The Indian economy has benefited from continued advancement in the financial technology space. Fintech describes technology that is used to facilitate a financial transaction which could include credit expansion, bill payments, and loan applications. The financially underserved has been benefited the most as Fintech has blossomed, and this should continue to be the case as rural areas begin to experience financial technology.
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The Under-Served and Under Banked
The critical area that has been expanding in the Indian economy is underbanked. The IFC, International Finance Corporation reported that India’s credit gap between those that have access to banking services and those that are underbanked has surged. Bringing financial technology to new customers and allowing them to apply for small-ticket loans is beginning to bridge the credit gap. Financial technology firms are offering flexible lows to these companies and individuals using innovative delivery models to assets the creditworthiness of the underbanked to avoid defaults.
Collating data and analyzing this information has been the impetus that has allowed start-up to leverage their business models and show a growing need. The banks and working with fin-tech companies which are helping to enable a smoother operation for consumer and business. Financial technology provides seamless fund routing and merchant payments on mobile applications.
The data that is gathered is analyzed to assist with the sales and marketing process. Using mobile data to show investors where business needs can be exploited has helped startup companies provide a business model. Fintech has also made data-driven customer insight a focal point. The adoption of new technologies such as blockchain which is used as the backbone to learning how to trade cryptocurrency with an app is among the software that is helping to bring bringing traditional banking ecosystem to India.
Growth Moving Forward
India’s growth forecasts continue to rise in an upward trajectory. According to NASSCOM the trajectory of fin-tech growth is accelerating and could hit US$ 2.4 billion by 2020. The market sized of financial technology is relatively small in India given the number of people. The latest data from NASSCOM shows that in 2019, venture capital investments into Chinese fintechs were more than 10 times larger than those in India.
Despite the huge opportunity to serve the underbanked in India, the competition is heating up. Both startups and large corporations are developing new applications to compete for market share. Europe and Asia’s different segments are beginning to find sustainable growth. London has become a hub for investments into fintech financial solutions, while China has become well known for facial recognition. Cybersecurity has also become a subsegment of financial technology with its hub rising in Israel.
What is Driving Financial Technology
Fintech is driven by cultural innovation and the desire for entrepreneurship. New generations of workers are finding opportunities in technology which in turn are expanding economic growth’s-enabled credit assessment and bill paying has brought commerce to areas that were underbanked. Fintech has created faster easier access to loans and bill payment s, as well as more secure money, transfers environment and improved wealth management options.