Fintech will be a game changer in India’s socioeconomic landscape
There is no doubt that for India to fulfil its potential as a global superpower, it needs to make some paradigm shifts in the way things work in the country. Financial services – or their lack thereof – remain a major obstacle in the way of realising our dream. India’s formal banking system may be over 200 years old, but it is still unable to service the marginalised sections of society. At the other end of the spectrum lies a regulatory vacuum for emerging technologies such as cryptocurrencies. And bridging that gap and creating innovative solutions that serve a wider customer base more efficiently and at a lower cost are fintech companies.
Indeed, fintech as a startup sector has been in favour with entrepreneurs, investors and acquirers for over a year now, and is growing rapidly. While many may equate fintech with digital payments, the fact is that fintech as an approach brings a host of benefits that will help India leapfrog over the traditional trajectory of developed economies.
As of today, India has everything that it needs in order to establish itself as a global FinTech hub. With a large market of unserved customers, increasing mobile penetration, favourable demographics, an active start-up ecosystem and a large technology talent pool, India has a potent opportunity that is waiting to be seized in the FinTech space.
Towards the foregoing, YES BANK has launched a unique initiative, The India Fintech Opportunities Review, which attempts to understand the country’s fintech landscape and seek views from startups and experts on building a roadmap for creating an enabling fintech ecosystem. The survey aims to unearth hard data and insights from the fintech community itself and provide recommendations to the Government, regulators and corporates for creating an enabling policy and infrastructure for these startups. [Make your views count by participating in the survey today.]
With the emergence of fintech startups across sectors such as payments, alternative lending, blockchain and insurance, among others, here’s a quick look at the changes these fintechs are enabling on a large scale.
- Enabling better customer experience without restrictions of time, place, proximity, etc: Consider this: from remittances that can be sent with a single click -- without having to trudge to the post office to send a money order that takes days to reach -- to purchases in the remotest corners of the country, fintech solutions through digital channels with minimal human intervention have reduced the chances of friction and resultant corruption. They give people freedom to decide what works for them and what doesn’t. In fact, with their easy access to streamlined information, the solutions are boosting financial literacy, making it easier for users to understand and make informed choices to decide where and how their money is used.
- Data generation that enables insight driven solutions: The earlier generation of financial solutions and the strict regulations around them restricted the number of people who could access these, mainly due to the lack of clear credit histories or financial identities. However, with the new-age fintech tools, gathering data to better understand users, capturing details regarding identity, and providing relevant services has become much easier. In fact, several fintech companies are using data from sources such as phone bills and rental and utility payments to understand the financial behaviour of users, and formulate solutions accordingly.
- More efficient and lower-cost than traditional financial services: Fintech solutions work for customers too. Fintech solutions, with their simplified and more user-centric approach, offer transparency and clarity and, in turn, a better overall experience for the users.
- Increased accessibility to services hitherto restricted to exclusive groups: In addition to a competitive marketplace that gives users a wider choice, fintech solutions also allow them to derive advantages such as increased accessibility and reduced costs from service charges and subscriptions. Digital platforms and mobile technology have simplified interaction. Furthermore, these solutions don’t just cater to smartphones on high-speed networks, but have also been customised for usage on basic mobile phones at low bandwidth, ensuring that a greater number of people can use them.
- Reducing risk and increase complying with regulations: The nature of the financial services industry makes it one of the most tightly regulated industries. These regulatory requirements are also broadening to factor in the changed dynamics. Biometrics-based solutions that can establish financial identities are now available. Now, regtech firms that enable compliance adherence for businesses by providing automated tools, improve identity management, and reduce fraud risks are slowly coming up in India and are expected to come into their own in the next few years.
- Creating a level playing field for companies of all sizes: While traditional players looking to up their innovation game are 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 synergy from healthy competition between traditional banks and fintech startups can benefit both. While startups can benefit from the credibility banks enjoy, the latter, in turn, can keep pace with the latest trends and technologies via such collaboration.