Fintech is rapidly transforming the landscape of the finance and banking industry. The Fintech companies are at the forefront of this by catering to the evolving customer needs. They are all set to accelerate and expand significantly in the next decade.
Fintech has particularly changed the face of the banking industry. Banks too are adapting to new changes and are switching to digitizing transactions, leading the paperless and cashless process.
Simply defined, Fintech aims to automate the delivery and the usage of financial processes. Fintech, as the name makes it obvious, is the combination of the fields of Finance and Technology.
The term is very recently coined, it was primarily used in back-end systems of already established and thriving financial organizations. Now its scope has expanded, Fintech now covers various sectors of different industries. Some of them are education, retail banking, and non-profit fundraising.
Fintech utilizes special software and algorithms, designed and developed to provide convenient financial solutions. Fintech not only helps individual consumers but also comes up with innovative solutions for large companies and business owners.
Fintech has also played a major role in the development and use of cryptocurrencies like Bitcoin. Even though Fintech is making inroads into many different fields, a significant percentage of them still mainly retain focus on the traditional banking industry.
India is now a major player in housing many emerging Fintech firms, giving a boost to the already raging digital revolution in the subcontinent.
Why is Fintech on the Rise in India?
India is one of the world’s fastest-growing economies. And it has also undoubtedly emerged as the fastest-growing hub for Fintech start-ups. The processes of paperless lending, mobile banking, secure payment gateways, and mobile wallets have been widely adopted by the people in India.
In recent years, a massive number of people have adopted digital payment systems in India. They have found it extremely convenient and quick to carry out the transactions.
There is a substantial growth of the Fintech ecosystem and it is aided by several factors like availability and use of smartphones, affordable internet and its access, and high-speed connectivity.
A Closer Look into Fintech Industry of India
With the rapid advancement in technology, banks are no more the gateway for payment services in India. For the first time, the monopoly of banks has begun to weaken.
India’s payment infrastructure has seen several necessary improvements in recent years. This is particularly witnessed with the introduction of new payment mechanisms. New interfaces have emerged like Immediate Payment Service (IMPS), Unified Payments Interface (UPI), and Bharat Interface for Money (BHIM).
The government too has given these developments a push by launching projects like ‘Make in India’ and ‘Digital India’. They too have played a critical role in accelerating the use of Fintech among the masses.
The Reserve Bank of India too has come forward and pushed the growing use of electronic payments. All these are aimed to truly establish a cashless society.
Another catalyst to all these developments in the Fintech industry was the series of actions taken by the government itself. The standouts were the much-debated demonetization and the implementation of the GST. These events created a substantial growth opportunity for all the Fintech projects to take off.
Although demonetization led to chaos and uncertainty among the common folk, it also acted as a driver for the same people to shift to a technology-driven platform for financial transactions.
And what further enhanced the acceleration of the Fintech revolution is the Covid-19 pandemic. The new social distancing norms promoted contactless and cashless payments.
Now new payment methods are entering the scene. Buy Now Pay Later in India is now a raging trend among the young. The Fintech players who have jumped into this game provide instant credit, mostly on 0% interest.
The repayment happens in EMIs. Many Fintech firms have included special features to improve the user experience. ZeroPay is one such app that provides instant credit with zero interest and zero late fees.
It also rewards you with points on every repayment made. Many such apps are using attractive features to provide quick financial solutions.
Some platforms have proved to be breakthrough applications that are being widely used. PayTM, PhonePay and G-pay can be majorly counted on that list of apps having a significant mass appeal. They are now flag bearers of the rising Indian Fintech industry.
India’s future with Fintech
India is a diversified and hugely populated country. A huge percentage of its population remains under-banked. Fintech is a perfect financial solution to cater for this significant chunk of people. When it enters the equation, it can transform India’s financial and banking sector.
India also is a home for innovation-driven start-ups. There is a highly favourable market that has access to smartphones and fast internet. There is also a proactive push from the government to accelerate the growth of the Fintech industry. India is a great space now for the Fintech revolution.