Over the last few decades, almost every global industry has been disrupted because of various reasons like availability of new technology, ability to use data and predict behavior, creation of more viable alternatives or just eliminating the need of incumbent products /processes. With every disruption, outcomes become cheaper, faster or better. And as long as two out of those three happen, the change is sustainable and profitable; else users roll back to the previous state eventually (unless the change is addictive!).

Banking and Financial Services are, by design, people heavy industries because of the associated cost of failure. Since the stakes are high, the industry has relied on human judgment and comfort for many decades and asa result, large financial institutions were created. And by some law (Let’s call it law of optimism), it needed to become faster, better and cheaper. And technology is the perfect answer!

Depending on who you ask - Automation, software, user experience, design, Internet, API, Digital and some times even data science is clubbed into Technology. It will add value to break this ‘Technology’ down into exclusive yet exhaustive components and my objective will be to give a framework for a technology organization structure in a FinTech organization.

In FinTech, technology spans across these three key areas -

1. CHEAPER and deeper acquisition - The easiest and most logical first win in FinTech is the ability to acquire customer digitally via a website, phone call, mobile application or via aggregators. This dramatically reduces
the need for an on-ground force and hence brings the CAC (customer acquisition cost) down significantly. And of course, this increases distribution to virtually anywhere with the increasing penetration of phone network,
4G and smartphones. Online application forms, paperless account opening, internet only banks are all proof of this con cept. Use of B2B partnerships, social media and digital search platforms smartly have resulted in up to 80 percent CAC reductions for many new age enterprises

2. FASTER processing and decision time- The next big break comes when you need to take an action. Automation and low latency communication has enabled information to flow faster than ever before. Whether it is the ability to process a payment across the issuer, acquirer and scheme within milliseconds or it is processing a loan application through real time scoring - it is all possible now. The rise of API banking, central data sources like CIBIL and Aadhaar and many other public and private data sources can now be accessed in real time to make decisions . What took (and still takes) traditional banks over three to four days of processing time on verifications can now be done in a matter of milli seconds with the correct and synchronized use of smart technological interfaces mentioned above Before we go to the third reason, let me introduce a geek(ier) cousin of technology - Data Science. In order to make BETTER decisions than the ones made in the past, they need to work together.

Automation and low latency communication has enabled information to flow faster than ever before

Before we go to the third reason,let me introduce a geek(ier) cousin of technology - Data Science. In order to make BETTER decisions than the ones made in the past,they need to work together.

3. BETTER intelligence – Human decisions are biased, subjective and not replicable or scalable as the sample size increases and the balance has been shifting towards a more optimal man-machine allocation towards solving a problem. Fraud detection, credit scoring, default warning systems are all made possible by using data science to consume every possible data source available to predict an event or identify an anomaly.

In the background, sophisticated data science applications are made possible by the availability of extreme computation capability (think distributed computing, super computers, IaaS) and technology to implement the algorithms at scale (think Big data architecture, DevOps). The outcomes are mind blowing. Not many have imagined data the way it can be decoded with the help of systematic Data science techniques and intervention that throw superior insights into variables that most matter to business success.

Technology is not the answer to everything- in fact is an enabler and propeller, a golden thread that runs across the organization in every function to make it

CHEAPER-FASTER-BETTER. When combined with the right use case, a focused data strategy and a well thought through architecture, it can be a winner on many fronts. So, three teams need to come together to build a solid technology function -

A. Product (who defines the need),
B. Engineering (who builds the software) and
C. Data Science (who helps take the right decision).

These three teams together can create path breaking user experiences, enable quick decisions and reduce risk of Failure, while making the unit economics work.

Fin Tech companies across the world have adopted this framework to create path breaking product solutions and have created newer markets that the Banking industry didn’t see for over two decades. Remember, at the end, if you are able to achieve any two out of the CHEAPER-FASTER-BETTER, you can potentially win a good chunk of the market!