What is the Innovation in the Indian Fintech Market


Innovation and technology have brought about a radical change in traditional financial services. India has seen the emergence of start-ups and massive global investments in the market.

By definition, fintech comprises of technology-based businesses that are competing against, enabling or collaborating with existing financial institutions. In addition to the financial institution, they are also collaborating with universities and research institutions, government associations and industry bodies.

A major role in kick-starting the evolution of Fintech in India was played by start-ups offering digital mobile recharges

Evolution of Fintech in India:

Post liberalizing policy in 1990, the banking industry has introduced technology-savvy banks. Many legislative actions have taken by the government to boost the banking system and pushed new technology such as MICR, electronic funds transfer and other electronic payments that revolutionized the banking system and in turn, boosted the Indian economy.

Later in 2015, the initial offer of banking correspondent (BC) model, which was used to increase penetration of financial services to the rural household took ahead fintech growth.

The year 2010 saw an emergence of payment start-ups in mobile wallets; e-bill payment and mobile recharge services. Major Fintech start-ups such as Oxygen, MobiKwik, Paytm and Free charge originated between the years 2005 to 2010.

Since 2010, there have been multiple Fintech start-ups that have mushroomed in different segments such as lending, personal finance management, and investment management.

Fintech has gained even more eminence with Venture Capital firms displaying keen interest.

India has witnessed various developments in the Fintech segment in last few years where apart from start-ups and investments, the established corporate sector including banks, financial institutions, and others as well as the government and regulatory bodies have taken steps to develop, implement and propel innovative solutions.

  • Banks have also launched solutions with the help of their in-house teams aimed at improving the digital financial infrastructure. Some of the initiatives include:
  • ICICI bank launched a contactless mobile payment system which could enhance NFC payments in India
  • Axis Bank presented the ‘Invoice to Payment’ feature that provides end-to-end digital invoicing and payment solutions
  • DBS introduced the first mobile bank that allows customers to open accounts digitally with their PAN card and Aadhaar card
  • Union Bank launched the mobile application in partnership with NPCI that allows basic services like balance inquiry, fund transfers and mini statements to its customers even when there is no internet.
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These new solutions will enable Fintech start-ups to leverage the infrastructure created by banks to enable their solutions or enhance existing offerings with superior product experience.

Who are the stakeholders connected with Fintech growth?

The principle on which the Fintech ecosystem is based on is integration and collaboration with other agencies, this is where the exchange of ideas and strategies, the building of networks and conversion of opportunities plays a significant role.

Below are the key stakeholders that define the success of this industry:


The main role played by the start-up in the growth of the Fintech. The space of start-up Fintech is not just limited to mobile wallets. The number of start-up fintech is rapidly increasing and expected to rise more in the coming years due to the introduction of initiatives such as a focused accelerator program by local and state governments and banks. Moreover, support through funding is provided by leading corporates and venture capital. At this point, the start-ups are undergoing a makeover – from disrupters to enablers of change.

Universities and Research Institutions:

The leading institutions in India are playing a proactive role by organizing events and competitions as well as offering technical courses. For instance, IIT Roorkee, one of the premier institutions of our country, organized the Global Entrepreneur Conclave to enhance entrepreneurial skills and recognized those students who displayed exemplary skills in technology-related fields.

Government and Regulators:

The Government, along with regulators such as the Reserve Bank of India (RBI) and Securities Exchange Board of India (SEBI), are extending all the support to Fintech companies, in order to realize the country’s vision to become a cashless economy.

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Through the ‘Start-up India’ initiative that was launched in 2016, the government envisages to build a strong ecosystem for start-ups in the country, promote innovation, drive sustainable economic growth and generate large-scale employment opportunities. In addition, to help start-ups, the government has launched a range of tax and surcharge reliefs, including income tax exemption for start-ups for the first three years, a credit guarantee mechanism through debt funding for start-ups as well as other exemptions

The following are the government opportunity available:

  • Financial Inclusion and Enablement
  • A growing digital population
  • Promoting non-cash transactions
  • Biometric identification database

Financial Institutions:

After viewing the rapid emergence of the Fintech sector, various BFSIs are collaborating with Fintech start-ups on a variety of platforms such as wallets and online client acquisition, among others. Financial Institutions are proactively mentoring, supporting, and investing in innovative start-ups. For example, Bank of India offers a wallet in collaboration with Paynim that is powered by Tech Process.

Incubators and Accelerators:

This is a critical component of the Fintech ecosystem. The incubators and accelerators role is not just limited to funding, but also to strengthen the financial industry and enhance soft skills. Financial institutions play a significant role to discover talent and develop platforms and solutions. Many start-ups have identified founders developing apps that revolve around innovation in banking. Moreover, non-financial institutions focus more on incubation than acceleration. Some of the most significant initiatives include PayPal Incubator and Yes Fintech.


The users, comprising of customers in the form of both individuals and organizations, have shown impressive receptivity to the transition of India’s economy is technology-driven. The routine transactions made by cash have given way to cashless transactions and mobile banking.

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What makes Fintech in India unique?

Fintech has been thriving in India for the last few years. The reason behind fintech being unique in India because it is young, growing rapidly, and is fuelled by a large market base.

Some of the key characteristics of the Indian market that make it exciting and interesting for Fintech start-ups are:

  • The only Fintech hub which provides ample opportunity to target large unbanked population. United with the growing young population who readily accept new technologies, India makes an attractive destination for Fintech start-ups.
  • The tough exercise to change consumer behavior towards accepting Fintech solutions is already underway.
  • The broad level of technical education provides India with a strong talent pipeline of a comparatively cost-efficient and easy-to-hire tech workforce.
  • India has the second biggest startup ecosystem in APAC after China measured in deal size and number of deals.

Overall, India is confidently moving up the Fintech ladder and provides plenty of opportunities for Fintech start-ups to enter the diversified market and be successful provided a careful solution-customer match and a strong go-to-market strategy is in place. The two broad segments where Fintech is most active in India are payments and lending.

What is the Innovation in the Indian Fintech Market?

Two key innovation drivers, Aadhar and Unified Payments Interface (UPI) have huge potential to push the Indian Fintech ecosystem ahead.

The very base of India stack is Aadhaar – the national digital ID program. Aadhaar extends to a billion Indians a powerful biometric database that can be accessed by any service provider and another hand Unified Payments Interface (UPI) with the aim to transform payments.


Innovation in financial services has been growing across the value chain – from product development, packaging, and delivery, to services.

India provides a huge market for Fintech that is ripe for disruption. With rising financial awareness, and a startup that comes to India would need to strike the right balance between their product and the market, invest in customer education, develop innovative business models and build Fintech in India.

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