India finds itself at the forefront of a FinTech revolution. Propelling with the world’s highest FinTech adoption rate at 87%, India has produced the second-highest number of FinTech startups in the last three years. With technological transformations and innovations as the linchpin of FinTech success, startups are flocking the landscape with breakthroughs and disruptions. As per the recent stats – there are over 2000 FinTech companies in India, of which 67% have been founded in the last five years. As of now, there are 187 FinTech unicorns globally and 18 of these unicorns hail from India.
In just a few years, India has built an extensive network of FinTech segments such as digital banking, PayTech, LendTech, InsurTech, RegulationTech and WealthTech, among others.
Technological advancements, implementation of demonetisation and GST and the pandemic have ushered in a surge of FinTech startups in India. As a result, real-time payments, quick loan disbursals, peer-to-peer lending, transparent insurance advisory, etc. have become apart of the FinTech landscape.
Factors Affecting the Growth of FinTech Startups in India
Technological Advancements
Technology has been a key enabler in the growth of FinTech. Advanced technologies like Artificial Intelligence (AI), automation, blockchain, cloud computing, biometric and machine learning have spearheaded the wave of change in India’s financial sector. As technology continues to blur the barriers, startups to well-established institutions are leveraging it to develop innovative solutions for their customers.
Consequently, FinTech is bringing efficiency in processes through e-KYC, digital loans, digital signatures, biometric identity verification, etc.
Governmental Measures
Government initiatives and support have been a catalyst in shaping FinTech startups in India. Government programs like Digital India, Startup India, Jan Dhan Yojana, India Stack, UPI, etc., have accelerated the progress of FinTech startups in the country. From robust broadband infrastructure and digital currency to financial literacy and supportive regulatory framework, governmental measures have strengthened and hastened the technological transition.
Along with the GOI, financial regulators such as RBI, SEBI and IRDAI have taken numerous endeavours to establish a robust framework and sandbox environment to encourage FinTech startups.
Internet & Smartphone Penetration
The ubiquitous presence of the internet and increasing smartphone penetration has made it possible for the widespread adoption of FinTech solutions and services. As consumers become well-versed with technology, their expectations and demands are evolving. This has encouraged numerous startups to develop novel solutions to cater to the changing needs of the population. Increased mobile and internet access and high internet speed and coverage have enabled FinTech startups to penetrate the Indian market deeply, widely and rapidly.
Digital Infrastructure
As more and more industries and sectors continue to embrace technology, India’s digital infrastructure is strengthening. The backbone of India’s FinTech infrastructure has been fortified by a selection of options available to participants such as Bharat Bill Payment System (BBPS), India Stack, Bharat QR and UPI. As a result, the strong and expanding digital infrastructure is generating tailwinds for the FinTech startups in India.
These startups are leveraging the robust infrastructure to address customer challenges and reduce the cost of acquisition and services.
Consumer Appetite for Innovative Technology
One of the most significant factors driving the growth of FinTech across the globe is the rise of the millennial generation. India’s large consumer base of tech-savvy millennials is seeking personalized services from the convenience of their phones. As a result, the financial services sector is evolving from a transaction-based approach to a customer-centric approach.
By leveraging innovative technologies, FinTech startups are offering tailor-made solutions such as mobile banking, instant loans, digital wallets, etc., to meet their customers’ demands. As a result, they have been able to onboard masses of customers and scale business operations.
Key takeaway
The Indian FinTech industry is forecasted to be valued at over $150 billion by 2025.
Considering the pace at which the FinTech startup landscape is growing, there is no doubt that India will soon be spearheading the global FinTech space. As startups bring technological innovation to the fore and financial intuitions, regulators and government bring scaling and reach benefits; their collaboration is set to elevate India’s FinTech growth trajectory to unprecedented heights.
Disclaimer
Views expressed above are the author’s own.
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