‘Indian Fintech’ two words that make every investor smile and boost their confidence! Wondering Why?
Let’s start understanding about the Fintech with some statistics;
Indian FinTech is one of the top five markets by the value of capital funding and investments in the sector with nearly $270 million of funding in 2016.
This report is designed to help in charting direction for a sustainable, and scalable FinTech sector in India.[1]
The figures are promising, aren’t they?
‘Fintech’ just as the name suggests, its a combination of Fin & Tech, wherein Fin stands for Finance & Tech stands for Technology.
Fintech means the collaboration of financial & technology-based companies, it is a kind of tie-up between both the companies, some popular & successful results of this combination are Google Pay, about 55 million people are using Google Pay.[2]
The list of examples includes PhonePe, PayPal, Policy Bazaar, Money Control. These examples are representing only two industries but this, but the room for industries welcomed as Fintech is unexplored yet.
Fintech has been a booming market ever since some financial policies and RBI regulations were declared that in some or the other way supported fintech.
“The major winners will be financial services companies that embrace technology.”
– Alexander Peh, PayPal, and Braintree
With the advent of Fintech, the face & pace of the Financial Market entirely changed, let’s understand Why & How:
We have made it simple for a layman to understand the entire hype created for Fintech, the following 3 points state how Fintech can help in patching the financial loopholes in India.
>Cost Leverage:
FinTech new companies are probably going to lessen costs and improve the nature of budgetary administrations. Not being troubled with inheritance activities, IT frameworks, and costly physical systems.
Thus ultimate benefits can be passed to the end customer. In a way, its a leverage between Cost Incurred & Returns made thereof.
>Systematic and Simple Work Approach:
The FinTech business will create one of a kind and inventive models of evaluating chances. Utilizing enormous information, AI, and elective information to calculate the credit score. Credit Score shall help customers know about their Investment Portfolio.
>Business Perspective:
The trial and error window is always open for all sorts of businesses & that includes FinTech companies as well. It is essential to identify the risk & keep developing the strategies.
A lot of investors prefer investing in FinTech companies as such companies are more likely to adopt new changes, be diversified, secured, and to a greater extent, they have a stable financial growth as well.
Why Fin-Tech is important to you?
‘‘At the end of the day, customer-centric fintech solutions are going to win.’’
– Giles Sutherland, Carta Worldwide”
This quotation by Giles Sutherland is cent percent true. A lot of Investors trust FinTechs but very few of them notices that FinTech are a rising sun for certain countries;
- The countries with a majority of Youth Population are most benefited from the FinTech and FinTech companies are more interested to put their foot forward in such countries. India is the biggest example of it.
- According to a serve, they have found that a certain percentage of the population don’t hesitate in preferring the Financial Products of the companies, whose technology there are already using. 91% of Indian respondents, 86% of Chinese respondents and 60% of US respondents are expected to believe so.[3]
- Banking Sector shall get better support with the presence of FinTech companies as it will keep the flow and circulation of money in velocity to a greater extend.
- It would be a combined progress strategy, instead of internal competition between the companies, wouldn’t it be better for them to progress jointly?
- The emergence of New India can be made more evident with the help of FinTech companies. Industry experts are expecting some technological advancement like NLP-based Chatbots or Cloud Banking in the near future.
Industries that can participate in the beginning FinTech era:
Payments:
The payments industry itself is very diverse, ample of people are using digital payments, the special emphasis laid by Honorable Prime Minister of India, Shri Narendra Modi, mentioned about using Digital Payments, ever since then digital transactions have increased.
There are multiple platforms jumping into the said industry to float with the flow as if digits are to be believed, PwC’s Fintech India Report 2017, this digital payments sector is estimated to grow to USD 500 billion by 2020, representing around 15% of GDP in 2020.
All of us have at certain places have made use of digital payments.
Have you ever wondered why certain giant companies are accepting digital payment including Banks?
Jio Money, SBI Buddy, ICICI Pockets, etc have immediately accepted the trend & shifted to digital money as its trending and people are using it without any fear.
If all these big companies are using it, the significance of this sector could be understood from that.
Money Lending:
Capital Float, Vistaar Finance, Bank Bazaar &Lendingkart; have you ever heard of it?
These are the popular names for alternative money lending, the reason why its popularity is because they fall into the category that is the second-highest growth yielding in the field of FinTech.
The second most funded sector that cumulates up to 37% of GDP, in the current situation it is very difficult to make money arrangements, people are not sure whether they can repay their debts and loans, in such a situation Money Lending sector will definitely boost.
The Money Lending sector is also trusted by people as it can help them and in the context of the development of India, this sector has already contributed to GDP, moreover, it saves the economy for getting a setback of NPA i.e. Non-Performing Asset.
Insurance:
It’s a term connected to every layman’s life, stating that almost every individual who can afford it has acquired it. People in India consider it as a lifeline to battle against rough days.
Therefore, The Insurance sector is a potential sector as it is versatile. One can define it as Health Insurance or Travel Insurance or maybe as Home Insurance.
Policy Bazaar is a leading FinTech player in this segment, just in 10 years of its inception it has raised $70 million. FinTech can help a company to progress manifolds, only condition apply is one needs to understand the market thoroughly.
Investment:
Even from an Investment perspective FinTech is crucial, name a single sector that doesn’t involve investment. Every sector, even MSME includes investment.
“Fin-Tech and banks need a cultural reconciliation: risk appetite and tolerate trial and errors”
– Hugues Delcourt
FinTech can help the markets grow exponentially as setting up FinTech is comparatively less costly and they can fund companies in other sectors. Since the operating cost of FinTech is low, the interest charged by them for lending money will also be less, the company asking for help or getting finance from FinTech could afford it due to less interest.
Closing Statement:
From a 360-degree, view FinTech is the New Trend of New India, India has again been ‘Sone kiChirya’ with proper channelizing of FinTech.
Currently, after this global pandemic, the economy is going to face a major setback, rotation of money will be less, people are losing their jobs, the purchasing power of an individual is reducing, banks loans will be hardly repaid, in such time FinTech can keep striving to uplift the economy by outsourcing a portion of their work to other industry or can keep the doors open of FDI or can tie-up with some other big companies and hire employees.
In one or the other way, the Indian economy shall be benefited from the perks of FinTech Companies.
Finance in Technology is required.
“Ignoring technological change in a financial system based upon technology is like a mouse starving to death because someone moved their cheese.”
– Chris Skinner
