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Technology Trends Changing the Face of Financial Services

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Rajesh Sehgal, Managing Partner, Equanimity InvestmentsRajesh is a long-term investor with tremendous experience of over two decades in managing early stage investments, private equity and public equity funds.

The saying “it was good while it lasted” seems to be the perfect connotation for bitcoins. The entire initial buzz has waned and unlike the scenario in 2017, not a lot of people are happy about their bitcoin investments anymore. (I’m of course talking about the ones who were looking to become billionaires out of their bitcoin investments and did not withdraw their earnings in time.)That being said, it’s not game over for cryptocurrencies on the whole and the legalised and regulated ones still have a major role to play in the financial services domain. Even though the legalised cryptocurrencies do not seem to be giving handsome returns now, people should still bank upon the regulated ones so as to be sure of where their money is going and if it’ll come back. And we know that India does not recognize cryptos as legal tender now, but given the renewed push a lot of bigger, developed economies are making towards cryptos, it will be fair to assume that India will also accept it, the only question being when. After all cryptocurrency and blockchain are the new innovations in the tech domain and any country which is late on the bandwagon, will find it difficult to keep pace with the latest set of innovations and with other developed economies.

Bitcoin & Cryptocurrency – Creating an Impact on Financial Domain
It goes without saying that cryptocurrencies, in the financial market, will bring the much needed transparency and decentralization. And although it’s still in its infancy to predict anything concrete, cryptocurrencies have the scope of handing complete control in the hands of the customers, and all this with faster global transactions and at reduced costs. The reason being the technology on which these cryptocurrencies are based – blockchain, is going to cause a big upheaval in any industry that adopts it, as a result of the whole host of benefits it can outlay. However, one word of caution is that cryptocurrencies are extremely complex systems and because these are money instruments,getting your hands in them without a proper and in-depth understanding, might lead you to make some really uninformedand unhealthy financial decisions for yourself. So, try to get self-informed in them to as great an extent possible, and only then think about acting.

Technology Partners– An Extended Arm
Sqrrl,a fintech company, operates at the
intersection of legacy systems of the industry and the latest mobile and webtechnologies for the customer facing front. As a mutual fund advisory platform, some important components of our product involve payments (including UPI 2.0),KYC and related services of the India Stack,as well as operational services related to mutual funds - specifically mutual fund data and research,along with transaction processing. To accomplish this, we are interested in working with technology partners who offer the best services in these areas using developer-friendly APIs. As a consumer product available on mobile and web,there are quite a few technology partners we need(and use). We are always keen to work with the best cloud infrastructure, analytics, marketing and communication stacks, admin dashboards and so on. Data analytics remains an interesting problem to solve. The reason being it has a wide range of use cases and there’s a need to be able to slice and dice our data across multiple partners and get a holistic view of various metrics.

"Finding the right equilibrium between reliability and agility will go a long way in transforming the financial space for good"

Embracing Technological Applications
The one technology we wish we had embraced faster is building the Sqrrl backend using the micro services pattern on serverless infrastructure. Sqrrl has a fairly complicated backend. And while the API helps in supporting our apps on iOS, Android and Web, we have several operational pieces. From processing transactions to fetching mutual fund performance data, the Sqrrl backend has a fair number of moving parts, several of which are independent of each other. Our initial architecture used the monolith pattern to build the entire backend with all these different services in the same, single application.

With time,we started separating some services into their own "microservices", which were then deployed on serverless (AWS Lambda) and invoked over HTTP using an API Gateway. The advantage of the microservices pattern was that it made our API leaner. Our main API (that supports our apps), however, is constantly iterating with the apps and is being modified several times a day. By keeping certain services separate, we were able to achieve a more robust backend - bugs in one service do not propagate to the other. Further, hosting these on serverless infrastructure lowers our cost as any infrequently accessed service costs a fraction to host in comparison to a regular cloud server.

A Culture of Innovation
People management in large, established organizations is a tedious task. There are just too many people, all with completely different sets of ideologies and aspirations. And fostering innovation, in such scenarios, becomes an extremely challenging job, given the plethora of ideas that gets bounced off of everyone’s heads, every single hour of the day. In this case, what can be done is to let people take the ownership of their tasks and put them in charge of making decisions. You’ll be surprised to see how, when given the charge of their own things; people go out of their ways to succeed and become more evaluative and learn valuable lessons, in case of failure.

Evolution taking place in IT Financial Management Space
IT financial management is one space which has not seen a lot of developments in the past decade or two. There are N number of red tapes which kill innovations and that’s the foremost reason why people are almost always unwilling to bring about transformations in finance domain.

I think bringing AI into the fold can greatly impact how we capture user analytics and can help the industry in offering better products and services to the customers. Adoption of agile platforms will also help in enabling digital delivery and streamlining the sharing of data. Being dynamic and nimble is what the customers would be expecting, and finding the right equilibrium between reliability and agility will go a long way in transforming this space for good.