In an interview, Rayan Malhotra, Serial Entrepreneur & Influencer and founder & CEO of NeoFinity, said thayt FinTech is notorious for its sudden regulations and the best way to be on the right side is to be abreast of the latest trends and regulations.

Excerpts of the interview…

1. Can you shed some light on your background and journey that led you to start your FinTech company?

I had a very varied journey, where I was initially a writer, then became a YouTuber. Then that YouTube channel scaled to about a million followers, giving me the status of a tech influencer. However, I did not want to continue in that domain and wanted to build something of my own. When I first started my corporate career, Steve Jobs was a big source of inspiration for me. Hence, I started helping a lot of startups. I worked across product, tech, and marketing roles, getting the required acumen to build my own startup one day. I had quite a few certifications in FinTech, as I had a lot of interest in that field. I also had patented technology, which led to the creation of my company, Kashware. That is how I came into the FinTech domain.

2. How does your solution adapt itself from existing offerings in the market of fintech?

Currently, I am the founder and CEO of NeoFinity. It is a next-gen FinTech payments company and is part of the illustrious Neo Group. We have been developing products that, in terms of the current payments industry, are both revolutionary and evolutionary. We have launched an exclusive line of wearables, wherein you will be able to pay using accessories like your phones, your wristwatches, and so on, without carrying your payment card. Plus, we are coming up with some banking solutions wherein we will be able to give you up to 9% interest on a savings-like bank account and up to 6-7% interest on a current-like bank account. The idea is to keep adding such new verticals to our portfolio and ultimately emerge as a one-stop shop for all your payment FinTech financial needs.

3. Can you discuss the strategies you put into practice to ensure your FinTech solution remains compliant with evolving regulations?

FinTech is notorious for its sudden regulations. The best way to be on the right side is to be abreast of the latest trends and regulations. Follow the regulatory authority’s official website. A strategy I personally use is talking to people. Talk to people and other founders in your domain. Take part in think tanks and be a part of certain groups where the relevant information is circulated. Once you have that information, knowledge, and understanding, you can use it to your advantage to stay on the right side of changing regulations.

4. How has the FinTech industry transformed over the past few years? And what trends do you see appearing?

The FinTech sector has undergone significant change in recent years. The first is UPI, which I think is actually hastening the demise of cards, especially debit cards. I believe that the scan-and-pay feature has fixed payments and transformed them forever. Another trend I have noticed is that people are now willing to pay for convenience; previously, it was considered to be the least expensive option. However, you now see a lot of innovative and experimental FinTech apps, which are setting the pace. This trend, I believe, will continue. Finally, considering that India is a developing economy, the middle class is growing. As a result, you can see that India is a credit-hungry country, with an increase in credit cards, loans, and BNPL (Buy Now, Pay Later) products. And it is still only the tip of the iceberg. I anticipate that credit will increase in the future, giving lend-tech and credit companies a lot of room to grow.

5. What challenges and opportunities do decentralised payment systems like blockchain and cryptocurrencies drive towards the financial industry?

I believe that there are opportunities in the fact that no specific entity will be solely accountable for the transactions. In theory, it all looks good. Obviously, it will aid in cross-border transactions and always bring about a great deal of transparency in transactions, as all transactions will be trackable. There are also a lot of difficulties out there, in my opinion. The biggest one is that you are basically trying to change an entire system and trying to remove key players who have been in the business for 50 to 100 years. Also, there is a reason it has been a centralised system as of now. Naturally, there will be some resistance once you attempt to change that. The other issue is that the decentralized payment system, as we are seeing, can be used for a lot of illicit and illegal activities if there is no kind of regulation over it. So those are the two challenges. One relates to structure, while the other to scope.

6. How do you see the role of digital currencies (CBDCs) influencing traditional monetary systems and cross-border transactions?

Boosting Innovation: CBDCs will encourage fintech companies to come up with new financial products and services. They provide a secure digital platform for startups and established fintechs to build upon.

Easing Cross-Border Transactions: CBDCs will make international payments much easier and cheaper. This is especially good news for businesses involved in global trade.

Including Everyone: CBDCs can help more people access digital financial services and have a safe place to keep their money. This can help those who don't have traditional bank accounts.

Changing Banking: Banks might have to change the way they do business because more people will use CBDCs for everyday transactions and savings.

In short, CBDCs are a big deal for fintech, making innovation easier, international transactions smoother, and financial services accessible to more people.

7. How does machine learning and AI provide fraud detection and prevention in financial transactions?

In the realm of financial technology, AI and machine learning hold a significant role in revolutionizing fraud detection and prevention in financial transactions. The real-time detection capabilities they offer are paramount. These technologies allow us to continuously monitor financial transactions as they happen, rapidly identifying and flagging suspicious activities. This immediate response is instrumental in preventing fraudulent transactions from being completed, minimizing potential financial losses.

Pattern recognition is another vital aspect. Machine learning algorithms meticulously analyze vast volumes of transaction data, comparing ongoing transactions to historical data. This enables these algorithms to identify anomalies or deviations from normal transaction behavior. For instance, they can swiftly detect if a credit card is being used in a location far from the cardholder's typical spending areas, triggering an alert.

Customer profiling adds an extra layer of security. AI systems create individual customer profiles based on their transaction histories, encompassing metrics such as transaction amounts, frequency, and locations. When a transaction significantly deviates from a customer's established profile, it triggers an alert. This feature is particularly valuable in identifying unauthorized account access or identity theft.

Moreover, predictive models powered by supervised and unsupervised learning play a pivotal role. Supervised models learn from labeled data, distinguishing between fraudulent and legitimate transactions to make predictions. Unsupervised models uncover hidden patterns in the data that were previously unknown. These models continuously adapt and improve over time, staying effective in the face of ever-evolving fraud tactics.

The ability to continuously learn and adapt is crucial in combating financial fraud. AI systems are designed to evolve in real-time, staying in sync with emerging fraud trends and adapting their algorithms and rules accordingly. This adaptability is vital in ensuring high accuracy in fraud detection and prevention.

Lastly, AI and machine learning enhance overall efficiency in the fraud detection process. By automating the analysis of transaction data, they reduce the need for manual intervention and review. This not only saves time but also significantly reduces the number of false positives, ensuring that legitimate transactions are not mistakenly flagged as fraudulent. Overall, these technologies bolster the efficiency and effectiveness of the entire fraud prevention system.

8. What strategies can fintech companies implement to bridge the gap between traditional financial services and underserved communities’?

Bridging the gap between traditional financial services and underserved communities is a pivotal challenge for fintech companies. To succeed in this endeavor, several strategies can be implemented.

Firstly, fintech firms should focus on developing user-friendly and accessible interfaces. This includes mobile apps and web platforms designed to accommodate users with limited access to technology and those who may not be tech-savvy. Simple, intuitive design coupled with multi-language support can significantly improve inclusivity.

Secondly, partnerships with local organizations and community leaders can help fintech companies gain trust and a deeper understanding of the specific needs of underserved communities. Collaborative efforts to provide financial education and literacy programs can empower individuals to make informed financial decisions.

Additionally, implementing alternative credit scoring models is vital. Many underserved communities lack traditional credit histories. Fintech firms can leverage alternative data sources such as utility payments or mobile phone usage to assess creditworthiness more accurately.

Furthermore, offering affordable and accessible financial products like microloans and savings accounts can address the unique financial challenges faced by underserved communities. Tailored solutions, such as peer-to-peer lending platforms, can help facilitate access to capital for entrepreneurs in these communities.

Lastly, regulatory compliance is crucial. Fintech companies must navigate regulatory hurdles to ensure their services are accessible while maintaining the required security and transparency.

In conclusion, bridging the gap between traditional financial services and underserved communities requires a multi-faceted approach. User-friendly technology, community engagement, alternative credit scoring, affordable products, and regulatory compliance are all key elements of a successful strategy in this endeavor.