INDIA FINTECH MARKET

INTRODUCTION

India, with a population of 1.3 billion people has an evidently massive consumer base, and thus serves as a hotbed for all kinds of fintech activity. Fintech is essentially an amalgamation of technology and financial services that provides an innovative and smart approach to facilitate services like banking, insurance, payments, etc.

Apart from this, it also largely contributes towards the development of digital money and cryptocurrencies. The evolving nature of this industry can pan out to be a game changer for the financial services landscape and enhance the country’s global presence into an emerging superpower.

INDIA FINTECH MARKET DYNAMICS

The Indian market holds immense potential for growth and innovation in this domain and is already one of the fastest growing fintech markets in the world, easily catching up with its global competitors.

The country has also seen a substantial increase in investment and funding over the years wherein 2019 witnessed the number nearly doubling to a whopping $3.7 billion from $1.9 billion in the previous year, making the country the third largest fintech market in the world.

The fintech market has evolved in many ways since it first emerged, primarily focused on the banking sector. In the coming years, the industry dominated the country in terms of money transfer, banking and insurance, investment, lending, and wealth management.

Among other branches of fintech, money transfer using digital platforms is an extremely popular practice in India. An upsurge was observed for a brief period after demonetization was implemented across the country.

The percentage consumer awareness of availability of fintech services to transfer money and make payments is 99.5% in India, hence, due credit goes to the consumers who have welcomed these innovations and ideas with open arms and proved to be one of the major pillars supporting fintech.  

Digital payments are evidently the most widely used fintech services in the country and some of the major successful start-ups like Paytm, MobiKwick, BillDesk, PhonePe, etc., have made the most of it.

Paytm is the unicorn among them whose services do not just limit to digital transactions, but also provides an array of other services like bill and mortgage payments, online shopping, recharges, and even insurances. It can be said that Paytm is the hallmark of the beginning of the fintech revolution in India.

GOVERNMENT`s ROLE IN INDIA FINTECH MARKET

The government has played a major role in popularising and marketing the idea of fintech services as a part of one’s daily life. The most prominent initiative is the introduction of UPI – Unified Payments Interface, unveiled in the year 2016.

It gained traction at an extremely rapid pace and since the government backed it up, the credibility and trust further spiked the usage. The launch of UPI is a benchmark for the Indian state, as from then on, the sky was the limit.

Not only the government actively endorsed digital transactions and practices, but private players too played a pivotal role in boosting fintech.

COVID IMPACT ON INDIA FINTECH MARKET

Although, the current scenario for the fintech consortiums has undergone a dramatic change due to the Covid-19 pandemic. On one hand, a number of start-ups, firms, and businesses have collapsed due to the pandemic whereas on the other, the fintech industry has only witnessed a handful of downfalls and hardly any colossal damage.

The pandemic boosted the demand for digital services and payment mechanisms hit the ceiling overnight and the whole fintech community made sure to make the most of it in as many ways as possible.

These demands were met and many organizations adapted and improvised, they introduced new services to fit the demands in such times. For example, PhonePe and Paytm offered a range of options to procure essentials like groceries, medicines etc., by partnering with other companies and financial institutions for seamless delivery.

COMPETITIVE LANDSCAPE

As of June 2020, there are 2,174 fintech companies in India and their roles are not just limited to advocating fintech services but also bring laurels to their economy by bringing a massive inflow of investment and funding from all around the world.

Between January and July 2020, fintech investments reached $1.47 billion which is approximately a 60% jump when compared to 2019. The last 4-5 years have been golden for the fintech business and India is definitely on a path of thriving success in the following years.

Despite the boom which the entire line of business has witnessed, there is a long way to gain complete control of the market. For a roaring success, the industry must penetrate not only the money transfer and lending markets, but also insurtech, wealthtech, and banktech which have a huge scope.

These sub sectors are huge opportunities for fintech companies to penetrate as they are a growing market. Start-ups like PolicyBazaar, Zerodha and LendingKart deal with different segments of finance unlike other traditional payment interface companies which thrive in the country.

THE WAY FORWARD IN INDIA FINTECH MARKET

The scope of fintech companies and start-ups are heading towards a bright future. Although the industry was looked at as a competitor for various financial institutions, over the years these organizations have ended up collaborating with them intensely to not only provide enhanced services but also ease up their pen and paper hard work.

Hindrances like safety and complicated interfaces drive away a certain part of the population, thus creating a gap on the consumer base.

When the safety aspect is looked at, blockchain and big data come into the picture. These two technologies are in full swing and play a pivotal role in enhancing fintech services by creating such swaying away fraudulent practices and incidents via secure and fool proof programs.

The fintech industry has no way but to go up and it is only a matter of time when we witness the boom this industry will experience in the coming years. Overall, the country offers ample opportunity for the industry to thrive in and with increasing focus on digitization of the economy, the fintech industry will serve as a backbone towards moulding the country’s future financial endeavours.

COMPANIES PROFILED

• PolicyBazaar
• Zerodha 
• LendingKart