The Fintech Revolution is sweeping the globe, and India is no exception. The fintech adoption rate in India is higher than the global average of 64%. By 2030, the fintech business will hit $200 billion in revenue. But how did India become a key player in the world of fintech?
It’s no surprise that there is a huge demand for financial services in a country with over 1.39 billion people. Traditional banks have struggled to meet this demand due to their inflexible and outdated systems, creating a significant opportunity for fintech companies to step in and fill the gap.
Let’s look at the modern tendencies fuelling India’s fintech revolution!
Trends Fuelling the Adoption of Fintech in India
India has become popular as a prominent fintech hub. Not only has the country attracted foreign investment, but it has also given rise to many homegrown startups. So, what trends are driving the fintech revolution in India?
1. A robust digital payment system
The robust digital payment system is one of India’s major trends driving the fintech industry. The government’s push for a cashless economy has made digital payments more popular.
In 2016, the Indian government launched a nationwide campaign called ‘Digital India’ to promote the use of digital technologies in all spheres of life. As a result of this campaign, the payment systems in India became more digitalized.
India’s most widely used digital payment system is the Unified Payment Interface (UPI). UPI allows users to make instant, real-time payments directly from their bank account. A total of 200 institutions support this payment system and it has over 100 million active users.
2. The rising demand for credit
The average salary in India is around INR 32,840 per month. This is not a lot of money, especially considering the high costs of housing, transportation, and other amenities. As a result, the graph of credit demand is constantly rising as people try to meet their increased needs.
This trend has given a significant boost to fintech in India. Many startups now provide small loans and easy credit facilities to people who need them. These companies use innovative technologies like artificial intelligence (AI) and big data to assess the creditworthiness of borrowers.
Buy Now, Pay Later (BNPL) is a popular credit option many fintech companies in India offer. Under this scheme, customers can purchase items and pay for them later in installments. This scheme is growing quickly in the business-to-consumer (B2C) and business-to-business (B2B) payments industries.
3. A fivefold increase in digital tech talent
In India, the digital talent pool has grown fivefold in recent years. This growth is due to the increasing number of engineering graduates in the country.
Every year, nearly 1.5 million engineering students graduate from Indian universities. This vast talent pool is a big advantage for the country’s fintech industry. Many startups are now using this talent to develop innovative products and services.
4. Increase in technological developments
The growth in technological advancements has been one of the primary drivers of the fintech revolution, altering the country’s economic paradigms and encouraging innovation.
Indian technology companies like TCS, Infosys, and Wipro, provide cutting-edge solutions to domestic and global clients.
While the country has always been a leader in IT, it is now making its mark in other technology areas. India is home to many startups working on innovative solutions in the fintech space.
5. Supportive government schemes
The Government of India is working to provide consumers and emerging startups with easily accessible financial services. Launching the Startup India programme in 2016 was a big step in this direction. This scheme offers many benefits to startups, including tax exemptions, easy credit, and government contracts.
Many fintech firms have taken advantage of such government measures to expand their operations. Not only has this helped startups grow, but it has also given a significant boost to the economy by providing employment.
What’s Next for India’s Fintech Industry?
The fintech revolution in India is still in its early stages. However, the country has all the ingredients needed to become a leader in this space. India’s digital infrastructure is expected to expand in the coming years, which is good news for the fintech sector.
However, the fintech industry in India will need to focus on certain challenges if they want to maintain momentum. They have to manage and balance the interests of their numerous stakeholders while retaining a customer-first emphasis. They also need to find ways to ensure responsible lending practices.
Tools like Precisa can help fintech firms analyse the lender’s creditworthiness and take informed action. If you’re a fintech firm trying to improve the efficiency, speed, and accuracy of your banking operations and the loan process, get in touch with us today!
Mumbai