Socio-economic and demographic changes have increased the demand for innovative and secure Fintech in India. Fintech startups are piggybacking on the government’s initiative to reach the majority of the population with their tech-friendly regulations.
National Payments Corporation of India [NPCI], Digital India, Smart Cities, Startup India and Aadhaar are some of the prominent Government programs that help build and support this ecosystem.
The growing interests in Fintech Markets put the transaction value of Fintech sector $33 billion as of 2016, and it is expected to grow and reach $73 million by 2020 putting the annual growth rate at 22{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616}.
There is wide scope for development in the Fintech Sector, and they can be categorized into the following spheres:
Growing FinTech trends to watch for in 2017:
- Micro-Payments – Companies focusing on the FinTech Sector are capitalizing on the Unified Payment Interface (UPI) and NPCI (National Payments Corporation India) to expand the ecosystem of digital payments. The increased efficiency and security of digital payments systems have increased the adoption rate of transactions via smartphones. A growing acceptance in this space will enable the objective of a cashless society.
- Blockchain Adoption – Blockchain is the technology behind “Crypto Currency.” It is an innovative integration of cryptography, mathematics, and economics that helps create and maintain an expansive database of transactions. It resembles a single consolidated ledger of financial activities.
The scope of applicability is large as Blockchain also promises security and credentials. According to the World Economic Forum [WEF], 80{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} of the banks are expected to start Blockchain projects with big players like Goldman Sachs getting behind the concept.
Even the RBI is considering this as a means to mitigate cheque fraud.
Blockchain also guarantees operational simplicity, reduction in process & settlement time and risk mitigation.
- Marketplace Lending – Online lending platforms (P2P) are becoming very prominent. They primarily use non-traditional data to determine a customer’s creditworthiness. Given that almost 75{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616} of the Indian population does not have an established credit report, this works well in their favor.
- These platforms data analytics backed by algorithms to make a risk assessment for lending.The categories predominant in P2P portfolios include personal loans, commercial loans, and microfinance.
- Reg Tech – Regulatory technologies are evolving to accommodate the barriers to business entry. The goal here is to provide the right tools and services that will enable automation of compliance tasks, improve the accuracy of identity management and reduce risks of fraud.
Delegating a lot of the redundant tasks to technology removes the burden of repetitive tasks and enables a lean business. This is a newly discovered market with promises to provide a lot of potential savings to organizations.
- Robo-Advisory – This market is expected to grow at a Compound Annual Growth Rate [CAGR] of 68{ed162fdde9fdc472551df9f31f04601345edf7e4eff6ea93114402690d8fa616}. The projected estimate for managed assets by 2025 is expected to be USD 5 Trillion.
Currently in India the apart from the wealth and asset management sectors, retail space is capitalizing heavily on robo-advisory services. Increasing investment in biometrics and security promises to enhance customer experience through digital transformation.
References:
- “ The India Fintech Market Map: 72 Startups Working Across Lending, Payments, Insurance & Banking” – CB Insights
- “#5 Fintech Trends That You May Want To Watch Out For in 2017” – Kumar Srivatsan [Entrepreneur]
- “3 Ways Fintech Is Disrupting The Indian Lending Space” – Manavjeet Singh [CXO Today]
