Scope of FinTech in India

The advent of technology has led to a revolution in the finance industry with a significant shift in banking, new businesses, trading, and virtual money. The last 65 years have been nothing short of spectacular for FinTech in India where ATMs revolutionized bank cash withdrawals, and the internet's introduction in the 1990s helped the fintech industry to reach new heights.??

It has received over $27.6 billion in funding and is predicted to reach over $150 billion by 2025. Indian Prime Minister Narendra Modi called for a "Fintech revolution" in India on December 3, 2021. Indian Fintech adoption rate is 87 percent, significantly above the global average of 64 percent.?

India's Fintech Market?

At a compound annual growth rate (CAGR) of 20 percent, it is anticipated that the value of transactions including financial technology will surge from $66 billion in 2019 to $138 billion in 2023.?

Additionally, as Fintech platforms and services mature with a huge user base and product-market fit, they have explored new ways to diversify their revenue streams, which has given rise to the concept of Super applications.?Super apps bring together a diverse set of services under one umbrella, allowing for multiple daily use-cases. Super applications are gaining traction in the Indian market as a result of increasing levels of digitization, falling smartphone pricing, and demand for COVID-induced digital services. It is also important to note that large technology companies such as Google, Amazon, and WhatsApp have altered their product lines to provide specialized services in India. Some examples of these specialized services include Google Pay, Amazon Pay, and WhatsApp Payments.?

Segments in Indian fintech firms:?

Let's take a look at a few of the different FinTech markets in India: -?

Payment Technology (PayTech)?

In order to break into this industry, fintech companies in India offer payment gateways, card networks, application programming interfaces (APIs), and payment security. Third-party application providers (TPAP), prepaid cards and wallets, bill payments, QR code payments, payment aggregators, and point of sale systems are all examples of consumer-focused services that can be utilized (POS). Paytm, PhonePe, MobiKwik, and Google Pay are some of the most well-known names in this sector's competitive landscape.?

?Lending Technology (LendTech)?

Examples of LendTech include personal loans, salary loans, gold loans, auto loans, student loans, and peer-to-peer lending, as well as lenders and suppliers of Buy Now, Pay Later (BNPL) services, al and anti-fraud technology, data interchanges, marketing, and insurance services. Paying with services such as Google Pay, M-Swipe, and Razor Pay are becoming increasingly common as customer and shop payment options.?

Insurance Technology (InsureTech)?

Insurtech is the use of technological advancements to achieve savings and efficiency from the current insurance business paradigm. Fintech is utilized in the provision of services by the insuretech industry, including claims processing, a sales platform, underwriting risk management, and insurance infrastructure API, and a policy administration system. Policy Bazaar currently has the position of the market leader in this particular sector.?

Wealth Technology (WealthTech)?

WealthTech brings money and technology together to create digital solutions that improve personal wealth management, investing, and portfolio management. The proliferation of digital payment methods, electronic know-your-customer verification through Aadhar, online money transactions, and online investment report generation has opened the path for the development of a completely automated asset management system. Two notable wealth technology companies operating in the financial technology market are called Zerodha and Small Case.?

Regulatory Technology (RegTech)?

A form of technology known as RegTech is employed in the management of various regulatory procedures within the financial sector. Monitoring, reporting, and compliance with regulatory requirements are all part of its responsibilities. Through the utilization of big data and machine learning technology, it provides real-time data on money laundering operations that are carried out online, thereby lowering the risk that the compliance department is exposed to.?

Online Payments?

According to Statista, UPI suppliers in India reported 2.8 billion digital payment transactions in June 2021, with a total value of over five trillion Indian rupees. Payment gateways, payment processing, cash delivery, internet payments, and a range of other banking solutions are all simplified and accelerated by neobanks. Paytm, PhonePe, RazorPay, and other leading fintech companies in India are involved in digital payments.?

Fintech Companies to keep an eye on in 2022?

The following are a few examples of leading companies that will play an important role in the future of fintech in India:?

• Paytm??
• CRED??
• BharatPe??
• Policy Bazaar is brought to you by TurtleMint?
• CoinDCX?
• RazorPay?
• MoneyTap?
• The Pine Laboratories?
• Services of Finance Offered by Shiksha?

Fintech's Future?

Fintech companies in India are undergoing internal transformations and making major redesigns in order to remain competitive in the global marketplace. Though India's FinTech sector is rapidly expanding, it still needs to learn how to deal with issues that may arise when these companies expand beyond urban areas.??

Major trends driving India's fintech revolution?

Fintech in India now focuses on financing clients and MSMEs. This sector has also developed to include traditional financial insurance, personal finance, and gold lending. Here are a few FinTech India categories:?

Factors influencing supply?

The expansion of the fintech industry in India is being fueled by a number of different macroeconomic forces, including enabling government and regulatory initiatives, India's demographic dividend, rising national disposable incomes, a sizable population that is not banked, improved internet access and smartphone penetration, and a rapidly developing e-commerce marketplace.?

Initiatives by the government?

Government support has been critical, not only in terms of regulation but also in terms of providing critical enabling assistance. Various government programs, such as broadband infrastructure to improve internet access in rural areas and digital literacy and financial programs, have accelerated the growth of India's Fintech industry. Furthermore, a strong public digital infrastructure aided by Aadhar, UPI, account aggregation, and other technologies, as well as a supportive regulatory environment, have aided and augmented India's technological transition. ?

Investing in India's Fintech Industry?

Over the past few years, India has seen a significant expansion of its financial technology ecosystem, positioning it as one of the largest and most rapidly expanding financial technology markets in the world. Furthermore, during the first three quarters of 2021, investments in India's financial technology sector totaled US$4.6 billion. Pine Labs was the recipient of US$600 million of these investments, followed by BharatPe (US$370 million), OfBusiness (US$207 million and US$160 million), and Digit Insurance (US$217 million), and Khatabook (US$100 million). Khatabook was the only company to receive US$100 million. Recent payments totaling US$4.7 billion were made by PayU, the payment division of the consumer internet firm Proses, to BillDesk, an Indian payment gateway service provider.?

Factors influencing demand?

As the financial services industry transforms from a transaction-focused approach to a more consumer-centric approach, the cutting-edge technology used by the Fintech field has carved out a niche for itself by offering tailor-made products based on user preferences. The fast-growing tech-savvy customer base in India, led by millennials, is driving the adoption of mobile-first products and services.?Furthermore, it has been observed that new customers are easier to onboard in the smartphone banking space.?

According to Experian estimates, 22 million Indian consumers sought credit every month prior to COVID-19, with 70% abandoning their applications due to complexities. ?

Technological developments?

Strong talent pools increased collaboration between banks and Fintech enterprises, and the rapid pace of technological innovation on a daily basis are three key technology factors driving Fintech growth. According to UNESCO research, nearly 32% of all students in India specialize in STEM (Science, Technology, Engineering, Mathematics) (STEM).?

Technology is being utilized to boost efficiency in procedures including payments, claims processing, and savings marketplaces.?

Conclusion:

We can conclude that fintech will play a larger role in the development of India's financial services market in the coming years. Strong ecosystem-level shifts are creating chances for new models and bode well for the unicorns of tomorrow to emerge from today's truly innovative, tech-enabled firms.?