Documentos de Académico
Documentos de Profesional
Documentos de Cultura
Powering a digital
economy
September 2018
KPMG.com/in
Foreword
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d
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Table of contents
21
Artificial
Intelligence-led
transformation in
financial services
sector
03
Unlocking
the potential
of open
banking
01
Introduction
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Blockchain — Enabling
a distributed ledger
ecosystem in financial
services Concurrent
43
adoption of
33 technologies
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01 Fintech in India – Powering a digital economy
Introduction
Financial institutions are undergoing on innovation in areas, such as all the stakeholders in the shared
a dramatic transformation in the artificial intelligence (AI) and ecosystem - government,
digital age - from their roles and data analytics, thereby attracting regulators, financial institutions,
responsibilities, service offerings, attention from investors. fintech are expected to play a
products to the distribution critical role. Developing a successful
The Asian fintech market is
channels. With the adoption of framework is vital for a flourishing
currently dominated by two growing
technology, ever-changing regulatory environment for experimentation.
economies, China and India01.
landscape and ever-growing
Fintech investments in China
consumer expectations, there is
strengthened in the first half of
a rapid influx of new entrants in
2018 as compared to the end of
the market, which is of growing
201701. The Indian market witnessed
concern for the incumbent financial
massive investments in fintech with
institutions (FIs).
31 deals in Q2 1801, propelled by
Innovation in the fintech industry has the strong government reforms
taken the world by storm, becoming to steer the country towards a To be relevant in the
a global phenomena not limited digital economy. current world around the
to any one region alone. Amongst customers, institutions
Initiatives led by the government
the various focus areas in which needs to leverage emerging
and regulators for digital India,
fintech has been making waves, technologies and re-look at
aided by the growing internet and
two areas which have driven fintech the customer experience,
smartphone penetration, has led to
adoption in the past few years stand while lowering their barriers
the adoption of digital technologies.
apart, these include - adoption to accept innovation. In
The financial services industry is
of data at the core of the fintech today’s world, advisors
rapidly evolving and moving from
business models and adoption of play an important role
the traditional ‘one size fits all’
open banking regulations across in providing the agility
approach to a more personalised
the globe. Going forward, it may required to support the
service approach.
not be surprising to see increasing innovation. From customer
participation from the non-financial Adoption of these technologies mobility experience to risk
service sector, such as telecom, by financial institutions can management, emerging
power and retail, leveraging open be achieved through fintech technologies are adding
data as a means to augment their collaboration, integration or immense value to
portfolio by foraying into financial development of in-house skill set business processes
services. to execute these technologies. in financial services.
However, the real impact of digital
From an investment perspective, the
transformation is likely to come
global fintech sector has witnessed - Gayathri Parthasarathy
from concurrent adoption of
H1 2018 investments surpassing Head
open banking, AI-driven data
2017 total to reach USD57.9 billion01. Financial Services - Advisory
intelligence and distributed ledger
Dominant market players continue KPMG in India
technology.
to emerge in the areas of payments
and lending. Meanwhile, a broader For India to embark upon the
range of companies are focused journey to become digital economy
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02
In this report, KPMG in India - in collaboration with NASSCOM 10,000 start–ups have showcased three
emerging technologies, which are rapidly capturing the market and becoming effective catalyst in proliferating
the digital landscape.
Artificial Intelligence
Blockchain
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03 Fintech in India – Powering a digital economy
Unlocking
the potential of
open banking
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04
Traditionally, banking was confined to a closed This entails providing personalised services, through a
ecosystem with data access in silos and limited data shared ecosystem with customer consent and thereby,
sharing with the customer. Consequently, the services unlocking the huge potential for open banking.
and products offered were unique to the institution.
With the leap in technology and evolution of the shared
ecosystem, the wave of open banking is gaining
Banking Services are moving from a 360 degree
prominence and thereby enabling financial institutions
view to a 720 degree view of customer relationship.
to provide more value to customers.
Customers
Fintech Account
Proprietary apps collaborations service (AISP)
Private API
Cross-industry Lending/credit
partnership platform
Payment network
Banking domain
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05 Fintech in India – Powering a digital economy
The following are the roles for banks in the open Revenue model
banking ecosystem:
The building block of an open banking ecosystem is
the open API architecture. The common misconception
Integrator Producer about an API is that it is an enabler of a product.
The bank controls The bank focuses on However, an API is a product in itself and demands a
production and products and services product strategy.
distribution of products and distributes via third
A strategic shift from building a scalable, secure,
and services parties
robust and agile API to allow the consumption by
outside parties is the gateway to monetise the open
Distributor Platform banking ecosystem.
The bank distributes The bank retains a stake
products and services in both production and
created by third parties distribution by acting as
a market intermediary
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06
Merchant Merchant
Offerings Offerings
Public/Open APIs
Bank IT System
Bank IT System
Increase sales
conversion of core Revenue sharing Partner with
Access fees product as API with fintechs alternate financiers
makes it easy to sell
API is a technology-oriented product, however, a API product management is a relatively new concept
strategic shift in the vision of businesses is required to in the industry. The sooner organisations realise its
embrace APIs. benefits and move towards building the right strategy,
the more impressive its returns shall be.
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07 Fintech in India – Powering a digital economy
Canada
Announced review
of open banking in
budget, Feb 2018
Not mandatory
U.K. Japan
Live from Jan 2018 Singapore Revised Banking
Mandatory for 9 banks Law in May 2017 to
Published API
Playbook, Nov 2016; introduce open APIs
U.S. might create API Not mandatory
Published principles recommendations for
for open data banks
sharing, Oct 2017 Not mandatory
Live from Jan 2018
Not mandatory
Hong Kong
Europe Revised Banking
Live from Jan 2018 Law in May 2017 to
Mexico Mandatory for all introduce open APIs
Passed Fintech banks Not mandatory
Malaysia
law allowing open Created open banking
banking, Mar 2018 Nigeria
implementation group,
Not mandatory Published open Q1 2018
API standards, Not mandatory
Mar 2018
Not mandatory Australia
01. Europe lays the foundation of open banking, Forrester, 27 July 2018
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08
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09 Fintech in India – Powering a digital economy
India Stack03
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10
Source: India Stack, Accessed on 3 September 2018; National Payments Corporation of India (NPCI), Accessed on 3 September 2018; UIDAI, Accessed on 3 September 2018
The end goal of the relentless efforts put in by the Open government data05
government is not only to open basic bank accounts
for fostering financial inclusion, but to also manage the Open government data can be defined as publishing
inflow and outflow of funds in accounts. This is done information collected by the government in its entirety
by transferring the direct benefit subsidies with the such as budgets, spending records, healthcare
Jan Dhan Yojna accounts, and then crediting various measures, climate records and farming and agricultural
subsidy (LPG, fertiliser, day wages and so on) directly produce statistics.
into the bank account. This inflow of cash into accounts
would encourage the unbanked population into India currently has over two lakh data
adopting formal banking practices. resources, over 6,900 APIs across more than
100 departments, 118 chief data officers,
resulting in an overall improvement in India’s
global ranking by the Open Data Barometer06.
Government
E-Way Bills TReDS
e-Marketplace (GeM)
• 26,556 buyer organisations • Clocked INR10 crore • One of the three TReDS
bills within 80 days of its entities witnessed average
• 134,502 sellers and
launch on April 1, 2018 monthly volume of bills
service providers
discounted at INR100 crore
• INR10,829 crore with over 200 MSMEs
orders value registered in Oct-Dec 2017
GSTN BBPS
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11 Fintech in India – Powering a digital economy
Regulators
Regulators have been instrumental in India’s drive towards developing and strengthening the open digital
ecosystem. The key objectives of regulators is to lay the groundwork for interoperability across payment systems,
and create an environment for innovation and increased personalised experience.
To address these focus areas, regulators have taken the following steps:
Implemented Bharat Bill National Payments Corporation The RBI has published a report
Payments System (BBPS) of India has paved the way of the ‘working group on fintech
to improve the security and for open banking by putting and digital banking’, providing
speed of bill payments through infrastructural blocks such as recommendations for an
multiple modes. unified payments interface (UPI) environment for developing
and Aadhaar enabled payment fintech innovations and testing of
services (AePS) in place. applications/APIs developed by
banks/fintech companies.07
Augus
t 2018 UPI 2.0
1 billion July 2017
transactions
April
2017
BHIM
Aadhaar
16
National ber 20 March
electronic toll Decem 2017
collection BHIM
BharatQR
August
2 016 Bharat
billpay
16
April 20 Globally, open banking has been
UPI
synonymous to two use cases – payments
and account aggregation, India with its
journey from UPI to UPI 2.0 has taken a
significant leap in the payments ecosystem.
Due to data access to third parties, regulators must continually recalibrate regulations and policies, develop
thresholds which are based on risk, keeping cybersecurity subjection in check, and maintaining a high degree of
consumer confidence.
07. Report of the working group on Fintech and Digital Banking, RBI, November 2017
08. Statistics, NPCI, website accessed on 26 August 2018
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12
Reserve Bank of India (RBI) declared directives for assets under the purview of different regulators.
Non- Banking Financial Company - Account Aggregator While the aggregators will have a holistic view, they
(NBFC-AA), highlighting the framework for registration will not be the owners of the data. It is only with the
and operation of an account aggregator in India. customer’s consent that the information can be passed
on to various financial information users (FIUs).
The account aggregator would give a consolidated view
of a customer’s assets across the ecosystem including
NBFC–AA architecture
Flow
based Bank
credit
Mutual
Personal fund house
finance
management Consent Consent
Financial required Account required Financial
information Aggregators Accounts/ information
user Folio provider
APIs APIs
Wealth
management Encrypted Insurance
provider
Robo Tax/GST
advisory platform
Structures
Current and Deposits Commercial Certificate
investment
time liabilities with NBFC papers of deposits
products
Units of Units of
Balance Real Estate Any other information as
Infrastructure
under NPS Investment may be specified by bank
Investment Trusts
Trusts (REIT)
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13 Fintech in India – Powering a digital economy
Financial information user’s (FIU) could range from to share the information only once. In case of personal
a single end user to financial services providers wealth management, the information could be shared
(FIPs), fintech firms, service-based start-ups, service on a weekly basis.
aggregators and so on. Given the sheer volume of data
available, various effective solutions can be developed. Benefits for financial institutions
In the current ecosystem, a FIU has a skewed view
Consent architecture of the customer. Based on only its relationship with
A key aspect of an AA is the consent framework. The the customer. The FIU is able to suggest products
account aggregators are ‘data blind’ in nature - which which might be useful for the customer. Often the
means that to collect as well as share the information, relationship with the FIU might not be the true picture
the AA would need user consent. The consent of the overall customer potential. With access to data
architecture is developed on the basis of the nature of from various FIPs, the FIU might have a consolidated
the FIU, defining the purpose and the frequency of the view of the customer, leading to an effective customer
consent. For instance, if the information is shared for servicing and elevated cross-selling. This could
flow-based digital lending, the customer might want enhance customer stickiness.
Investments Cross
/acquisitions industry
of tech firms partnerships
A global bank acquired Banks, through their
a Mumbai-based startup subsidiaries and NBFCs are
to help build an open Banks-fintechs partnering with adjacent
banking platform collaborations industries such as retailers
to provide digital solutions
Most fintech firms are approaching banks for validation through APIs to fintech firms, leading to faster
of their business model and access to customers’ data. development of products.
Additionally, most banks provide an open architecture
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14
Financial Institutions (FIs) continuing with old legacy systems may resist
as the customers may switch to other banks.
What is in it for me?
FIs that are embracing technology can add new potential revenue streams
by enhancing customer experience.
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15 Fintech in India – Powering a digital economy
Confluence of platforms of
e-governance
In the past years, under the digital India initiative,
multiple digital platforms have been created:
• The e-stamping, Government e-marketplace
(GeM), e-way bill and Trade Receivable electronic
Discounting System (TReDS) platform, Goods and
Services Tax Network, Income Tax Return and BBPS
platforms are functioning successfully but in silos.
- Manish Jain
Partner
Digital and Fintech - Management Consulting
KPMG in India
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16
• Customer
Replace manual way • A compliance • Procurement by govt. • Financing of trade
mechanism for depts./organisations/ receivables of
• framework
Tamper proof movement of goods PSUs MSMEs
• Focuses on needs
Can be checked by • Reduced • Tools of e-bidding • Widening financing
and requirements
anyone through site documentation and reverse options
• Has a Unique e-auction
• Linked with GST • Updated portal for
Identification Number • Wallet-like facility MSMEs to list their
for advance payment projects for bank
financing through
bidding
National Platform
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17 Fintech in India – Powering a digital economy
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18
PCR framework09
Borrowers
PCR-MCA Sub system (sub sys): PCR- Fraud database sub sys:
Company ID Details, Company Wilful defaulter List, RBI Caution
Financial Details, etc. List, CFR, ECGC, etc.
Public Credit Registry (PCR) will integrate information and Securities and Exchange Board of India. The
from multiple stakeholders (banks, NBFCs and utility/statutory bill payments database and legal
regulated financial institutions) and link with other database will enable API utilisation and strengthen
existing information systems such as those of the India’s credit landscape.
Ministry of Corporate Affairs, Reserve Bank of India
09. Report of the high level task force on Public Credit Registry for India,
RBI, April 2018
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19 Fintech in India – Powering a digital economy
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20
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21 Fintech in India – Powering a digital economy
Artificial
Intelligence-led
transformation
in the financial
services sector
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22
01. Worldwide spending on cognitive and artificial intelligence systems will grow to 02. AI to add USD957 billion to India’s economy by 2035: NITI Aayog, CMIE, 06 June 2018
USD19.1 billion in 2018, According to New IDC Spending Guide, IDC, 22 March 2018
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23 Fintech in India – Powering a digital economy
Lack of • With rapidly increasing mobile and internet • Conversational chatbots for
personalised and omni-channel
differentiated penetration and changing consumer
experience
customer preferences financial services industry need
• Optimise personal-finance
experience to adapt and provide relevant experience
management
03. Over 23,000 bank frauds worth Rs 1 lakh crore reported in 5 years: RBI, The Time of
India, 02 May 2018; Financial crime on rise in life insurance sector, The Times of India,
22 February 2018
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24
Technical elements of AI
Banks and financial institutions are increasingly deploying various types of automation techniques across
processes based on technical requirements and return on investment (ROI) analysis. The three key AI elements
includes computer vision, machine learning and natural language processing.
Strategic thinking
Natural Language
Processing
Technical
elements
• It refers to the ability of • Uses artificial neural
machines to learn on
of AI networks, similar to
their own with or without those in the human
being programmed. brain computers, to
Fundamentally, machines Machine Computer identify associations
discover patterns and Learning Vision and relationships.
relationships in data The Visual recognition
and use them to make technology is capable of
predictions and solve automatically extracting
problems the required information
using images and
• Machine learning patterns such as face
algorithms are predominantly scans, tagged images,
used in financial services other picture contents
sector to provide sentiment
indicators, trading indicators • Banks offering remote check deposit via mobile or
and fraud risk management scanning facial expressions for sentiment analysis
across the front and back is an application of visual recognition technology
office processes.
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25 Fintech in India – Powering a digital economy
AI ecosystem collaborators
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26
04. Govt doubles digital India allocation to ₹3,073 crore; telecom sector disappointed, 07. IRDA sets up committee to study innovations in insurance, 07 Dec 2017, The Economic
Business Line, 30 January 2018 Times
05. Report of the working group on Fintech and Digital Banking, RBI, November 2017 08. AI applications in the top 4 indian banks, techemergence, 19 July 2018
06. SEBI constitutes ‘Committee on Financial and Regulatory Technologies (CFRT) , SEBI, 09. Mumbai analytics startup vphrase analytics brings natural language generation to make
03 August 2017 reports more insightful, Analytics India Magazine, 30 Jan 2018
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27 Fintech in India – Powering a digital economy
10. Wipro USD100 Mn venture fund discloses investments in 9 startups between FY ‘15- 13. Artificial Intelligence Primer, NASSCOM, July 2018
17, inc42, 05 June 2017 14. NASSCOM opens centre for data science, Business Standard, 05 July 2018
11. Google Launchpad Accelerator India to mentor 10 startups, LiveMint, 13 July 2018 15. NASSCOM unveils centre for data, AI, The Hindu, 05 July 2018
12. How AI startup ThirdWatch is keeping an eye on and preventing online fraud through
Mitra, Yourstory, 10 December 2017
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28
Application of
AI in the financial
services sector
With digital transformation and customer experience
at the forefront, financial institutions are looking at AI
solutions to deliver superior customer experiences,
reduce costs and unlock new revenue streams.
They are either developing in-house capabilities or
forming partnerships with fintech players to leverage
the technology.
As per a NASSCOM-CMR survey (Artificial Intelligence
for Banking, Financial Services and Insurance Sector,
2018) on adoption of AI in financial services sector in
India, the key objective as per financial institutions
is to offer enhanced customer experience, followed
by automation of back-end business processes, and
effective compliance and risk management.16
AI is utilised across front, mid and back office
segments, with existing and potential uses cases
ranging from customer services, targeted sales and
marketing, smart automation of manual intensive
processes, and compliance and risk management.
16. Artificial Intelligence for Banking, Financial Services & Insurance sector,
NASSCOM, Accessed Date, 29 August 2018
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29 Fintech in India – Powering a digital economy
The following framework illustrates how the aggregated ecosystem capabilities would drive automation across
the financial value chain leveraging AI applications.
Microfinance
Customer Operations Fraud Reporting and MIS
Management
• Chatbots for higher • Invoice automation
productivity, query • Fraud Detection • Smart Accounting
NBFCs resolution and Investigation
• Intelligent document check
• E-KYC- customer • Anomaly
• Smart reconciliation, audit
onboarding Prediction
trail, variance analysis
• Portfolio Management
Capital • Customer Servicing
Markets
Product and Solutions Compliance Management
• Product Pricing • Image recognition to
High • Personalised Offerings digitise documents
Impact • Financial Advisory • Automate legal disclaimers
Medium • Intelligent text extraction
Impact
Core engines
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30
Availability of computing power, cloud services, Such symbiotic collaborations between the ecosystem
digitalisation agenda of the government and evolving players will provide opportunities to deploy AI
regulations around open banking would lead to the technologies in financial services functions and mature
rapid adoption of AI led automation across the financial from using AI in low impact rule-based processes to
services value chain. high impact cognitive and predictive processes.
One of the fintech startups, Gyandhan is enabling Regulations governing the privacy and security of
the education funding using AI driven models to data, policy initiatives and talent infrastructure will
underwrite large ticket education loans for students by further shape the ability of financial and non-financial
predicting the employability score (Gyandhan Score)17 institutions to utilise AI.
Large technology players are developing their AI
platforms and providing access to open source
libraries. Meanwhile, smaller AI technology companies
are contributing significantly by developing targeted
solutions for the financial services sector. The
effectiveness of aggregation capabilities across the
ecosystem players to drive front-to-back adoption of
AI technologies can be a key value differentiator.
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31 Fintech in India – Powering a digital economy
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32
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33 Fintech in India – Powering a digital economy
Blockchain —
enabling a
distributed
ledger
ecosystem
in financial
services
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34
Introduction
Blockchain utilises decentralised storage for recording data records. Its characteristics have eventually
all peer-to-peer transaction data in the form of blocks. resulted in an increased interest from the
It preserves old blocks and simultaneously adds new financial institutions.
blocks, making it nearly impossible to manipulate
Since then, the financial services sector has seen
documents, transactions and any other information.
major traction in blockchain applications, such as
Blockchain, which is also the underlying technology
know-your-customer (KYC), anti-money laundering
of all cryptocurrencies, is a secure, transparent and
(AML), trade surveillance, settlement and clearing,
decentralised database that drives efficiency and
smart assets, and collateral management.
immutability and brings in unanimity in organisations’
Evolution of blockchain01,02
2014-2015
While interest in cryptocurrencies is still disorderly, • 14 per cent03 of the banks and other financial
the interest in blockchain has increased largely. institutions have successfully deployed a
Global financial institutions spend about USD1.7 production blockchain application in 2017.
billion03 annually on blockchain and are moving
In India, blockchain gained visibility in 2016.
beyond the proof-of-concept stage to commercially
Consequently, financial institutions and fintechs
deployable solutions.
have started investing heavily in the technology.
• The blockchain budget of global banking and capital Within the next 5 years04, Blockchain has a potential
market firms increased by 67 per cent in 2017, to create value to the tune of USD5 billion in India
with one in ten firms reporting budget in excess of across all sectors.
USD10 million03.
01. The evolution of blockchain throughout the years, CoinOps, 14 November 2017 03. Financial services industry spends USD1.7 billion on blockchain, Greenwich
02. The technology behind bitcoin is only halfway through its evolution, Business Insider, Associates, 12 June 2018
12 January 2018 04. Blockchain can add USD5 billion to Indian economy in 5 years: NASSCOM official,
Business Standard, 27 July 2018
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35 Fintech in India – Powering a digital economy
International High cross-border transaction fee Shorter settlement time reduces the
funds transfer cost as well as foreign exchange risk
Know your High KYC costs, KYC checks Industry-wide customer registry to
customer performed individually in different facilitate the encrypted transmission
financial institutions of customer data
Capital market Data reconciliation, high costs, long Secured and reduced
trading transaction times and operational risks processing time
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36
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37 Fintech in India – Powering a digital economy
Europe
China
• 23 European countries
established European Blockchain • One of the banks
Canada Partnership is implementing
• ETF for blockchain technologies • European Commission launched a production
issued on Stock Exchange EU Blockchain Observatory and blockchain
Forum with investment plans of system to provide
• Government utilises blockchain over EUR300 million by 2020 syndicated lending
technology to track and publish capabilities
information about grant funding
Japan
• Announced a
blockchain-based
data sharing platform
for the trade industry
Switzerland
Australia
• Accepts digital currency in
payment of city fees • A stock exchange in Australia has
• Added bitcoin as a means implemented a blockchain-based
of paying small amounts solution to replace its current
up to CHF200 post-settlements process
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38
Curb property- The government Prevent ration IndiaChain Crops and the School and Banks can create
related disputes is generating and electricity will be linked vegetables can college leaving sidechains which
which occur due soil health cards loss by bringing to IndiaStack, be tracked and certificates will can be linked to
to mismatch for agricultural transparency unique identity tagged once be included, their domains
of property land. Every and project Aadhaar it reaches the which see a linking back to
dimensions, patch of land accountability which will market high degree IndiaChain
multiple stake will be digitised to the enable know of forging and
claims, etc. in terms of government your customer duplication
quality of land, schemes (KYC) data on
crops grown, like Public IndiaChain
seasonality, etc. Distribution
System
08. Report on “NASSCOM signs MOU with Blockchain Research Institute (BRI) to 13. Chhattisgarh successfully conducts its first Blockchain Grand Challenge, Your Story, 31
evangalize a blockchain ecosystem in India”, NASSCOM, 21 February 2018 August 2018
09. Blockchain and government of Karnataka- an emerging love story, Yourstory, 15 14. NITI Aayog initiates the blockchain effort, The United Service Institution of India, 02
February 2018 August 2018; BankChain, IndiaChain & India’s Tech Future, Tech Story, 29 June 2018;
NITI Aayog announces indiachain blockchain based UPI, Owlt Market, 28 June 2018;
10. Kerala to set up blockchain academy, business standard, 18 january 2018
What is IndiaChain: a blockchain system that could soon be the heart of governance in
11. this indian City is embracing Blockchain Technology- - Here’s Why, Forbes, 5 March India?, Business Insider, 21 June 2018
2018
15. Ethereum co-founder’s startup to make blockchain prototypes for Niti Aayog, Tech
12. Andhra Pradesh govt. signs MOU for blockchain innovation in the state, Inc42, 6 March Circle, 17 April 2018
2018
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39 Fintech in India – Powering a digital economy
Regulators
Blockchain regulations are still at a nascent stage. –– The global body for standardisation established
However, regulatory bodies are showing increased Technical Committee 307 to develop standards
interest in blockchain. While few countries’ regulatory for DLT and blockchain. Representatives from
bodies have launched blockchain frameworks, more than 45 countries attended the inaugural
many countries are still interpreting the technology meeting of the Technical Committee. Of these, 25
to develop a formal framework. Despite the slow participating countries designated ISO/AWI 22739
progress in formulating regulations, global policy as the first standard to be developed to establish
makers are positive about blockchain. uniform terminology and concept description17.
16. Blockchain technology & Malta’s regulatory framework, business matters magazine, 3 17. The year of blockchain: global legal framework begins to take form, White Case, 27
august 2018; california Blockchain Bill is Finalized in State Legislature, Cryptodisrupt, February 2018
30 August 2018; Canada postpones plans for crypto regulation until late 2019, Coin 18. Whitepaper on “Applications of Blockchain Technology to Banking and Financial Sector
Geek, 30 August 2018; US States working on blockchain legislation in 2017, Brave New in India”, IDRBT, January 2017
Coin, 02 April 2017
19. RBI explores feasibility of launching ‘fiat’ digital currency, Indian Express, 6 April 2018
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40
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41 Fintech in India – Powering a digital economy
26. Blockchain being used in banking, contracts, The Hindu, 28 May 2018
27. Singapore proposes regulatory boost for decentralized exchanges, Coindesk,
23 May 2018
28. Report on “Roadmap for blockchain standards”, Standards Australia, March 2017
© 2018 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
42
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43 Fintech in India – Powering a digital economy
Concurrent
adoption of
technologies
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44
The next wave of innovation in banking and financial A next generation customer journey illustrates how the
services industry is set to reshape the industry entire ecosystem can collaborate to assist a customer
and bring in profound changes in the way business in mortgage buying process and create a differentiated
strategies shall be defined. The change would be experience in the journey as highlighted in the exhibit
largely driven by consolidation, collaboration, and ‘Next generation open aggregator platform’ leveraging
convergence with fintech. AI , blockchain and open frameworks. Here’s how the
process works:
Many of the technology elements have crossed the
initial level of piloting and the time is right to stitch the • Customer can log in to the real estate aggregator
components and create frameworks for concurrent platform and view several options. The platform
adoption of these technologies. proactively assesses the profile of the customer
on basis of quick data entry done and through
We believe that open banking, AI and blockchain
direct linkages with the financial institutions. The
have the potential to create the next wave in financial
platform has access to the financial information of
services. The adoption of these technologies will
the customers, government databases, land registry
enable financial institutions to redefine the business
data, and so on
strategy, achieve deeper level of personalisation and
disintermediate the financial industry. • AI-driven recommendation engine provides
suggestions to customers such as best offers and
Following are some of the emerging trends which we
housing options, what other people are purchasing,
foresee would drive this industry:
simulation tool to analyse future cash flows
Open platforms and aggregated • All the processing can be done through the platform
enabled by the electronic land registry which acts
business models as a single source of open information accessible by
Adoption of open banking standards and API driven the registered institutions
technology models have enabled collection of relevant • All the records or transactions are smart contract-
data. This data is being used extensively to build driven, and stored on a permissioned ledger secured
platforms that enables interactions between the through cryptography.
consumers and suppliers to create business value.
In near future, we are likely to see financial institutions
Financial services is the latest entrant to foray in the adopting a mix of above strategies and bring
open platforms business, with multiple institutions incremental revenues driven by lower operational and
looking for alternate revenue streams and designing customer acquisitions costs.
sustainable business models to leverage the non-
financial ecosystem. The financial institutions are
adopting a two-fold approach:
a. Acting as a platform provider and bringing the
ecosystem together
b. Participating as a service provider on existing
platform and adding value.
In near future, we are likely to see financial institutions
adopting a mix of above strategies and bring
incremental revenues driven by lower operational
and customer acquisitions costs.
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45 Fintech in India – Powering a digital economy
Fetch property
attributes Listing of the property 1
4
House details:
• General valuation
agreement on transaction terms
• Ownership details
• Financing details
• Technical report
Property Finalisation and
Transaction details
Digital
land
record
Requirement listing 2
and request for options
<< AI driven
recommendations >>
Customer Creditworthiness
7
Transaction
and Eligibility Check
execution
(e-Contract) << AI led engine
Authorisation to
for credit 3
disburse loan
and eligibility
check >>
<< Electronic
data records
over blockchain
secured through
Cryptography >> 5 e-Contract execution
6
Access rights to the pool of property
data from centralised register
Lender
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46
AI-driven business and operating models The financial superstore would act as a one stop
solution for all financial product and services. For
AI can unleash its real potential in confluence with large setting these superstores the three basic decisions
data sets. Adoption of open API-led business models which have to be considered are selection of the value
could lead to enhanced use of artificial intelligence. chain segments to operate, product/service mix to
With the acceptance of open API in the near future, be offered and onboarding the right product/service
we might see financial institutions adopting innovative providers. The superstore would be supplemented
methodologies to incorporate emerging technology for with linkages to the government platforms such as
streamlining its current business processes. GSTIN, ITR and government led e-marketplaces.
We believe the following parameters are likely to These superstores will serve an excellent source of
be adopted by financial institutions for an enhanced authentic data and would be a progressive step in
customer experience and incremental revenue: direction of collaboration amongst financial institutions
and government to develop open frameworks such as
‘Public Credit Registry’.
Reduced Enhanced Amalgamation of authentic financial information of an
operational cost cross selling end user with technology will lead to assessment of
behavioural patterns and guestimation of solutions,
Performing process With the abundance products, informative tips and so on to the end user.
reengineering and of data, customer
redefining traditional behavioural pattern- In the coming years with open digital economy and
methodologies are based selling services the increased maturity level of technologies, financial
imperative steps to could be encouraged. institutions would be capable of moving to models
change. Financial Illustratively building which are highly personalised in nature, and with a
Institutions can chatbots, processing capability to collaborate with multiple applications
optimise their natural language resulting in a seamless customer journey.
operations leading to and using predictive
enhanced customer analytics can develop It is expected that with the advent of new digital
satisfaction and reduced an algorithm to give technologies, the boundaries between financial
operational cost product suggestions institutions and fintech companies would diminish,
and the ecosystem would move towards a more
collaborative approach.
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47 Fintech in India – Powering a digital economy
About About
KPMG in India NASSCOM
KPMG in India, a professional services firm, NASSCOM is the industry association
is the Indian member firm affiliated with for the IT-BPM sector in India. A not-for-
KPMG International and was established in profit organization funded by the industry,
September 1993. Our professionals leverage its objective is to build a growth led and
the global network of firms, providing detailed sustainable technology and business services
knowledge of local laws, regulations, markets sector in the country. Established in 1988,
and competition. KPMG has offices across NASSCOM’s membership has grown over
India in Ahmedabad, Bengaluru, Chandigarh, the years and currently stands at over 2,500.
Chennai, Gurugram, Hyderabad, Jaipur, Kochi, These companies represent 95 percent of
Kolkata, Mumbai, Noida, Pune, Vadodara and industry revenues and have enabled the
Vijayawada. association to spearhead initiatives and
programs to build the sector in the country
KPMG in India offers services to national and
and globally. NASSCOM members are active
international clients in India across sectors.
participants in the new global economy and
We strive to provide rapid, performance-
are admired for their innovative business
based, industry-focussed and technology-
practices, social initiatives, and thrust on
enabled services, which reflect a shared
emerging opportunities.
knowledge of global and local industries
and our experience of the Indian business
environment. nasscom.in
KPMG.com/in
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48
Acknowledgements
KPMG in India NASSCOM
Shravan Shetty Rakesh Kumar
Shankar Gyanchandani Nirmala Balakrishnan
Ashit Gandotra Nemesisa Ujjain
Kriti Sharan Shivam Sareen
Shivika Sethi
Noopur Dogra
Radhika Todi
Omkar Sawant
Nisha Fernandes
Reema Pawa
Shveta Pednekar
Shilpa Bhoir
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50
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KPMG in India NASSCOM
contacts: contact:
Mritunjay Kapur Nasscom
National Head Plot 7 to 10, Sector 125,
Markets and Strategy Noida 210303, India
Head - Technology, Media and Telecom T: +91 120 499 0111
T: +91 124 307 4797 E: research@nasscom.in
E: mritunjay@kpmg.com
Gayathri Parthasarathy
Head
Financial Services - Advisory
T: +91 98190 29924
E: gparthasarathy@kpmg.com
Manish Jain
Partner
Digital and Fintech - Management Consulting
T: +91 98867 69023
E: manishjain5@kpmg.com
kpmg.com/in
Follow us on:
kpmg.com/in/socialmedia
This report has been jointly developed by KPMG in India and NASSCOM 10,000 Startups.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular
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The views and opinions expressed herein are those of the persons quoted and do not necessarily represent the views and
opinions of KPMG in India.
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