryptocurrency and used cryptocurrency. Ethereum has unlimited supply. Do you know Vitalik Buterin can print as much Ether as he wants? Second, it is as centralized as it gets. Majority of the crypto holdings or crypto trading or investing happens through only a handful of crypto exchanges or crypto owners. Bitcoin, I mean top 10 guys own more Bitcoin than all the others combined. So it is reasonably getting centralized more and more. So frankly, the decentralization concept has disappeared over time. But just the idea that it is interesting, it is some technology, it has just become a fancy word that everyone uses. So I personally am not a, uh, believer that cryptos are actually solving a problem that exists. And whatever they're solving, they're introducing other problems with. So, uh, as far as India is concerned, uh, so just think about this. If cryptos were decentralized, why should a crypto's value go up just because Donald Trump says it's a good thing or will adopt? That's the worst thing. You know, it is as centralized as it gets. He says it's good. It goes from 60,000 to 100,000. This is what happened in the last couple of months, right? Three months. Uh, so India, frankly Indian government, I believe is not comfortable letting a decentralized currency or cryptos take over. So they're letting it play by. They're not regulating it out, they're not making it, let's say, uh, uh, they're not calling it illegal, but there's a lot of uh, RBA regulations like Foreign Exchange Management Act, FEMA applies to it. Yeah, they are just letting it be in the gray area for the last seven, eight years. They've talked about it many times, but they've not done anything with it. I don't think India needs cryptos for any reason at all. Um, and reality is, in the world, how many people you know, who are using cryptos to make payments? Very few. Everyone is just buying it, holding it and hoping to sell it to someone at, at a higher price. So yeah, India is not. India's in the. India is not, uh, encouraging it, not discouraging it, letting it be, uh, it's around, it's real. Many people believe in it. Where, um, it goes, we'll just see. But uh, India is fairly digital in terms of payment, so it in principle, maybe it doesn't need it at all. So this is my humble opinion. Yeah, Kalin, you were saying? I'm sorry.

Speaker C: So Indians, uh, to extend on what you are saying, Indians are looking as crypto as an investment that they can buy it, say for x and make 10x or thousand x then mint money off it. And uh, um, while, uh, certain thoughts of yours on crypto are right, but RBI is definitely against crypto. That's why they have come up with their own cbdc, which is still within the Indian ecosystem. And uh, the last budget did have a 30% tax on any profit you make from digital assets. And that they kept it a little bit gray that when you say digital assets, they were basically referring to crypto. Now you made an interesting point about why should crypto go up if Donald Trump has come into power or uh, supports crypto. That is a very good point because if it was decentralized, it should not matter who is in power. Um, the fundamental reason for that is most of the crypto exchanges which have the stronghold in the world are in us basically. And they try to cut the wings of China. And now with deep sea coming, you saw the impact on even ChatGPT. So anybody else in the world who comes up with a cryptocurrency or anything which is um, going to compete with us, it's a problem for us. And that is the way it has been dealt with currently. Um, regarding my thoughts on last year Digital payments has been um, spoon in India. Um, it's thanks to basically RBI and NPCIS initiatives like UPI Etc. Taking it global has uh, helped a lot also because right now UPI is in markets like UAE, France, Singapore, etc. There is also a constant push to get everything digital. Uh, if you see um, six months back you could still do your credit card payments via apps like CRED and all which is to directly do the payments for your credit cards. Now everything has come on the Bharat Bill pay system so just slowly getting everything on the digital rails so that um, there is more adoption. It's easy to use from any apps, maybe phone Pay, Google Pay, etc. Um, but as digital payments are going up, uh, the frauds also are increasing. That is where AI and ML will play a major role in fraud detection and um, basically uh, due diligence of underwriting or customer experiences etc. ChatBots also has come up a lot in the past uh, year. There are a lot of uh, various use cases which many fintechs, um, even NPC and RBI trying with blockchain also. But uh, the sandbox environments that they have brought up are uh, really helping in that. So this would be kind of what digital payments is like in the past 2024 basically.

Speaker A: Yeah. So uh, that was a very interesting conversation we just had on some of the trends in the last year and uh, how cryptocurrency is um, uh, you know, being seen across the world and what uh, are, what is its future in India? So uh, let's talk about um, what are the biggest regulatory challenges for fintech companies that we are facing, all of us are facing right now as well as we uh, think that might come in, in the coming years as well because regulatory challenges are real for us. And uh, uh, you know we, we are in a situation where we need to find that delicate balance between meeting the compliance and uh, you know, um, improving the business, um, on the other side. So, so what are your thoughts on that?

Speaker B: Colin, you want to go first?

Speaker C: Yeah, sure. So see regulation is big. Um, I think it has evolved from 2015, 16 when digital payments uh kicked in with UPI because we went mobile first because the Indian consumer always knew that uh, they could use their account within their own mobile banking. So all the risk, all the control was with the bank. So example you had an account from Bank A, you are using Bank A's mobile number. So if there is any issue you face or any problem you face in the transaction, you would go to your bank and you would Get a resolution now with digital payments and everything becoming mobile first. Okay so the risks are higher because you are now trusting a third party app, ah, like a phone pay, Google Pay credit to protect your data. That can be your mobile number, it can be your bank account, you have um, your transaction history, um, where are you paying, where are you going? Because location services also are captured. So with all this the risks are higher and that is where the compliance and regulatory has tightened the screws multifold. Um we started with protecting PII data, then we went into not capturing PII data, then we went into encryption of data, we went into ways of encrypting data, protecting data and the compliance keeps getting stronger. Um, what comes from RBI and NPCI to the banks gets directly transferred to the fintechs and the fintechs have to also comply with the regulatory. So that brings in uh, various frameworks like PCI, DSS, ISO 27k being mandated by banks to findex that they need to follow that. You need to have a SOC team, an siem, a dlp, nlp, various tech platforms to make sure that your systems are robust and, and secure. And when you fall into the framework you automatically start giving that kind of service to your customers because security becomes your primary uh focus by delivering customer experience also. And we can all, with all this compliance then we fintechs try to use AI ML blockchain to figure out how to make the whole system more robust that even if somebody gets a door in, cannot manipulate what has happened in the system.

Speaker B: Yeah, I think um, besides this generally obviously regulators can make or break uh any fintech businesses and business models. Uh as an example, um, in 2016 or 17 I think PayTM was the key largest payment wallet provider and they had the largest merchant network. But just because RBI NPCI was able to launch UPI payments business model, the defensibility this is of their model was completely taken away overnight. Uh in some regulatory changes which have happened in the couple, in the last couple of years for the fintechs that are in the digital lending space, lot of them were taken off app store, their apps were taken offline, their apps were just taken out. Uh, so they had to fight, they had to take uh, NBFC partnerships and approval from Google and many other things like that. Uh, of course there are always bad actors in the play but how you regulate it, how much you care for the continuity of existing businesses versus just regulating it to make your life simpler is a large unpredictable challenge all the fintechs face. I'm talking this very generically I don't think there's any specific point to be discussed as such. But beyond what Carlin said, I think the regulators like rbi, Sebi and some others hold the key to a lot of business potentials and models going forward and they would keep changing around. Data privacy would be a big one. Cyber security would be a larger one. And the biggest thing I think, uh, which very few people are yet covering

Speaker C: a lot coming to the picture, uh, sorry, DPDP would come into the picture very soon.

Speaker B: Yeah, yeah, the, the, the, the biggest thing I think which would become more and more scary is the AI led frauds. While on one side we are using AI to detect frauds possibly, but on the other side with smarter uh, and smarter AIs AI agenting, uh, you could really specialize in doing frauds also. So the cyber security is the biggest challenge I believe the fintechs would face and the regulators will have to really regulate very strictly. Uh, even today there are some regulations in place like in India, that if your data gets leaked or hacked you could be held liable for a large sums. I forget the exact act that's out there but uh, you are meant to protect the data which everyone, every fintech would, every responsible fintech would really do but they cannot, uh, they could give, get hacked away. Everyone gets hacked. I mean Aadhaar data has been public for a long time. Uh, so surely the cyber security challenges, especially in the world of where AI can do so much will become more and more prominent and will become in the forefront of the regulators decision making I think. Yeah. Over to you Meghna.

Speaker A: Yeah. So um, do you think that uh, uh, with all the technological advancement impacting the financial services domain, any traditional financial services company, uh, let's say the banks and the traditional NBFCs and all, they can afford to be just a financial services and not a fintech. So what I'm trying to say is that do you think the line between a finance company and a fintech company is, is blurring fast and most of the traditional uh, organizations are actually becoming fintechs only?

Speaker B: Yeah, I guess so. I mean every bank would have a website today. Every bank would have an online onboarding form of course, the onboarding form of onboarding process journey for a good uh, fintech company which is a fintech fir and no branches or physical infrastructure will be way more uh, stronger, faster, convenient for the user compared to any traditional bank's website and all. But all the banks have to deliver their services over, over technology layers also. So as an example, to put this in perspective, you know some of the APIs of the FinTech players make more money than a branch of a financial uh, institution or a bank. So an API. Yeah, I mean there are APIs you could have API calls for building your uh, business over Revolut, which is a digital bank in, in UK and Neox

Speaker C: is a good example. Yeah, yeah, completely a new bank where they're just leveraging a bank CPIs, um,

Speaker B: though you don't need to build the infrastructure anymore. And the best thing about the. Of course. So, so all to answer your question, all the financial institutions have to go digital for sure. But they will obviously go very slowly because they have more to lose than not. It is a classic example of think about Walmart versus Amazon because Amazon was digital only and digital first. They moved very fast and they grew very fast but Walmart would not do it just because they are so afraid of losing their revenue in the offline model. That's a traditional thinking. You know you are, when you are sitting in a Walmart office or today if you are sitting in a traditional bank, let's say uh, Punjab national bank, um, you know you are thinking that oh I have so many branches, I have so many people, I have so many customers. But how many bank managers actually care for customer service? How many of them want to save their customers time? How many of them don't want to uh, or want to service their customer even when they're on lunch? This is classic. And an API would work 24 by 7, 365 days, no holidays, nothing. Right. So why should a customer walk into a branch at all if you can make your all services, if not the key services online? Um, so I, I guess to answer your question, yes, the financial institutions will go digital but they'll do it very poorly as they're doing right now, most of them. And the fintechs will do it well because that's their core business, that's their only business. They understand API more than a bank's branch for sure.

Speaker A: So yeah, yeah. So just to follow up on this only. So um, Fintechs are clearly providing better customer experience. Experience, we all agree on that. Um, but how can they improve um, uh, you know, the trust that customers have on them as compared to what the customers have on a traditional financial services organization? Because I think if banks in today's age also can afford to not think about the customer experience that much, that means that there is something else that customer is looking at, uh, especially because it is about the money. So they, they want an institution, uh, with which their money is safe.

Speaker B: Right.

Speaker A: So how can FinTechs, you, uh, know, uh, get that kind of a trust from the customers?

Speaker B: Um, uh, I think I. Colin, let me try and end this in two minutes and then you can take on. Um, so Meghna, I think number one, you have to think about today's age of people who are banking and who have the money. Anybody who's 40, 50, 60, 70 years old is likely to have some savings, some money out of their jobs. And we are talking the top 5 to 10% of people of India who are, uh, let's say paying taxes, 5% or so.

Speaker C: Right.

Speaker B: So those guys who have money, they are in the ages of 40, 50, 60, they look at the life very differently because they grew up with these banks branches. They would know their father would know the branch manager or they would themselves know the branch managers who are their friends or neighbors or somebody. Right. So it's a mindset. They are used to that. But if you think about somebody who's 20 years old or who's 15 years old or 25, that person, the millennial, the Gen Z, the XYZ, whatever they're calling the new age people, kids, they just want digital. They have never seen a branch, they've never gone to a branch. They cannot understand how in a branch a manager could say it's a lunchtime, come back after two hours, you know, so they will never understand that they are so those guys, those guys, those kids, as they grow and they become, come into the money, they get more and more money by earning, by doing whatever they do, by gaming, by influencing, by whatever they do. They will not go to a branch. Those new account openings will happen more and more in digital banks, fintechs and so regulation permitting, um, but today the money is in the, the older, the older banks, the traditional banks are existing is because there is a large generation which has grown up on them, which is maybe hybrid at best, digital plus offline. And they're okay with going to branch, sometimes they're okay paying an online payment through Google Pay or something. Uh, but that's the reason why they both exist as of now, in 10 years from now, 20 years from now, the world would look very different. Go on.

Speaker C: Yeah. So to just what Kunal said is absolutely right. The older generation does not look at the brand bank name. They look at the person at the counter, the relationship they have for them. That person is servicing them. Now, regarding the trust factor, what you mentioned about fintechs, when, when UPI went live and there was Beam I think so. Beam was the government app which everybody jumped on it because it was government app and everything would be secure. PhonePe had not even released in the market at that time. So how trust gets created is by adoption and by giving customer experience over time. Everybody, we all use applications. If there is a bad experience or your money is stuck or you're not able to do a transaction, most of us will just move on from that app and move to our next step. So that is where you lose trust. So the consistent customer experience, the support, the feedback mechanisms, the callbacks that you get, that is what builds trust. And that is why we are all using not banking apps, we're using third party apps like a Google pay phone pay or a bhim maybe for cash back but also because the experience is better. You can have, you might be paying from a uh, HDFC account. You will have a problem with the app, you will contact PhonePe, you will not contact HDFC and PhonePe support will service you much better than HDFC. So where we were talking about banks and fintech plans, the banks are still enabling fintechs and certain banks like the big banks know that they have to still concentrate on their core business. So they are working on enabling digital uh, part. So the APIs, the use cases, the compliance etc. From an API point of view, their core functionality they want to just expose that is where the business is concentrating on digital. And there are other departments which concentrate uh, on the normal banking things of fdrd, loans, etc, which will still continue because that is what uh, shows RBI your stability that you have um, float in your account etc. And that is what is the goal or a target given to a branch manager to open accounts and get funds in your account. Nobody is happy when somebody is using your accounts to send money out. Everybody wants money in. So the psyche of a branch manager of uh, uh, people servicing at the branch is just customer retention and selling more products to the customer. Whereas when a fintech is there it's about enabling use cases, making digital payments simple. Uh, how do I get in more services like insurance? Now with the account aggregator framework, can I cross sell to him? If he has got so much money in X account and he's getting a better rate of interest in Y account, can I tell him that you move money here? So that is where fintechs and banks have to work together. I don't think a bank will ever completely start their own fintech leg because then you will on one side want to uh, go around the compliance, whereas As a banking entity you have to be within the compliance. That is what happened to PAYTM also because they went from a wallet to a payment bank and that is when they came into the compliance part is where uh, they started having some problems.

Speaker A: Yeah, totally agree. Okay, so um, since it's, it's very uh, interesting discussion going on I wish we had more time but in the interest of time let's uh, discuss a couple of other uh, areas also. Um, so what do you think? Um, um you know which sectors within fintech are going to attract the most uh investor interest and what are some of the different revenue streams that the fintech companies? Because we see that in most of the models be it payment aggregator or in lending or in exchange, um, uh platforms the margins ah are pretty low for the fintech players. So how can they uh, improve their revenue streams and get more um, uh investor interest?

Speaker C: Um, I think micro lending would be a space that a lot of VCs and PEs are looking at currently. If you see UPI also initially was only on banking. Now they brought in credit card, they brought in credit lines which is also pushing banks to get a uh, Los system etc. If they do not have it in place. Regarding monetization, people are moving from the one time they are more open to subscription based per API hit, there are slabs, etc. They are looking at white label solutions with cloud being the center of it. After Covid scalability was a key and RBI also have come out with their directions for cloud. Um, banks are more open to you run the solution on your system and um, on your cloud basically and charge me per API hit or my usage so that way they do not burn unless uh use cases work.

Speaker B: Um, I think besides this maybe the AI led, AI led business models. So think of uh, one thing AI has done uh, since ChatGPT and the last couple of years especially is that they have democratized intelligence. You can have a chatbot today or a conversational AI which is smarter than the smartest human on the planet. They can analyze more data, they can respond very quickly. Uh, being digital they don't get tired, they can do anything. So frankly lot of the things for which banks and even fintechs were paying a lot to their resources to let's say software developers or let's say marketeers or anybody else. Just think about how the AI is going to take away your job and make it even more optimal at a very low cost. So if you needed five people in marketing department now you're going to need maybe one using five AI chatbots, let's say from ChatGPT, deep seq to whatever. So one thing is that the intelligence led by AI will create a lot of opportunities of building the next fintech AI of sorts, much cheaper, much faster, much better. All the functions within the fintech whatever they are doing, whether it's lending, risk assessment, recovery, customer journey, all of that would be AI led and done much better, much better and faster. And this is what will attract most capital. Also I think uh, if you don't have the. So until now for the last five to seven years all the AI, all the uh, tech companies pitches I had seen in fintech and beyond were all about that. We are digital and we use some AI and machine learning. But today that AI and machine learning has become real. Uh now its impact is visible to everyone because everyone has used now ChatGPT. So I think the disruption that AI brings at such a low cost, abundance of intelligence, democratization of intelligence available for every feature, every function, every process that a company needs to build is gonna drastically change everything. Uh, with AI Agent Inc. So I may have a um, software development team led by an AI driven by an AI agent or lots of agents working in it. A marketing team where there are lots of marketing agents etc which are now AI and not humans. That is where the time shift over the next few years will be. Starting this year the AI game will be the biggest including fintech.

Speaker A: Yeah, I mean I totally agree with both of you on this. Um so apart from AI, uh what are the technologies you think are going to define like let's say 2025 or 2026 for fintech?

Speaker C: Mhm. AI has to be one of the pillars currently I think so the with AI and uh, scale uh, you will have to see how we one comes up with a uh use case and fills a gap. I think so it will be together. I don't think so. It's only tech based. I think blockchain would be also top there because um, uh reconciliation is something which is a pain point in between banks and fintechs and NBFCs, uh across the board. So um, with AI and blockchain that problem can be solved and adoption will be the key because currently nobody moves unless it is given a green flag by a regulatory entity. Uh it's very difficult in the Indian space, the banking space and the fintechs to do something uh, without somebody's approval uh because it normally shot down fast even though it might be a good idea. So I think so. Um, there is a lot of Sandboxes by RBI etc, which they are doing some work on. Blockchain also AI like how Kunal said um would go ahead. But you also have to see the challenges AI brings in because at the end of the day somebody still needs to see that their AI is not embedded, something that might be pushing information somewhere else. So that is still a risk where uh, if you are sitting with some old bankers it's very difficult to convince them on something on those lines.

Speaker B: Yeah, um, I personally do not, um, if I may have a slightly different opinion, um, the blockchain use case has not proven to be useful anywhere in the world. It's been around for decades now, uh, over a decade I've been seeing it. And uh, again it's about decentralization but nobody truly decentralizes other than Bitcoin. Nobody else mines anybody else's currency or any use case. Rest of it. What it offers has existed as in shared databases for a long time in Oracles and SQLs of the world. Uh, but I think the only other thing I feel that may be a challenge as well as an opportunity is cybersecurity. As things get more and more digital intelligence gets more and more abundant. I think the cyber security will be a big threat uh, to lots of fintech players as well as their customers, security data etc. And um, I think that will present probably some opportunities as well for some players to come in and become uh, expert, specialist, uh, standard uh, protocols or standard offerings that all these fintechs use, either driven, led by, approved by some uh, regulators or otherwise. So I think the cyber security, cyber threats and cyber security will be uh, a another technology which I think uh, will be of uh, will be definitely needed. We'll be seeing a lot more cases of uh, challenges around uh, data leaks and hacks and everything. And uh, this will present opportunity also. Yeah. Over to you Meghna.

Speaker A: Um, so um, any thoughts on uh, quantum computing? Yeah, please go.

Speaker B: Sorry, go on. Quantum and what?

Speaker A: No, no, I was just saying that how it is um, uh, you know, impacting fintech particularly.

Speaker B: So as far as I can see there is zero impact so far uh, because quantum has not become real. It is still in development phase. The quantum computing essentially uh, brings, will make compute uh, way faster, better exponentially than where it is today. So as an example, the best servers existing in the world today, the problem they could solve by using all their compute resources, that would take years. The quantum computer is able to solve within seconds. So surely quantum compute is a great leap forward. Exponential growth in terms of digitization compute, the problem solving leading to things which we humanly never thought were possible. Uh, things like space travel, things like going to other galaxies or solving very, very challenging problems which otherwise have not yet been solved for a long time. Uh, but Quantum is not, has not become come to public domain yet. It is uh, only Google has recently, a couple of months ago I think talked about that they've got a breakthrough in terms of getting the quantum compute uh, data more correct than all the other quantum models out there. Uh, but it's not fully correct yet. It's still um, in the test phase and it may take and there's no timeline by when it would go public at all, if at all, or it goes only to governments or businesses first. So quantum is a big deal for sure, but it is I think a while away. Uh, so no impact on fintech as of now as far as I can see. But uh, open to hearing any other views. Over to you Carlin.

Speaker C: So um, like Kunal mentioned, it is a while away but I think in the recent global fintech fest they did touch about count on computing specialty, the encryptions and all what banks and fintechs use. Um, it would be able to break it quite fast with quantum computing and that would make, have to make us evolve our encryptions and our protection of data. So it, it boils down back to cyber security and improving the cyber things like how Kunal mentioned. But like it's, there is some time before quantum computing becomes a threat as of now.

Speaker A: Okay, okay, uh, that was great.

Speaker B: So um, I can add one more point. Uh, in Quantum, you know there are platforms which are called SNDL Store now, decrypt later. There is lot of data which is encrypted, let's say crypto transactions, let's say crypto wallet, many other kinds of private secret data which is available on the Internet, dark web here and there which cannot be decrypted. The current technologies out there. So you know, there are uh, people who own that data but they forgot the encryption key as an example or decryption key as an example. So there are platforms which offer storage where you can store data for years, which is encrypted for now, but you can decrypt it later when quantum compute becomes available, when quantum processing becomes accessible to the retail or institutional public. So just fy. There are very interesting concepts like that around as well. But yeah, Quantum will take a leap forward. The whole Internet will have to change. The, everything will have to change how it exists today once a quantum becomes available which could be maybe years away, maybe, who knows. But yeah, it's uh, a real, it's a real deal threat as well as an opportunity both.

Speaker A: Okay, so um, lastly, I mean uh, we have discussed a lot of interesting points uh so far, um, do you think that fintech still remains a uh, lucrative um, uh industry for the investors? Because looking at the recent data for the last year or so or maybe three years also we have not seen a lot of new, new uh, age fintechs, uh, you know, raising a lot of um, good funding uh, for their organization. So, so how do you see this whole thing shaping up in future and what are your thoughts on why it has been not a favorite of the investors?

Speaker B: So I think that has to do with partly the maturing of the investor community. Also the VCs in few years ago, five, seven years ago, would invest billions in a company in a sector in a theme before even them showing that they have a proof of concept or they have any product market fit. So as an example I think was it 2012 when Snapdeal raised in about a billion and a half, one and a half billion dollars from SoftBank just in the name of e commerce because SoftBank had missed investing in investing in Flipkart, Uh, uh, I think uh, cred raised a lot of money and nobody knows what they do frankly. Um, so uh, that investment boom which happened especially in 21, uh, since COVID uh 21, 22 has now come to maturity and it has become more reasonable and the valuations have become more reasonable and people are not talking about just burning money in startups, but they're saying first show me some revenue, show me a path to profitability and then I'll invest more. So partly the investments have slowed in fintech as they have slowed in every other sector, almost every other sector. So that is a maturing of the investment industry that private companies should not be overvalued if they are not lost, if they are not profit making or if they are not growing as fast or if they don't have a path to profitability. That's number one. Number two, the cost of acquiring a customer, which is what a fintech job is like. Paytm, Google pay, all of them spend so much money in the initial years burning through millions, hundreds of millions, uh, and then acquiring a customer and then figuring out a business model later. This is how PhonePe worked, right? PhonePe got into payments, everyone knows in fintech payments as such, uh, consumer to consumer, peer to peer, you can't make too much money or any Money the moment you start charging, which PAYTM did, people started dropping out, said they stopped charging so you don't make money in payments as such from a consumer. But then phonepe spent hundreds of millions of dollars and then they found a business model that they can be an insurance aggregator. That's their core model. PAYTM moved towards lending and trading in stock markets. Other players are doing other things. So the model of spending hundreds of millions to acquire customers into a service and then figuring out where you will make money hasn't worked as well or as successfully. So people are not investing that much in customer acquisitions anymore. So hence the investing cycle into fintechs for doing this is slowed down a lot. Uh, these are a couple of reasons I can think of. Thirdly due to regulation and the proven cases in which some of these, let's say stories where uh, firm like paytm, which is, which has taught digital payments to India, became the most successful company, raised most capital, went public, but then could never ever achieve uh, the targets of the public market, which is a profitable result quarter after quarter. Uh, and that led to a big fall in their valuation since ipo. So some of these reasons in which there is no exit, there's no clarity in business model or proven business model or there is a slowdown in just burning up front that is the investor learning how to invest, why to invest uh, when you don't have all unlimited capital or the easy uh, capital which was available in 2122. All these corrections have led to a mature market I think. So the payment, the fundraising has slowed down quite a bit and that will become more and more responsible. I believe there would be lesser moonshots, lesser huge payment a, uh, huge fundraisers in a regulated space where there have not been too many successful exits. I think these are some of the reasons not to say you can't build a good business in between you can't scale a business. You can, but it will have to, it'll take a bit longer, you'll have to do it more diligently. Product market fit and business model will have to be proven first and the scale may be a bit slow. It will take its own due time. So these are some of the corrections that are happening because of which the fundraising has dried quite a bit. Uh yeah, these are my $0.02 over to you Karlan.

Speaker C: I agree with Punal and besides that also I think many of the fintechs who have got funded are trying to acquire the other fintechs which have come up with a better idea. So that's A new way that they're working. There are examples like Mindgate and all who have been acquired by PayU, etc. Zaggle is looking at acquiring so many companies which have got good funding or are uh, in the market, are acquiring smaller ones which uh, are doing well. And that, that also is a way that the fintechs are going to um, B2C normally, uh, like mentioned, uh, unless you have uh, out of the box, uh, kind of solution. Right now everything is revolving around 5, 6 main use cases where it's not exciting the investors that much. And normally you would be in a position how are you different to A or how are you different to B? So those are main reasons why it has slowed down but uh, like it can pick up and I think so as there is clarity given by the regulation. Also many things like uh, slice pay or this thing other one started uh, with the nbfc, gives secured cards, then they had to stop it and all. Once there is clarity there, I think uh, things might start looking better.

Speaker A: Yeah. So that was a pretty uh, comprehensive coverage from both, uh, both of you, Kunal and Carlin, thank you very much. Um, so to conclude a quick recap of our discussion. We started the discussion with advancements that have impacted fintechs in 2024, AI being the most, uh, impactful one. We spoke about cryptocurrency and how it is going to shape up in India, whether it will or whether it will not. We spoke about the regulatory impact on fintechs, how fintechs can build trust with traditional financial institutions. Enjoy with custom. We also talked about quantum computing, uh, trends we are going to see in the next year or two, uh, and why investments have slowed in fintech in the past couple of years and whether it will change in the near future or not. Um, thank you Mr. Kunal and Mr. Carlin for sharing your valuable insights and for being a part of today's discussion. I'm sure our listeners have taken away a wealth of knowledge from this conversation. Any, any concluding remarks from both of you are welcome. Um, I'm good.

Speaker B: Yeah. Fairly well covered. Thank you. Thank you.

Speaker A: Okay, it's been a pleasure moderating this session and we will be back soon with another exciting topic on FinTech X. Until then, thank you for tuning in. This is Meghna Gupta signing off. Have a great day.

Speaker C: Thank you.

Speaker B: Thanks.

Speaker A: Thanks.

Speaker B: Bye.

Speaker C: Bye.