Fintech in India: Paving the Way to a Billion-Dollar Economy

Fintech in India has crossed China and became the second-largest fintech economy after the US

Fintech in India is ballooning at an unprecedented speed like never before. Recently, India has crossed China as Asia’s top financial technology market, emerging as the second-largest fintech ecosystem in the world after the US. Indian fintech companies are leveraging new technologies to address financial service-increase outreach, improve customer experience, reduce operation friction and foster adoption and usage of digital channel. India is amongst the fastest growing fintech market in the world. Despite making it big in recent years, the industry is now setting up new goals for other countries. Fintech in India was valued at US$65 billion in 2019 and is expected to grow to US$140 billion in 2023 at a CAGR of 20% during the forecast period. Along with many mergers and technological outbreaks, Indian fintech companies unravelled a new age of banking for the country’s more than 63 million business and 190 million unbanked accounts, which had been at the verges of financial services. Fintech is used to represent the new technologies that seek to improve and automate financial processes like payment, transaction, monitoring, etc. Digital payments, digital lending, Banktech, Insurtech, Regtech, Cryptocurrencies and Wealthtech are some of the key segments of the fintech ecosystem. Indian fintech companies have the potential to reshape the financial service landscape by reducing costs and improving quality, developing unique and innovative models for assessing risks and creating a secured payment method. Fintech in India stands strongly on digital payment, Wealthtech and Insurtech. With the emergence of fintech start-ups, the wealthtech industry is seeing dramatic spike. Technological changes and new business models are shaping the future of weatlhtech. Digital payments are becoming an easy source for Indian online banking users. As more and quicker payment solutions make their way into the fintech ecosystem in India, the industry keeps rising its ground to higher levels. The scope of IoT has raised the insurtech beyond telematics and customer risk assessment. While all these routine breaking trends and new solutions come out as a remedy, fintech in India gets streamlined with many advantages.  

Developing a fintech ecosystem

Traditional financial services have seen linear growth in the past few years, thanks to innovation and technology. In 2015, the world experienced the emergence of more than 12,000 start-ups and a massive global investment of US$19 billion. As more fintech companies started using fintech tools and technologies, it brought a seamless spike in the services. Starting from tapping new segments to exploring foreign markets, fintech ecosystem in India is pursuing multiple aspirations. Government acts as a prima facie catalyst between people and fintech in India. The government of India along with regulators like SEBI and RBI are standing by the Indian Fintech companies to bring a fully cashless economy through government programs. Tech vendors are the backbone of fintech ecosystem in India. They support the Indian fintech companies to disrupt traditional functions, infrastructure and skills. Meanwhile, banking, one of the major contributors to the Indian economy is merging with fintech start-ups to incubate and create alliances on a variety of platforms such as wallets, investment intermediation, online client acquisitions, etc. Banks are trying to cope up with fintech to upgrade their existing systems and enable smoother operations to deliver a better experience for consumers. With the merger of banks and fintech institutions, the duo can provide collaborative financial services in an open architecture. Some of the trends and factors that are anticipated to drive fintech in India in 2020 are listed below, Reliance on tech firms- The younger population is totally changing to an online mode of payments over the physical way of visiting banks or dealing with money. Henceforth, fintech institutions are increasingly relying on tech firms to find disruptive trends. Cloud banking- After banks moved to cloud computing, the cost spent on maintenance and services has drastically reduced. Besides, cloud also adapts to the changing demands and provides resilience to serve the shifting needs of customers. The comeback of neobanks- Neobanks are increasingly seen as the future of banking system. As more people apply for banking licenses and institutional banks looking to expand their digital offerings, neobanks will get streamlined in future.  

Fintech start-ups in India

Fintech start-ups are the reason behind India winning over China and taking second place globally in fintech market. In recent years, man fintech start-ups have emerged from the Indian ecosystem by disrupting the banking, financial services and insurance (BFSI) sector. They have brought the concept of paperless lending, mobile-first banking, secure payment gateway, mobile wallets, etc. Despite directly impacting BFSI, the fintech start-ups are also targeting the wealth management, regulation and insurance industry. Fintech start-ups are reducing the number of parties involved in the management process and make them easy to use. For example, the insurance sector involves customers, distributors, and insurers. But with the help of fintech, insurance companies can directly link with customers rather than involving a third party. Mobile insurance solutions are offering thousands of options to customers and minimize their workload.