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Fintech’s Digital Dance: Revolutionizing E-commerce, Entertainment, and Trust 

The fusion of fintech with e-commerce and entertainment is undeniably reshaping the global digital landscape. As businesses harness the power of advanced technologies, they’re tasked with ensuring the security and privacy of their consumers. The future rests on this delicate balance: innovating for convenience while fortifying trust. 

As digital platform usage increases among consumers, businesses are modifying their customer service approaches. Concurrently, with growing customer expectations, there’s a trend where companies, through “embedded finance,” can now offer financial services, transforming the way they cater to financial needs. 

“Traditional banks, known for their brick-and-mortar branches and manual paperwork, have been revolutionized by fintech. Fintech has not only made banking services more accessible, efficient, and cost-effective but has also introduced new services like embedded finance. This transformation has boosted several industries through mobile payment apps, digital wallets, and contactless payment solutions,” remarks Dr. Anamika Datta, an e-commerce tech professional drawing upon her rich experience and industry observations from Zalando and Amazon 

To realize this vision, companies will aim to equip their customers with a range of banking and financial tools. These tools will encompass standard bank services like digital payments, bank accounts, insurance, and loans. While major tech giants have ventured into this realm, we see more companies branching out across all industries. 

A 2021 survey from German Solarisbank and Handelsblatt Research Institute shows that 61 per cent of Germans would purchase financial services from online shops. The willingness will affect other platforms and providers with whom both consumers and businesses have established trustworthy relationships.  

“As fintech is a bridge connecting traditional banks to e-commerce platforms, it offers multiple payment solutions. This allows SMEs to provide a variety of payment options for their customers, catering to diverse preferences and ensuring they can service a broader audience.”

Dr. Anamika Datta, E-commerce tech professional

E-commerce giants like Zalando, Asos and Farfetch are working to create a seamless online shopping experience for customers in everything from browsing to delivery. 

“Traditionally, the e-commerce customer journey has multiple steps, with payment being a crucial step that could enhance or hinder the overall customer experience. With the introduction of fintech and digital payment methods, the online shopping experience has been significantly improved.”  

According to Dr. Datta, global digital payments revenue is expected to reach $15 trillion by 2027. Two-thirds of adults globally use digital payments, and digital wallets make up half of all e-commerce sales, excluding the 20 per cent from credit cards. This advancement in payment methods offers customers a multi-channel shopping experience, allowing them to buy from various platforms seamlessly, including through conversational commerce. 

Empty carts filled 

Transactions become a natural part of the shopping journey without any hurdles. According to Dr. Datta, 35 per cent of consumers check available payment methods even before placing an order. Zalando, Amazon Fashion and Asos publicly published reports nearly half of the customers have abandoned a purchase due to the absence of their preferred payment method. 

“The abandoned cart phenomenon is decreasing by a steady rate thanks to adding digital wallet payments to your e-commerce store; you are more likely to end up offering at least one of a customer’s preferred and trusted payment methods. Being able to meet customers where they’re comfortable is a major advantage when it comes to winning a sale and securing repeat customers,” Dr. Datta says.  

The evolution of payment methods has come a long way from the traditional catalogue days when individuals had to send money orders or make payments at post offices physically. Today, the rise of digital wallets, exemplified by platforms like Apple Pay, offers many advantages. According to Dr. Datta, there are three reasons for this: 

Firstly, they reduce the margin for error as users no longer need to input lengthy card details manually. Secondly, these platforms offer a seamless transaction experience, eliminating the cumbersome process of fishing out physical cards. Lastly, thanks to advanced encryption and anonymization techniques, digital wallets provide a safer alternative, sidestepping the risks of theft or loss associated with cash and physical cards. 

Fintech empowers SMEs through data 

In the dynamic world of e-commerce, the entry of fintech has acted as a bridge connecting traditional financial institutions and e-commerce platforms, enabling small and medium enterprises to gain access to more financial services. 

“As fintech is a bridge connecting traditional banks to e-commerce platforms, it offers multiple payment solutions. This allows SMEs to provide a variety of payment options for their customers, catering to diverse preferences and ensuring they can service a broader audience. Just like we see it with Paytm in India,” Dr. Datta says.   

“blockchain’s transparent nature can foster trust between businesses and consumers, making it easier for emerging companies to establish credibility”

Morten Rongaard, CEO and co-founder of Reality+

Embedded finance, in collaboration with fintech, offers real-time transaction data. For SMEs, this immediate data access enables quick adjustments to products, pricing, or marketing strategies based on current market trends and customer behaviours and can give SMEs a competitive edge. 

“With data-driven insights, e-commerce giants witness a whopping 30 per cent increase in customer engagement. With transactional data, SMEs can make more informed purchasing, pricing, and discounting decisions. This leads to better demand forecasting, which increases the likelihood of repeat purchases and fostering customer loyalty,” Dr. Datta says and concludes:  

“In a nutshell, fintech and data-driven analytics transform e-commerce companies into customer-centric, profit-making juggernauts. From fraud-busting to dazzling recommendations, these analytics elevate the game, leaving customers enchanted and operational strategies oh-so-smooth.”  

Unlocking entertainment’s future 

The transformative power of fintech isn’t limited to e-commerce. The entertainment industry is also getting a taste of the revolution.  

The advent of digital currencies, e-wallets, and blockchain systems has made global transactions almost instantaneous. As a result, international audiences can easily access content or services without geographical limitations. For creators, this means that they can now reach and monetize their content in markets previously out of their reach. 

And especially for small and medium-sized businesses, these novel payment methods are a boon.  

“They lower transaction fees, diminish the reliance on traditional banking systems, and enable microtransactions, making it feasible for businesses to monetize even the smallest digital goods or services. Additionally, blockchain’s transparent nature can foster trust between businesses and consumers, making it easier for emerging companies to establish credibility,” explains Morten Rongaard, CEO and co-founder of Reality+, who advises brands and companies on the opportunities in the new paradigm for applications on the internet – the so-called Web3. 

Fintech offers means to streamline transactions, which has revamped the monetization methods available to entertainment platforms. This is evident through the rise of in-app purchases, virtual goods sales, and premium subscriptions that have become revenue staples for many entertainment providers. 

The intertwining doesn’t just stop at transactions. The vast data entertainment companies possess, from how users consume content to their spending habits when coupled with fintech, opens the door to tailored financial products.  

“Imagine getting a unique credit offer based on your favourite movies or a savings scheme aligned with your music streaming habits. The melding of these two sectors also leads to innovative marketing strategies, such as cross-promotions and loyalty programs, where the lines between entertainment and finance blur. You could be offered exclusive show tickets as a banking reward or get special deals on a streaming service when using a particular payment channel,” Rongaard explains.  

Financial institutions, recognizing the immense potential of the entertainment industry, have begun to diversify their operations. They’re either forging partnerships with successful entertainment ventures or directly investing in them.  

Simultaneously, the vast audience base of entertainment platforms is being tapped into to promote financial education and literacy, which is essential in an increasingly digital world. 

“We’re also witnessing an uptick in joint ventures between these sectors, leading to co-branded products that intertwine financial benefits with entertainment perks,” Rongaard says.  

Battling fintech’s cyber threats 

Merging fintech and new industries introduces various privacy challenges as the extensive personal and financial data stored by fintech platforms makes them tempting targets for cyber threats. 

The use of blockchain technology presents an avenue to address many of these concerns, according to Rongaard:  

“Data breaches involve unauthorized access to sensitive data. With blockchain’s decentralized nature, data isn’t stored in a singular location, making it less susceptible to breaches. Every transaction on the blockchain is recorded on multiple nodes, ensuring that data remains intact even if one node is compromised.” 

Phishing attacks and transaction fraud have also seen a rise with the digitization of transactions. Again, Rongaard argues that blockchain’s transparent ledger system can be leveraged to verify the authenticity of transactions, making unauthorized or fraudulent activities easier to spot.  

“Each transaction is recorded in an immutable ledger, which means once a transaction is added, it cannot be altered, reducing the scope for fraud,” he says.  

Also, e-commerce faces growing security and privacy hurdles due to integrating and using transactional data. According to Dr. Datta, 64 per cent of consumers are uneasy about potential data breaches. And the numbers speak louder, with 86 per cent pausing transactions due to security reservations. What does this mean for the burgeoning e-commerce landscape? 

“To address these concerns elegantly, businesses must embrace robust encryption and stringent authentication protocols. Laws like GDPR and CCPA aren’t just best practices; they’re essential. They’re the keystones to cultivating trust in this digital dance,” says Dr. Datta. 

A new canvas 

Not only payments and transactional data are shaking up the e-commerce industry. Alternative lending models, enabled by fintech, have been a game-changer, particularly benefiting SMEs. 

With traditional lending tightening its grip, alternative lending stepped onto the stage, helping SMEs. According to Dr. Datta, 32 per cent of SMEs found it easier to secure funds through fintech-powered lending platforms, fueling their growth ambitions. 

“Fintech has transformed the lending process, eliminating the need for burdensome paperwork and long waiting times. These modern platforms boast a remarkable turnaround, with approvals often coming within a day. Such speed and convenience have made them a preferred choice for many SMEs,” she says.  

Fintech-driven alternative lending has reshaped the e-commerce terrain for SMEs. With these platforms offering them unparalleled access to capital, rapid loan processes, bespoke financial solutions, an expanded customer base, and the means to undergo a digital revolution, SMEs are better positioned to thrive in the ever-evolving digital marketplace. 

“Alternative lending has painted a new canvas for SMEs in the e-commerce landscape. With easy access, speed, flexibility, global reach, and digital transformation, these businesses waltz confidently into the digital marketplace, embracing growth and flourishing like never before,” Dr. Datta concludes. 

Local vegetable sellers become e-commerce companies 

The Indian Paytm capitalized on a unique situation in India when the government demonetized larger currency notes to combat corruption. Amidst a scenario where the nation had numerous micro-businesses – from street-side stalls selling vegetables, coconut water, and flowers to chai vendors, all usually dealing in meagre amounts – Paytm introduced an easy-to-use QR code system.  

These vendors, many of whom are illiterate, could now bypass cash transactions, as customers simply scanned these QR codes to transfer payment directly into the seller’s Paytm account. Realizing that many vendors couldn’t read notifications, Paytm incorporated voice authentication to announce received payments. Even vendors without traditional bank accounts benefited, bringing a substantial portion of India’s 80% unorganized market segment online. With Paytm’s innovation, even the humblest local vegetable vendor could step into the realm of e-commerce. 

NFM Publishing Team
NFM Publishing Team
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