Why fintech companies hold the key to Digital India

Touching customers across sectors and at all levels of the pyramid, fintech companies are bringing in transparent, affordable, and easy-to-use financial solutions.

The financial domain isn’t one everyone is comfortable with. For terms like loans, collateral, securities, stake, and funding can scare even the not-so-faint-hearted.

At the other end of the spectrum are enterprises, both small and large, that are fulfilling demands, creating products and providing services that improve the quality of life and create employment. However, they find the going tough as they find the finance maze tough to navigate.

While banks and other formal and informal finance channels have been available since long, the former need a potential customer to complete a host of pre-requisites before disbursing any funds while the latter often lack transparency.

This is the gap that several fintech companies are now trying to bridge, and, in turn, leading the country to fulfilling the goal of Digital India.

Sampad Swain, Co-founder and CEO, Instamojo, said there are millions of MSME enterprises in the country that are typically self-employed, or employ under 10 people. While they are abreast with trends like digital payments and online commerce, the biggest problem for them is the fear of adopting these technologies and affordability.

“We need to create a product and experience that is affordable and simple to use, which will create immense value for them for decades to come.”

Giving an example of how fintech can help scale up businesses and make them profitable, Sampad spoke about a teacher from Mysore who sold exam tutorials, making a few thousand rupees. Using a simple payments product on Instamojo, he was able to scale his business to a revenue of Rs 15 crore, and now hires 89 people.

Sampad, along with Amit Shah, Senior President and Country Head, YES Bank; Bala Parthasarathy, Co-founder and CEO, MoneyTap; and Shashank Rishyasringa, Co-founder, Capital Float; was speaking at a panel discussion at the eighth edition of YourStory's flagship annual event TechSparks, which kicked off in Bengaluru on Friday, September 22.

The two-day event, themed ‘Make it Matter’, will see conversations and idea-sharing across a gamut of areas, including financial technology, e-commerce, fashion, artificial intelligence and Internet of Things.

The discussion was moderated by Srikanth Rajagopala, Head of Financial Services, Amazon Internet Services.

Shashank said fintech companies were increasingly reaching out to customers that are data rich but credit poor, and with innovative solutions were helping those who never had access to the traditional credit system earlier.

Calling his bank a 13-year-old startup, Amit, of YES Bank, said the fabric of banking was changing. While on one hand, there were traditional old banks that until a few years ago had customers sworn for life, on the other were fintech companies that identified a problem and went after it with a single-minded focus.

“If I can meaningfully change the business model of a customer using the solutions I provide, that is the game YES Bank would like to play,” he said.

Hype or not?

One common question that comes up when talking about fintech companies is whether the space is overhyped.

Bala said, “We are going through a hype cycle and the media is further ahead in portraying the death of banks, but that is not really true.” However, he said there were definitely signs of change, as behind all the hype there is always some reality!

Speaking of the impact fintech companies were making, and whether they had reached an inflection point, Shashank said,

“Fintech without scale is meaningless. This is not an industry where you can merely be a small innovative player without touching the lives of a meaningful section of customers.”

The local kirana to the lady selling papads outside the station to educators – fintech companies are increasingly bringing to a multitude of Indians transparent, affordable, and easy-to-use financial solutions. That’s where the core value of Digital India lies.