The Indian Fintech Industry 

 

Described as a combination of financial and technology, FinTech is a relatively new, and often nebulous term that refers to technologies that are used to help consumers and financial institutions deliver financial services faster and more affordably than they have in the past. When you compare the difference between walking into your bank for a balance check and being able to electronically retrieve that same data on your phone, you can visualize FinTech’s impact.

 

All aspects of financial services have evolved in recent years, from the ability to view financial transactions online to apps that allow you to pay your friends to tools that help financial institutions make lending decisions quickly. As an example of FinTech in action, investors are able to do their own research, select stocks and track their performance in real time.

 

With the help of fintech, consumers are being empowered to take as much control over their finances as ever before. By leveraging advanced technology, the company is dismantling old silos and improving consumers’ financial outcomes.

 

Technological advancements in the financial industry have greatly impacted global business. This has given rise to new business opportunities and created new financial services and included a global population. FinTech has contributed to the growth of online purchases. This area has expanded exponentially at the expense of shopping in-person resulting in the dominance of online transactions and cashless solutions. This is the e-commerce industry we covered in our last blog. It has also shifted the balance of power from banks as well as other financial services providers that own customer experience and instead it is the financial technology that engages the customers. Through financial technology, financial services providers are getting new platforms for collecting data and creating aggregated market views and use of data analytics that uncover various industry trends. Financial products are also increasingly becoming more tailored to customers who in turn seek coverage of those services in their specific locations, timeframe and user needs. It has also made possible for artificial intelligence and enabled financial services providers to differentiate their product and service offerings. Sustaining FinTech has also emerged as being an expensive affair for providers because of its dynamic and changing nature. This has pushed players to seek partnerships with market lenders, FinTech solutions companies to evade a regular overhaul of their infrastructure.

 

In the past year, India has surpassed China as the largest financial technology (FinTech) market in Asia. Having emerged as the world’s second-largest fin-tech hub (trailing only the US), India is experiencing the ‘FinTech Boom’. Estimates put the industry’s total valuation at between $50 and $60 billion. Reports by Boston Consulting Group predict Indian fintech companies will reach a valuation of US$150-160 billion by 2025, increasing threefold in five years.

 

Numerous start-ups in India are supporting their rapid growth by being innovative in the way they offer investors and financial institutions reliable information and reduce the asymmetry of information between them. Demonetisation, which took place at the end of 2016, contributed tremendously to India’s rapid adoption of digital/online payments.

 

Key drivers

  • Start-up India
    •  Flagship government initiative to mobilize and strengthen the country’s start-up ecosystem.
  • Aadhaar
    • A biometric identification possessed by persons living and working in India, which can be used as verification during digital payments.
  • Jan Dhan Aadhaar
    • A government plan to link Jan Dhan accounts with the Aadhaar and mobile numbers in order to be able to directly transfer subsidies to needful citizens.
  • Blockchain market
    • Expected to grow at a compound annual growth rate (CAGR) of 37 percent till 2024

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