Being a digital payments warrior, 2016 was amazing for my industry, something very few sectors can claim. While I have many stories to tell from 2016, who cares? The future is looking even more interesting.
As we bathe in the sun of the new year, here are some of my thoughts on what could happen in 2017. For me, this will be the year of going back to the basics. It will NOT be a year of buzzwords and sexy acronyms. It will be the year of world-class platforms and technology services and of handling amazing volumes. It will also be a year of incremental product growth rather than disruptions, as far as India is concerned.
Get ready for Bharat
Over the last few years, it has always been about the affluent middle class and solving their payments problems. All discussions were about how Uber payments could be made seamless. However, in the wake of the demonetisation, the focus needs to be on welcoming the digitally-uneducated into the new economy. The focus should and will be on making the transaction flow easier to understand for the middle-aged and not just millennials. According to the latest BCG report, rural India, home to about 870 million people, should be the prime target of fintech players creating awareness around digital transactions. We should further anticipate an increase in the adoption of technologies and platforms which are incremental to banking services. Hence, I feel a UPI-like service will be a big focus in 2017.
Solve for credit
Anyone who has followed the Indian middle class will agree that the credit model has been broken for the last 10 years. It might be easier to pass through the scrutiny of a US visa than to get a personal loan! Banks have found it incredibly difficult to find the right consumer and deliver low-cost credit. A recent analysis by PwC suggests the expected Indian market size in lending through P2P platforms alone will be $5 billion. There will be an opportunity to use the online digital payments channel to deliver credit and to ensure that collection of payments also happens faster. In fact, millennials, as one of the most dynamic consumer segments, will be keen to build their internet profiles to build creditworthiness and not just Tinderworthiness. These creditworthy internet consumers will demand recognition and credit. Be ready to deliver!
The use of social media for commerce has been on the rise. FB and WhatsApp have been destinations for product promotions and commerce. Payments will need to follow. Over the next five years, payment buttons will make the recent Amazon video come true. Payment transactions will happen on social channels and we will see more products with ‘pay’ buttons on SMS and WhatsApp. Tuition teachers, gym coaches, bloggers, and biryani aunties will all use WhatsApp for receiving payments.
Emergence of Bitcoin
One of the most anticipated trends of 2017 is Bitcoin, both in terms of spending and investments. The industry is already witnessing a growing user acceptance with a rise of 250 percent in the Indian user base, further accentuated by surpassing the $1,000 mark, hitting its highest value post demonetisation. As the digital landscape makes room for more users, the same would be the favourite haunt for cyber criminals, who are always on the prowl. Since every digital payment service provider is engaged in ensuring highly secured and uncompromising processes, cryptocurrency walks away with the cake. Guarded by additional layers of cryptography for security purposes, Bitcoin further safeguards transactions via private key numbers and more. While still at a nascent stage in India, Bitcoin will observe major overhauls and industry-wide associations to gain mainstream acceptance and scope of utility.
Digital payments become smarter and more intuitive with AI & big data analytics
2016 was the year that witnessed impressive growth in both the adoption of AI and the expansion of the fintech sector. If that is not an epiphany of sorts, I wonder what is. 2017 will, in the coming months, see an amalgamation of two of the most promising sectors of today. Considering the digitalisation drive, we expect an exponential increase in the data relevant to the fintech sector. According to a joint report by NASSCOM and market intelligence firm Blueocean, the analytics market in India is presently valued at $1.2 billion and is expected to reach $2.3 billion by 2017–18. Big data analytics can bring about industry-wide fast-paced processes. Besides, with AI, both traditional and non-traditional banking and financial players can expedite the processes, making the same more intuitive and proactive. With a massive opportunity for financial inclusion, these technologies will play a major part in manifesting the same vision.
These are the times for the revolutions poets wrote about, especially for the fintech and digital payments landscape. There has never been a better time to dream big and deliver incrementally.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)