Fintech revolution in India

Traditionally, banks and individuals have been repulsive towards inclusion of disruptive innovations and have preferred steady improvements. With the development of technology and increased transparency, there has been a change in perspectives. The regulatory authorities believe that the financial systems would also benefit greatly from these changes and financial services are increasingly exploring Fintech. The government has played a crucial role in promoting digitalisation and the economy has seen a fall in cash transactions. The consumer focus has been shifted towards digital alternatives for financial transactions.

In the past, the financial services industry was not very welcoming towards start-ups and kept it barriers high. But there has been a shift in the perspective here also, existing institutions have become more open to start-ups and collaborations. Technological revolution is the cause of this shift. Start-ups in India are increasingly using advanced technology like machine learning, artificial intelligence etc. Realising the potential of these technologies is important as they have numerous uses in the Fintech industry.

The government of India has realised the potential of Fintech and many government programmes have helped in building a foundation for Fintech in India. Programmes like Start-up India include processes like tax exemption, increased government funding, simplification of processes amongst many other advantages. Through the introduction of Pradhan Mantri Jan Dhan Yojana (PMJDY), there has been a tremendous increase in number of bank accounts used by poor sections of society. An advanced technological framework has been provided by initiatives like India Stack. Adoption of Aadhar and an overall push towards digitalisation has played a strong role in the growth of Fintech.

The Fintech sector experienced a drop-in funding in 2016, worldwide while the investments in Asia increased. However, economic uncertainty in 2016 also impacted India. In the last quarter of 2016, FinTech funding was raising only $32 million across 10 deals, down from $157 million and $127 million in second and third quarter respectively. The cause was this decrease was likely due to uncertainties as a short-term impact of demonetization or the regulatory situation.

At the same time, there is still a long way to go. It is estimated that in developed countries about 21% of transactions are made through cash whereas in India, even today close to 80% of transactions happen in cash. It can be attributed to the uncertainty associated with banking technology concerning frauds and other malpractices or simply lack of knowledge. Yet the future of Fintech in India looks very promising. With increasing adoption of financial inclusion and digitalisation of services, the investment in the sector is likely to increase adoption of advanced technology.

For FREE CONSULTATION from our trusted & experienced professionals (requiring upto 1 hour of their time & efforts), write to us on info@ansserv.com or alternatively fill the contact form on Contact Us page.

Comments are closed.