Fintech in India

Fintech refers to the novel processes and products that become available for financial services thanks to digital technological advancements.  More precisely, the Financial Stability Board defines fintech as ―technologically enabled financial innovation that could result in new business models, applications, processes or products with an associated material effect on financial markets and institutions and the provision of financial services.

• A recent report by Ernst and Young (2016), Capital Markets: Innovation and the FinTech Landscape identified the following nine technologies or technology-enabled trends that, individually or collectively, facilitates current and future FinTech innovations: 

• Cloud technology
• Process and service externalization
• Robotic Process Automation (RPA)
• Advanced Analytics
• Digital Transformation
• Block chain
• Smart Contracts
• Artificial Intelligence (AI)
• Internet of Things

• According to the report of (KPMG 2016), India is transitioning into a dynamic ecosystem offering fintech start-ups a platform to potentially grow into billion dollar unicorns. From tapping new segments to exploring foreign markets, fintech start-ups in India are pursuing multiple aspirations. 
• The Indian fintech software market is forecasted to touch USD 2.4 billion by 2020 from a current USD 1.2 billion, as per NASSCOM. The traditionally cash-driven Indian economy has responded well to the fintech opportunity, primarily triggered by a surge in e-commerce, and Smartphone penetration. The transaction value for the Indian fintech sector is estimated to be approximately USD 33 billion in 2016 and is forecasted to reach USD 73 billion in 2020 growing at a five-year CAGR of 22 percent. 
• The investor attention has been concentrated towards hitech cities in 2015, with Bengaluru witnessing eleven VC-backed investment deals of USD 57 million, followed by Mumbai and Gurgaon with nine and six deals, respectively. Bengaluru, the start-up capital of India has benefitted from the same and is ranked 15 among the world‘s major start-up cities.  

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The Future of Fintech in india: 

• Blockchains
• Alternate lending
• Robo advisory
• Digital payments
• Insurance sector

Challenges:

• In India, acceptance of various cashless modes payments was seen after demonetization notes. The government itself encouraged everyone towards the cashless technologies like digital wallets, Internet banking, and the mobile-driven point of sale (POS).
• Linking with the Aadhaar card, eKYC, UPI and BHIM had restructured the financial sector in India. 

• After the ban of 500 and 1000 notes, it was reported that digital transactions raised up to 22% in India FinTech start-ups like PayTM saw 435% of more traffic to the websites and Apps. This led to the growth of many FinTech start-ups in India as there are many opportunities to grow.
  • Digital Finance firms have benefited from many government‘s start-up policies. Reserve Bank of India also allowed an easy way to start a FinTech start-up. Government is also providing the financial assistance for start-up‘s up to 1 crore. Customers started accepting the digital currency for both personal and commercial use. 
  • Due to various changes in the Indian economy, the financial structure of Indian banks and financial institutions were changed and digital wallet became a mandatory channel for the transfer of payments. 
  • Integration of IT with finance led to the increase in the value of digital money like Bitcoins. Crypto currency, Block chain system led to faster transactions of digital payments. 
  • Banks like HDFC, Federal Bank etc. linked there official digital transactions with the small startup in India like Startup Village which led to the growth even in small FinTech start-ups. 
  • Modernization of the tradition sector of banking and finance had increased more customers, reduced the time and were able to provide fast and quick services to the customers.
  • FinTech industry also has few challenges, like Fintech startups, find a little difficult to reach the growing phase in the business cycle. 
  • Collaboration and adoption rate is quite less but the ratio is moving upwards with a 59% increase in the digital payments. 
  • Integration of many other techniques like blockchain management, cryptocurrency is not still in a niche stage in India.
  • Transparency of the regulatory issues and hiring of tech personnel are among the key challenges of the Indian FinTech space. 
  • Innovation has been a bit limited for the low-income groups. Additionally, mass awareness and internet bandwidth is still a huge roadblock in India.

Way Forward:

• As a coin has two faces even FinTech industry in India also have few challenges, Yet these challenges can be converted into opportunities if a further support is provided by the government.
• Fintech industry change for the financial services in India. and India’s fastest growing fintech industry in the world. In the feature, Indian fintech software market is forecasted to touch USD 2.4 billion by 2020 from a current USD 1.2 billion, as per NASSCOM. 
• The traditionally cash-driven Indian economy has responded well to the fintech opportunity, primarily triggered by a surge in e-commerce, and Smartphone penetration. 
• The transaction value for the Indian fintech sector is estimated to be approximately USD 33 billion in 2016 and is forecasted to reach USD 73 billion in 2020 growing at a five-year CAGR of 22 percent. 
• The Indian government also focuses on and encourages fintech industry and promote new ideas and innovations refer to the fintech industry. Fintech is an emerging concept in the financial industry. 
• Financial technology innovation in India more advantage for the Indian economy, the fintech services more secure and user-friendly. the fintech services reduce their costs for financial services.

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