September 04, 2024
Banking Technology (BankTech), designed to enhance and streamline various banking processes and services, has been continually evolving to meet the changing needs of both financial institutions and their customers.
In the last 5-6 years, the pace of transformation in banking technology has accelerated dramatically. While the pandemic initially acted as a catalyst, driving a rapid shift towards digital solutions out of necessity, the momentum has only grown stronger. Today, the focus is on refining and expanding digital capabilities to meet the evolving expectations of tech-savvy customers. Banking services are now seamlessly integrated into everyday digital experiences, making in-person branch visits largely obsolete. This ongoing transformation is characterised by a continuous push towards innovation, efficiency, and customer-centricity, with technologies like AI, cloud computing, and blockchain leading the charge.
BankTech is traditionally divided into various sub-categories that address specific functions within banking operations. With time, however, the lines have started to blur. For investors seeking a holistic view of this dynamic market, it’s crucial to understand its diverse sub-categories.
Innovative, new-age solutions – driving BankTech for 2024:
IBS Intelligence, a platform known for delivering insights, research, and advisory services to the FinTech and banking sectors, also tracks ongoing transitions in banking technology systems. Their continuous analysis highlights the industry’s focus on digitalisation, lending, and payments, offering a comprehensive view of the evolving landscape. The data unveils a captivating perspective on the trends and opportunities within the BankTech sector.
In 2023, an analysis of over 800 banking technology deals revealed a strong focus on digitalisation, lending, and payments, which together accounted for more than half of all transactions. It also underscores the industry’s commitment to digital transformation as a strategic priority for long-term stability and growth, even amidst economic uncertainties.
In the rapidly evolving landscape of BankTech, three pivotal technologies are reshaping the way financial services are delivered:
- Cloud Computing: Offering scalability, agility, and cost-efficiency for banking infrastructure.
- AI and Machine Learning: Personalising financial services, optimising operations, and enhancing risk management.
- Blockchain: While not as popular as a few years back, the underlying technology holds immense promise in enabling secure and transparent transactions, revolutionising areas like supply chain finance and identity management.
Why BankTech is ‘Ripe Potential’ for VCs:
a. Innovative Ecosystem: India’s thriving start-up scene, coupled with a strong talent pool, is driving the development of next-gen banking technology. The global demand for banking innovation makes this a lucrative market.
b. Strategic Partnerships: Banks are increasingly collaborating with tech start-ups to accelerate innovation, creating strong opportunities for investment in disruptive solutions.
c. High Return Potential: With regulatory changes, technological advancements, and growing digital demand, the sector offers significant returns for investors backing scalable, high-value start-ups.
The sector holds immense growth potential due to innovation, regulatory changes, and the ever-growing demand for financial services digitally. Venture capitalists capable of identifying and supporting transformative startups will play a critical role in shaping the future of banking, steering it toward sustained success. In this evolving landscape, Cedar-IBSi Capital is excited to partner with founders building disruptive, new-age NextGen BankTech SaaS products, driving transformation in the sector.
