The Fintech sector in India is growing fast and holds a lot of potential for the economic development of the country in future. Fintech in India revolves around verticals such as lending services, payment services, personal finance or retail investment services, remittance services, banking and equity funding services, cryptocurrency, and miscellaneous software services. There has been a huge disruption in the Indian financial services sector with the emergence of these key services on digital platforms.
The emerging and dynamic Indian Fintech sector is a result of a large market, innovation-driven start-up landscape, and friendly government policies and regulations. NASSCOM states that India’s fintech software market could touch US$ 2.4 billion by 2020, double its current growth rate.
How Fintech is disrupting the Indian economy
India, which is largely a cash-driven economy, is gradually but steadily rising from the shackles of a traditional financial ecosystem. While the public sector banks have millions of loyal customers, there is another chunk of the population without access to even basic financial services. However, it is during this cash crunch fintech comes to our rescue.
Affordable delivery of financial services: Financial processes that took hours or days to complete can now be done in a fraction of time. Government initiatives such as ‘Digital India’ are further creating awareness among the masses to take the online route for their banking and transaction needs. People are able to reduce their transaction costs by completing them digitally.
Self-service applications: With growing use of smartphones and mobile apps, there is a high incidence of self-service financial applications. Fintech applications are being used commonly for financial services such as online transactions, investment advisories, and bill payments; leading to enhanced customer experience, and saving of time and effort.
For example, Fintech solutions such as payment wallets, by removing the need to link banks during the checkout while shopping online, digital wallets have made the payment process faster and easier.
Likewise, Fintech lending platforms are turning out to be a preferred mode to seek personal or business finance. Loan seekers can simply register on a lending marketplace, find loan matches, choose their lender and get approved for funding within minutes.
Speed, transparency and convenience are major factors that Fintech firms are leveraging to capitalise on the Indian economy. The consumers are benefiting with services at their fingertips, while businesses as banking on technology to grow in the new ecosystem; creating a winning situation for everyone.
We can say that Fintech are filling the gaps in the digital economy; and are enhancing customer experiences manifold as they do so.
Job creation: Fintech firms not only help in providing financial support but also help boost employment. Fintech platforms are always looking for talented employees to make sure their services reach the target audience in a way that they turn into loyal customers. After all, customer service is one of the main factors why Fintech bloomed in India.
Fintech investment in India went up from USD 247 million in 2014 to more than USD 1.5 billion in 2015. Investors are realising that fintech is more than just payment technology and investor interest is manifesting itself in a variety of sub-sectors such as investing, lending, wealth management, credit reporting and others.
What is the future of Fintech in India?
Mobile usage in India is set to rise to 64% in 2018 from 53% at present, and with internet penetration steadily going up, the growth potential for fintech in India is immense. Also, as many as 90% of small businesses are not linked to formal financial institutions. ThIs shortfall in access to institutions and services indicates a great scope to develop Fintech solutions (such as lending services, finance management) in India.
Growth and success of any fintech hub result from an integrated ecosystem. A conducive fintech ecosystem is one where all the stakeholders collaborate and share ideas across communities and networks, translating opportunities into business. In the current era of technology-driven financial services, no market participant can afford to operate in isolation.
The Indian government, along with financial regulators such as RBI and SEBI are doing their bit to transform the heavily cash-driven Indian economy into a robust Fintech ecosystem. Further, tax benefits to merchants conducting digital transactions, rebates on patent costs and income tax exemption for start-ups (first 3 years) propelling the Fintech growth in India.
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