Despite the significant recovery from the global financial crisis, the retail banking industry...
In India, the banking system is very old, but it is still unable to serve a group of sections of the society. On the other hand, fintech companies are bridging the gap and creating innovative solutions which serve a wider customer base more efficiently at a lower cost.
For entrepreneurs, investors and acquirers fintech as a startup sector is in favor and is rapidly growing. Fintech brings a host of benefits which will help India grow over the traditional trajectory of developed economies.
In order to establish itself as a global Fintech hub, India has everything which it requires. India has opportunities waiting to be seized in the Fintech space with a large market of unserved customers, increasing mobile penetration, favorable demographics, an active start-up ecosystem and a large technology talent pool.
Traditional players are looking up for associating themselves with fintech startups either through partnerships or by directly investing in them, for young firms, collaboration with established names gives them a great platform to showcase their product and get access to a network of mentors, investors, and customers.
The healthy competition synergy between traditional banks and fintech startups can benefit both. While startups can benefit from the credibility banks enjoy the latest trends and technologies via such collaboration.
Remittances which can be sent with a single click without going to the post office to send a money order which takes days to reach. Through digital channels with minimal human intervention, fintech have reduced the chances of friction and resultant corruption.
With easy access to streamlined information, fitness is boosting financial literacy, making it easier for users to understand and make informed choices to decide where and how their money is used.
Due to the lack of clear credit histories, an earlier generation of financial solutions and the strict regulations around them restricted the number of people who could access these. With the help of fintech tools, gathering data to better understand users, capturing details regarding identity, and providing relevant services has become much easier.
To understand the financial behavior of users, and formulate solutions accordingly several fintech companies are using data from sources such as phone bills and rental and utility payments.
With the simplified and more user-centric approach, it offers transparency and clarity and, in turn, a better overall experience for the users.
FinTech’s also allowed deriving advantages such as increased accessibility and reduced costs from service charges and subscriptions. With the help of digital platforms and mobile technology, it has simplified interaction. This fintech also customized for usage on basic mobile phones at low bandwidth, ensuring that a greater number of people can use them.
The most tightly regulated industry is financial services industry.
This Fintech industry will develop innovative models of assessing risks. It will help in creating a more diverse, secure, and stable financial services landscape. These Fintech companies are less homogenous than banks and offer great learning templates to improve capabilities and culture.
Around risk and internal controls, operational excellence, compliance culture, and employee engagement, Fintech companies can learn and adopt best practices which have stood the test of time for most the banks, and financial service providers in India.
In India, towards the success and development of the Fintech ecosystem, the range of factors have contributed. India’s population is going digital at a very fast pace with the number of internet users and is expected to rise even further. Government is making consistent efforts to promote digital services through ‘Digital India’, where the opportunity lies for existing Fintech start-ups as well as potential investors. The government’s biometric identification database, Aadhar, contains information of over 1 billion Indian citizens which is likely to minimize the effort required for first-level verification of customers. The Reserve Bank of India has introduced set of guidelines in and relaxed the rule of undergoing a KYC process for customers carrying out transactions. RBI also introduced set of norms to revamp the Indian peer-to-peer (P2P) lending market. Fintech has become an emerging industry with the significant growth in capital investments and government policies. This interest is likely to witness a spike with continued participation from banks and regulatory bodies.
Furthermore, the government has introduced tax rebates for traders accepting more than 50% as electronic payment to provide an impetus to cashless transactions.