Innovation and technology have brought about a radical change in traditional financial services...
The country’s changeover to a digital and less-cash budget has transported along with it some predictable and inevitable transformations along the way. The fintech start-up eco-system has seized the moment and caught public attention in memorable ways.
In the current scenario, banking is essential, but bank branches are not. Today, banks are at our doorsteps and indeed, inside our homes around the clock. Transferring money, getting statements, making investments, paying bills and more – all day to day banking tasks can be done through our smartphones with a few taps and seamlessly bringing together traditional banking and modern technology, thereby creating exciting new opportunities.
At the heart of this change is the multitude of FinTech startups that are revolutionizing the way banking and financial sectors operate. By manufacture the numerical citizen happens modern technology within seconds, these Fintech startups are fast changing the perception and realization of India as a digital hub, as our country moves towards a state of the less-cash economy.
I’ve always known that there is no industry – no way of doing things – that can’t be disrupted by a fresh perspective harnessed with the application of modern technology. The FinTech space in India represents this philosophy perfectly, as it provides a big canvas of potential innovation for all players. New thought leaders and entrepreneurs have arisen where it was previously believed that no space existed and, as young as they may be, these new-age leaders are the ones who are driving the country forward towards newer frontiers.
The meteoric rise of Indian FinTech startups While India is a relatively new entrant into the financial technology space, the industry has gained recent prominence on account of a massive consumer base, conducive government policies/regulations and an innovation-driven ecosystem that encourages startups to flourish. According to a NASSCOM report, about 400 FinTech firms have already been set up in the country since the introduction of the FinTech terminology and the industry is predicted to be worth as much as $2.4 billion by 2020.
The wheels for this dramatic liftoff are already in motion. There are several FinTech startups in the space that have introduced massive transformations in the way data is processed and gathered, thus revolutionizing the industry altogether. Mobile-first banking is one key area of focus where we have seen some incredible recent innovations, all thanks to the rise in smartphone consumption and their affordability. Peer-to-peer money transfers have also scaled massive heights of adoption, driven by an increasing propensity to conduct digital transactions using digital wallets and modern platforms like the Unified Payments Interface (UPI).
Important startups are making the best custom of this virtual exchange to authorize Kirana stores and to take small-business establishments to greater levels. By handling foreign exchange rates automatically, cross-border trade has also implemented record-breaking technology to empower merchants like never before. We have also seen some highly interesting applications of Blockchain Technology in order to make transactions more secure, inclusive and, ultimately, worthy of global customer confidence.
How the government and industry leaders can help?
Mentoring these entrepreneurs and startups is something that we at PayPal take pride in. For instance, as part of our efforts to empower the industry, on the whole, the PayPal Incubator offers Fintech startups unimpeded access to our technological expertise as well as market leadership. We also hold the confidence that existing manufacturing players should come together commonly to articulate initiatives that aid startups in this space to create and deploy innovative, scalable and ultimately, profitable financial solutions for their consumers. After all, cumulative industry growth is beneficial to everyone in equal measure, and to the economy.
No great vision or breakthrough in society comes without a challenge. Startups in the Fintech space continue to face several steeplechases specific to their segment. Chief is culture and comfort in paying and accepting cash and paper-based supporting processes. While Demonstration coupled with other measures in recent years has pushed a larger number of users to adopt digital means, close to 90% of all transactions in India is in cash. Though a majority of work is being done in recent years, the supporting process which enables digital payments, digital lending still has a friction-like wet signature, physical verification of document and physical mandates for SI’s as some examples. These result in high friction and increases costs of acquiring, on-boarding and serving users using digital means.
The catalyst for change in recent years has been the Indian Government & regulators. The Government in a startup mode has introduced several initiatives to accelerate India’s transition towards a digital economy under the Digital India program. The Startup India program and other initiatives by Government and RBI have catapulted India into one of the most vibrant innovative fintech/payments ecosystems. The launch/implementation of JAM, UPI, Aadhar Pay, Bharat QR and India stack are enabling new fintech startups and models to grow and thrive in the financial services space.
As the brave new world of a less-cash economy awaits, it is only with mutual collaboration and teamwork, and the innovations that FinTech startups provide, that India can truly realize its ambitions. Industry leaders and government policymakers thus need to pool their resources and intelligence together to create a conducive ecosystem that nurtures these new-age financial market players, in order to lift off this vision and propel the country towards a brighter future.