Fintech is essentially the collaboration that financial companies do with technology companies. This sector is in its infancy and nascent in the digital era but set to skyrocket in the years to come. Among the leading fintech companies that are performing well in India are Paypal, PhonePe, Paytm, Google Pay. Trading companies like Share Khan and Money Control too have a large presence in the market. Insurance companies like Policy Bazaar can also be included in this list. Yet, there is a huge vacuum when it comes to the different fintech categories, and those with financial acumen would be wise to invest in these options.
As per a NASSCOM report, in 2018 there were around 400 fintech companies operating in India. This number is constantly growing. NASSCOM predicts that the revenue generated in India due to fintech companies will touch $2.4 billion by 2020.
Due to the reforms made by the Reserve Bank of India and the Government of India, fintech investments are also growing tremendously and have increased to make the Indian fintech growth market more digital and user-friendly.
Still, there is a necessity to invest more in fintech as startups and small and medium companies. As per the recent analysis, digital payments are just about 13 percent of the total volume and currently, 87 percent of the volume of transactions happen through cash transactions. Thus, fintech is a lucrative sector to invest in and is set to grow exponentially in the India growth market.
Furthermore, this era is ripe to understand the different fintech markets to invest in India, creating a space in this disruptive industry. The specific markets where one can invest in the fintech field can prove to be very profitable in the time to come.
1.Peer to peer lending
You can invest in P2P lending startups which connect lenders to borrowers directly, and create a platform for people to connect for digital transactions. Borrowers have access to easier and faster capital with this particular category.
This platform connects banks and users, within user base as well. This mainly includes digital wallets to enable quick transactions. As soon as a payment is credited, it reflects into an account instantaneously. There are three types of payment apps in this category
a) Standalone apps
b) Bank-centric apps
c) Social media-centric apps
3.Mobile banking applications
Due to the secure digital push by RBI and the Indian Government, many governments and private sector banks have enabled cash transactions that are done digitally through banking apps and net banking software. According to recent reports, 25 percent of the 50 global banks have adopted fintech for user transactions.
Several banks still need to adopt digital technology for transactions.
Therefore, a tremendous investment potential awaits to be tapped in this sector.
Remittance services are used for transactions between banks (remittance providers) and users to transact money smoothly, in different currencies, and geographically diverse areas. Many startups in the global arena have started to break the monopoly of large remittance providers such as Paypal, Western Union, and Money Gram. There is a huge potential to invest in this fintech as startups or as medium scale bankers.
Many insurance companies are adopting fintech to smoothen otherwise cumbersome processes. As insurance companies increase their digital footprint, customers need not wait for days for insurance premiums to be calculated. Based on analytic data, insurance calculations is now faster, through apps and software. For example, in life or car insurance, after collecting and analysing data online, the apps provide metrics like the required amount and analytically correct information. Investment in startups in these areas is the need of the hour.
6.Crowd funding and equity funding services
In many western countries like the US and UK, crowdfunding is a lucrative business for raising venture capital for startups. In India, this trend is also gaining momentum as one of the fintech areas to invest in. The growth potential globally in crowd funding fintech is $16.2 billion.
7.Platform to connect buyers and sellers
There is a dire need to develop platforms to connect buyers and sellers digitally or online though apps or software where safe and secure transactions in large volumes can be done. This is an area with a large investment potential among the fintech categories.
Cryptocurrency is a nascent and fast-growing area of fintech. Those with the right business acumen can invest in this area to make money quickly.
The fintech sector has huge investment potential, and low risk compared to many other investment options. Growing at a rapid pace, it is an area that is set to grow steadily in the future. In India, there are many investment options in fintech. “Make hay while the sun shines,” is an apt proverb for investing in fintech companies in India. Choose this field which is the most promising of disruptive technologies across the globe today, will pay huge dividends. If you have the business acumen for finance and app development, then fintech investment is the way forward.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)
(Edited by Suruchi Kapur- Gomes)