An Empirical Study on Evaluation of FinTech Industry in Bengaluru

Digitalization has brought challenges in all the industries and business sectors (Ryan Randy Suryono et al. 2020). The research in this area reveals clearly that the development of digital transformation has given the way for emergence of fintech initiatives. India is one of the fastest growing fintech markets in the world. India has Asia’s highest fintech investment institutions with a deal value around $647.50 million across 33 deals as compared to China's $284.9 million during the quarter end of June 30, 2020 (RSBA Advisors 2021). As per the MEDICI India FinTech Report 2020 India has witnessed exclusive growth in the number of new ventures launched in the FinTech space. Cumulative investments in India crossed $10 billion by the end of June 2020. The number of fintech startups in India is now almost 2280 with Bengaluru and Mumbai contributing to 42% of the companies (India Ego Medic.com). The first wave of disruptions in Financial services was led by digital payments followed by digital lending, wealth management and insurrect startups. This trend led to the emergence of fintech 2.0 where there are new use cases emerging with completely new models. These trends gave the way for emergence of new segments and also new innovations in the existing platforms in the fintech world. Fintech offers several services like funding, payment e-aggregations, e-trading, and e-insurance, and crypto currencies such as Bitcoin. The rise of digital commerce, innovation in payments, technology based AI, black chain, the internet of things and real time payments and the introduction of mobile point of sales devices have led to a reduction in the cost of acceptance and also contributed to the growth. Fintech has been growing rapidly in India in the last 5 years and is expected to grow further in the nearest future (Krishna et al. 2019). Fin tech companies create more competitive advantage in the financial market by providing faster service in the area of payment, financial consultancy, lending and investment. Against this background an attempt is made to study the evaluation of the Fintech Services Industry in terms of benefits, motivators, challenges and problems faced. The study reveals the presence of a favorable demographic profile of respondents impacting fintech. The challenges faced by fintech services include, lack of support from the government, customer protection and difficulty to change the mindset of merchants. The motivators as per the study includes ease of setting up of an account, effective service quality, 24/7 access to service, availability of innovative products, good online experience and functionality. The study also reveals about the benefits derived from the fintech which includes higher personalization, increased speed and improved products to the customer, efficiency enhancement etc.,


Introduction
There is no universally accepted definition of the term "FinTech" which is flyspeck of the both combined words "finance" and "technology" (Paschmann, 2017, Zovolokina et al., 2016. It is the exchange of paper based processes (Aswini Sanmath, 2018). It refers to firm merging the upcoming technological trends to provide better financial solutions to the customers in the form of digital payments and transactions (Aakriti Sai, 2020). As per CB Insights latest reports, there are 20 Indian fintech startups that have been listed among top 250 global promoting startup companies. (Wilson, R. 2020).
The traditional banks have discharged a significant role in the financial world (Salman, 2014). However, with the advent and growth of technology, the world economy has been gradually switching to the digital channels (The Economic, 2015). The existence and continuous department Philosophical Readings XIII.4 (2022), pp. 312-325. 313 Info@philosophicalreadings.org 10.5281/zenodo.5912447 of fintech has caused huge pressure and challenge for the traditional banks (Desai, 2015). The growth in the technology adaption will make traditional institutions collaborate with fintech institutions or they can act as fintech solution providers in order to sustain and stay active in the business.
The development in the technology adoption has the potential to make markets more diverse, competitive, efficient, and inclusive but could also enhance concentration. Innovation has inducted competition and enhanced inclusion in emerging markets and developing economies (First et al. 2021). Fintech thrived in markets where the financial system had been less developed (Didier et al., 2021).
Covid-19 pandemic resulting in lockdown and social distance accelerated the digital transformation. Contactless business was done through a digital system. Business houses, individuals and financial service providers have used the digital services in their business during the pandemic crisis period and it will continue in future also. It has intensified e-commerce (Alfonso et al. 2021) which benefits the big tech firms and their activities. Countries with strict Covid-19 policies than lower mobility nations experienced a large increase in financial app downloads on account of the outbreak (Didier et al. 2021).
Need for studying fintech services Fintech services reduce risk and cost of transactions (Balterparger, 1980). There exists asymmetric information regarding market interactions consequently there arises no trust between parties and fintech services solve the risks and create trust between institutions and consumers. Banks diversify across an innumerable number of borrowers and manage uncertainty in a better manner. Providing any kind of services to the needy requires not only information and financial resources but also real resources. These consist of labor, equipment and premises to produce financial contracts, financial capital and trust which differs from one to another business type.
Traditional financial firms need a larger size of fixed cost investment for creation and maintenance of back office systems and physical distribution networks. But fin tech service providers enjoy economics of scope through building interdependent financial services. Technology advancement has emerged in two significant areas that have contributed to the current wave of technology based finance: The two key areas are (1) increased connectivity and (2) low cost. The first one is related to the capacity of internet and mobile technology which are rapidly increasing the transfer of information and internet contactless both between business and directly to the consumer. The second point is about low cost. The cost of data storage has been substantially declined. The ability to process the data with speed has also been enhanced with innovations in artificial intelligence (AI) and machine learning.
Big data emerges from a variety of sources and used in a wide range of traditional financial services and new types of business houses to improve credit analysis, process efficiency risk management, customer service, product design etc., The development in the technology led to emergence of platform based business models. Fintech, big techs are discharging their best services as "matchmakers" between different users and platform providers (Corson et al. 2021).

Review of literature
Ashwini Sanmath (2018) stated that world is embracing fintech service. The advantage of fintech service includes from adaption of technological services by the banks and their financial services. The fintech services offer better financial services to the customers at cheaper costs.
Anjan V. Thakor (2019) in his research study revealed that fintech platforms have recently not delivered the returns to investors. Further he has remarked about the presence of variations in ROE which may be considered by the platforms and may opt leverage in the future. Further, the researcher suggested that whatever theories are built around banks and P2P platforms, they should consider the potential developments to highlight the costs and benefits of leverage. Chen et al. (2019) expressed that fintech is part of the process of evolving financial innovation, which has theoretically been shown to be risky but of value with supporting recent evidence that offers substantial returns to the investors.  D'Acunto et al. (2019) expressed that adopters of robo-advising are similar demographically to non-adopters, but are more active and have greater assets under management. Further, the research has stated that the investors adopting robo-advising experience diversification benefits, getting better returns with lower volatility.
Krishna Priya, P. et al. (2019) in their research work they have revealed that there are around 1500 Fintech startup firms operating in India and out of these nearly half were started in the past two years. Further, the researchers stated that a majority of successful fin tech firms belongs to payments and the researchers wished that this trend should spread to other financial segments. Kavuri et al. (2018) stated that new financial technologies (Fintech) have emerged around the globe. As a result of this it is found that there has been a considerable increase in academic literature over the last 5 years. The researcher further stated that much work has to be done before this area becomes an established academic discipline.
Andre L., (2019) expressed that Fintech has indeed taken an important space in today's digital world. As per the researchers with an expanding family of robust technological tools for personal and commercial finance, it is poised to further grow in use and impact. Vijay, C. et al. (2020) reported that fintech is important for the future of the financial sector as inclusive finance strongly impacts economic growth. Fintech has taken the next level of financial services like shopping, transfer, receiving funds, saving time and user friendly. Further, they expressed that fintech benefits both consumers and business.
The study by Parameshwar, H.S. et al. (2019) reveals that fin tech has become an inexplicable way to follow in all financial institutions and its impact is having a paramount goal for the success of all financial constitutions.
Objectives of the study 1.
To study the demographic profile of respondents.

2.
To Analyse the challenges faced by Fintech 3.
To analyse the motivators for adopting fintech.

4.
To analyse the benefits of fintech.
Demographic profile of the respondents is not contributing towards fintech.

2.
There are no challenges faced by fintech.

3.
There exist no motivators for adopting fintech.

4.
There are no benefits of fintech.

5.
There exist no trends in fintech.

Research questions 1.
What are the reasons behind the characteristics of respondents not supporting the study? 2.
What are the challenges faced by fintech services? 3.
What are the motivators for adopting fintech? 4.
What are the benefits of fintech? 5.
What are the trends in fintech?

Research Methodology
Research design : Research design is studied through (1) research paradigm, (2) research approach and (3) choosing a methodology. Research paradigm speaks about comprehending knowledge and its acquiring. Research approach tells about quantitative or qualitative approach is followed in surveys or other measurements that generate data in the form of numerals while qualitative approach pertain to interviews or participant observation.
Research Methodology : The present study uses survey methods for the purpose of data collection. Under this method required data is collected from the sample in the universe in order to examine the socio-economic characteristics of respondents, challenges faced by fintech services, motivators for adopting fintech, benefits derived and trends in fintech. Under the present research Philosophical Readings XIII.4 (2022), pp. 312-325. 315 Info@philosophicalreadings.org 10.5281/zenodo.5912447 work data collected within the natural context where the work goes on normally. Survey technique aims at determination of the position of a given phenomenon. Under the present survey technique the researcher acquires an opportunity to answer all questions raised by the respondents and also test the hypotheses.
Study population : It is impossible to meet all who are really interested in Fintech services. 200 samples were conveniently selected to participate in the study based on convenient sampling technique. Further, some problems faced at the time of data collection in Bengaluru due to financial, time constraints in addition to Covid-19 norms.
Sample selection : Convenient sampling technique is followed in the present study. The sample to be covered is fixed at 200 due to time, financial and Covid-19's restricted movement.

Sl.
No. Data Source : The present study depends on both primary and secondary data. Primary data collected through administering questionnaires as scheduled in order to avoid non response, delay and to follow the norms of Covid-19. Secondary sources include journals and Web resources.

Type
Period of data collection and study area : The period of data collection was June 20th to August 10th, 2021. The study is confined only to Bengaluru urban areas and the sample for the study is fixed at 200.
Questionnaire Design : The present study gathers information through a structured questionnaire. Applying a questionnaire as a measure is at the heart of a survey procedure. The questionnaire is regarded as a basic technique of data collection and tends to be the most popular method (Easterby -Smith et al., 1991). Further, they have stated that questionnaire is regarded as a basic technique of data collection and tends to be the most popular method. Uma Sekaran (2016) expressed that questionnaire method is a pre-planned and formulated written set of questions which responds record their answers.
Method of data analysis : The study adopted chi-square, Garrette ranking, ANOVA and Kendall's measure of concordance. These techniques were applied with an objective and as they are easy to understand and considered sufficient for the analysis.

Data Presentation and Analysis: Section A -Demographic variables of respondents
The demographic variables which are required to the present work includes gender, marital status, age, education, occupation and monthly income. An impact of all the characteristics on fintech is studied. Hypotheses 1 : H0 : There exist no significant variation in the socio economic characteristics of respondents and they do not support the study.

Research question
H1 : There exists significant variation in the socio-economic characteristics and they support the study. Table -1 reveals data about the socio-economic characteristics of respondents. The demographic variable impactness is to decide how a proposed development research work will affect the lives of the present or potential population of an area under study. The impactness provides valuable information about the respondents and is essential for the determination whether individuals form a representative sample of the target population for generalization purposes. (Neil, J. Salkind, 2010). The study covered 170 (85% males and the rest 30 (15%) females. There are 180 respondents who are married (92.5%) and the balance 20 persons remain single. 60 respondents belong to the age group of 35-45 years followed by 50 belong 45-55 years, 30 each pertain to the age group of 25-35 years, and 55-65 years, 10 belong to 65 years and more and 20 belong 15-25 years). 80 respondents (40%) studied up to bachelor degree followed by 30 each completed PUC, and professionals,20 completed 10th standard and 15 respondents education status was another group which includes ITI and any certificate course. 80 respondents are working in the private sector, 50 in government service, 25 housewives, 20 doing business, 15 self employed, 10 startup entrepreneurs. The monthly income data reveals that 55 respondents (27.5%) belongs to the income group of 40K-50K followed by 40(20%) belongs to the income group of 50K-60K, 31 belongs to the income group of 30K-40K, 30 pertain to 60K-70K and 12 each belongs to 10K-20K and 70K and more. All the characteristics of respondents clearly show the presence of significant variation in the data and also exhibit a high degree of relationship. The formula performed to decide the relationship is C = √ x2 / x2 + N, where x2 = chi-square and N = Number of respondents. When the value of 'c' is equal or nearer to one, it means a high degree of association between the variables.

Section B -Analysis of research questions and Hypotheses
Section -B of the questionnaire is related to the section of research questions. These questions are framed to provide solutions to the objectives and cover challenges of fintech, motivators for adopting fintech, benefits derived from fintech and trends in fintech services. Five hypotheses were framed and tested using the collected data through questionnaires using Garret ranking technique the following steps were adopted.
1. Percent position table is prepared by performing the formula 100(Rij -0.5)/Nj and these values were referred to the Garrett conversion table to get scale values.
2. Score values are obtained by multiplying 'x' and 'f' (being sub values and f sum of opinions).
3. The total is divided by the number of observations to get the mean score and ranks are awarded based on the strength of the mean score using Kendall's measure of concordance (w) the following steps were applied.
Using the Kendall measure of concordance (w), the following steps were applied. 1. Add the rank for each problem and square the total rank.

2.
Add such obtained square to get total RT2 3.
Put the obtained SSR value in the formula W. Here "w" = 12 x SSR / K2N (N2-1), where N = Number of observation, K = point scale.
5. Finally test the significance of 'w' using x2 statistic.

Research questions No. 2 :
What are the challenges faced by fintech services? Hypotheses 2 : H0 : There exist no significant variation in the challenges faced by fintech. H1 : There exists significant variation in the challenges faced by fintech services. Table -2 explains the different challenges faced by fintech services. The bipolar expressions given by the respondents has been totalled to formulate frequency which is multiplied by Garrett scale value to obtain total and this total is divided by the number of observations to obtain mean score. Ranks are awarded after considering the strength of mean score. For the Garrett conversion Philosophical Readings XIII.4 (2022), pp. 312-325. 317 Info@philosophicalreadings.org 10.5281/zenodo.5912447 table refer to Table-3. First rank was assigned to the challenge of lack of government support, second rank was awarded to customer protection and third rank was assigned to the challenge of difficult to change the mindset of merchants and investors. Finally the fourteenth rank was assigned to a lesser number of clients.

Research question No. 3 : What are the motivators for adopting fintech?
Hypotheses H0 : There exist no significant variation in the motivators for adoption by fintech.
H1 : There exists significant variation in the motivators for adopting fintech. Table -4 reveals data regarding motivators for adopting fintech. These motivators vary from ease of setting up of an account to attractive rates and fees. 126 respondents (63%) out of 200 expressed strongly agree over the motivators impacting adoption followed by 49 agree and 25 somewhat agree. Out of the 126 respondents who said strongly agree, 20 spoke about 24/7 access to service, 19 each stated about effective service quality and good online experience and functionality. Further 19 more indicated about availability of more innovative products when compare to traditional financial institutions, 18 reported about ability to access to variety of products and services, 17 voiced about ease of setting up of an account and 14 said about attractive rates and fees. Out of the 49 who stated agree, 10 stated about 24/7 access to service, 8 each said about ease of setting up of an account and availability of variety of products and services and 5 each spoke about good online experience and attractive fees and rates. Out of 25 who said somewhat agree 5 spoke about ability to access to variety of products and services, 4 each voiced about ease of setting up of an account and availability of more attractive products. Further 4 more opined about attractive rates and free. ANOVA fails to accept H0 and accepts H1 and hence it is concluded here that there exists significant variation in the data.
Research question No. 4 : What are the benefits of fintech services? Hypothesis H0 : There exist no significant relationship between benefits and fintech services.
H1 : There exist significant relationship between the drivers of benefits and fintech services. Table -5 shows data about benefits derived from fintech services. 110 respondents (55%) stated strongly agree over the drivers of benefits followed by 60 (30%) agree and 30(15%) stated somewhat agree. The benefits derived from fintech vary from higher personalization to economies in scale in collection and manipulating large branch data. Out of 110 respondents who said strongly agree, 20 said about higher personalization, 16 voiced about regulatory environment. 14 identified about increased speed of service, 12 each reported about lower cost of research and economies in scale in collection and manipulating large branch data. Out of 60 who expressed agree 10 identified higher personalization, 11 said about efficiency enhancement, 8 spoke about regulatory environment (RBI), 7 voiced about increased speed of service. Finally out of 30 who said somewhat agree, 6 spoke about higher personalization, 4 each stated about efficiency enhancement, and regulatory environment (RBI). Further 4 more identified about cheaper and more secure transaction. 'w' fails to accept H0 and accepts H1 and hence it is concluded that there exist significant relationship between drivers of benefits and fintech services.
Research question No. 5 : What are the trends in fintech? Hypothesis H0 : There exist no significant relationship between trends and fintech services. H1 : There exists a significant relationship between different trends and fintech services. Table -6 highlights data about different trends that have emerged and followed by fintech services. These trends vary from Chabot's for customer service to Aadhaar adoption. 115 respondents (57.5%) out of 200 expressed strongly agree over the different emerging trends followed by 60 agree and 25 somewhat agree. Out of 115 respondents who said strongly agree a majority of 26 said about machine learning and artificial intelligence, 22 stated about biometric for stronger security, 9 identified about world class technical framework and 8 each spoke about Omnichannel banking and obsolescence of bank branches and start up India program, 7 each indicated about Black Chain for future security and Jan Dan Yojana. Further, 7 more indicated public Philosophical Readings XIII.4 (2022), pp. 312-325. 318 Info@philosophicalreadings.org 10.5281/zenodo.5912447 relations. Out of 60 who said they agreed, 12 expressed about machine learning and artificial intelligence, 7 identified world class technical framework, 6 voiced about Omni-channel banking and obsolescence of bank branches, 5 each spoke about Chabot's for customer service and Block chain for digital transactions. Out of 25 who said somewhat agree 3 each expressed about Chatbots for customer service, and machine learning and artificial intelligence for fraud detection. Furthermore 3 respondents spoke about Jan Dhan Yojana. 'W' fails to accept H0 and accepts H1 and hence it is concluded here that there exist significant relations between the emerging trends and fintech services.
Summary and discussion of findings The main objective behind the present study is to probe the challenges faced by the fintech industry in Bengaluru, benefits, motivators, and trends. The expert's contribution in this area is also taken into consideration in order to put the study within certain appropriate perspectives.
The present study is based on both primary and secondary data. The primary data was collected by administering a well drafted structured questionnaire which was used as scheduled due to avoid non-response, delay, and respecting Covid-19 norms. Secondary sources include journals, internet, and books. The target population covered employees working in government and private sector, business people, self employed, startup entrepreneurs and housewives. The findings of the study were presented and analyzed and discussed using chi-square, Garrette ranking technique, ANOVA, and Kendall's coefficient of concordance quantitative techniques. From the study it was found that the fintech industry is facing many problems and challenges. It is benefitting the merchants and investors and the motivators are highly encouraging the fintech services which are growing fastly at Bengaluru. Bengaluru is a growing city in Asia and it is aptly nicknamed as 'Silicon valley' and 'science city'. Innumerable global level educational institutions are providing better education to the Indian and overseas students. Further, the study also reveals information about trends and fintech services, and these trends include chabot's for customer service, machine learning, AI for fraud detection, biometric for stronger security, world class technical framework, National Payment Council of India Initiatives etc.,

Conclusion
Fintech innovation has been globally embarrassed. Through innovative fintech services banks and financial institutions can deliver better service at lower costs. There are about 2200 fintech startups in India and of these nearly 50% have started in the past two years. Improvements in connectivity and computing can help to enhance efficiency and competition. Regulatory and supervision policy tools have to be awarded depending on the need and necessity. Fintech in India especially in Bengaluru is advantageous since there exists a better youth demographic growing. The financial services market in India is primarily untapped and 40% of the population at present do not have any association with any bank and more than 80% of the transactions are carried out through cash. The present study reveals the supporting demographic characteristics which are significant and such a high degree of relationship between the variables. Innumerable challenges are faced by fin-tech service providers. The first challenge faced at Bengaluru is about lack of government support, second ranked challenge is customer protection and the third ranked challenge is difficult to change the mindset of merchants and investors. Ease of setting up of an account, effective service quality, 24/7 access to service and availability of innovative products are some of the motivators for adopting fintech. Innumerable benefits are derived from fintech. The study reveals that benefits derived include higher personalization, regulatory environment, efficiency enhancement and increased speed of service and improved products to the customer. The study also reveals about the trends in fintech. These include machine learning and AI, biometric for stronger security, world class technical framework and Omni-channel banking and obsolescence of bank branches.