The Fintech Space in India
The FinTech Space in India

Bill Gates once said, “Digital technology provides a low-cost way for people in developing countries to send money to each other, buy and sell goods, borrow and save as long as the financial-regulation environment is supportive”

This statement applies to a nation like India, where a large chunk of the population still doesn’t have a bank account.

According to a recent Assocham report, more than 19% of Indians don’t have access to banks.

This is where the role of FinTech companies in India becomes highly crucial.

What do Fintech Companies Do?

These are digital firms who leverage the benefits and potentials of technology and the internet to provide users with conventional financial services suited to today’s digital era.

In the past couple of years, several hundreds of FinTech companies have mushroomed all across the country, bringing much-needed innovation to the conservative financial sector of India.

A recent study by NASSCOM in association with KPMG India predicts that the FinTech industry in India would surpass $2.4 billion by 2020, which is double the current size of the market, $1.2 billion. Also know why fintech lenders are the first choice of India?

The primary aim of these emerging FinTech companies is financial inclusion. This means to bring the unbanked population of India into the formal financial services industry and to ensure that financial services are provided unanimously to all users, without any pre-existing prejudices.

Though the FinTech space in India is still at nascent stages, it has come a long way since 2015.

Instant Business loans for Startups

A push to digital India and a cashless economy by the government of India has worked in the favor of FinTech companies.

The GoI’s enthusiastic promotion of internet banking, digital wallets, UPI, eKYC, BHIM, Aadhar, mobile-driven PoS all have helped in disrupting the conventional financial structure paving the path for fintech companies. You can also avail for business loan by using your Aadhar Card.

Here are Few Popular Names In The Indian FinTech Space

Currently, India has over 751.5 million internet users and the number is predicted to reach 730 million by the year 2024.

Increased internet penetration coupled with the availability of cheap and affordable smartphones, has helped in bringing about this demographic shift.

E-Wallets

Another critical factor that helped in the explosive rise in popularity of FinTech companies in India is undoubtedly demonetization. Post this move, more and more customers have shifted from using currency notes to digital transactions. This has led to an increase in popularity and the emergence of a large number of digital wallets. Some of the most used digital wallets in India include PayTM, FreeCharge, MobiKwik, PayU and many more.

Also Read: How FinTech Is Changing Lives In The Global South

Auxiliary FinTech Companies

Demonetization didn’t just help in digital wallet companies increase their user base, but it also helped other auxiliary FinTech companies. For instance, Ezetap, a Bengaluru-based mPoS (Mobile Point of Sale) solution provider, a company that makes PoS devices that help merchants receive payments from customers witnessed around 25% increase in transactions, post demonetization.

FinTech companies like Instamojo, BillDesk and other mobile-based PoS providers like Mswipe have helped in bridging the gap between small merchants and the end customers. If you are into business and unaware about POS Technology than keep exploring benefits of POS technology for retail business.

Big Boys Club

Apart from homegrown digital wallets, the industry is also dominated by big players like Google Pay (TeZ), Amazon Pay, PayPal and more.

Online Insurance and Loans

Additionally, several FinTech companies have emerged in other sectors like insurance and loans. For instance, BankBazaar, PolicyBazaar, IFMR Holdings are the top dominant players in this industry.

Digital Lending

Today, thanks to FinTech, banks are no longer the primary choice for borrowers. Several FinTech companies provide the common man with alternative lending choices for both consumer and business loans.

In this domain, companies like Indifi, , and several others took center stage and are reaching out to a vast number of borrowers across the country.

FinTech is here to stay. The time when FinTech companies become mainstream and the primary provider of financial services is not far away.

FAQs

1. What is Fintech?

  • Fintech, short for financial technology, refers to the innovative use of technology to provide financial services. It encompasses a wide range of applications and solutions designed to enhance and streamline various aspects of the financial industry.

2. How does Fintech impact traditional banking?

  • Fintech disrupts traditional banking by introducing digital alternatives and innovative solutions. This includes online banking, mobile payment apps, robo-advisors, and blockchain technology, all of which challenge traditional banking models.

3. What are the key services offered by Fintech companies?

  • Fintech companies offer a diverse array of services, including online banking, peer-to-peer lending, crowdfunding, mobile payments, digital wallets, robo-advisors, blockchain-based solutions, and insurtech (insurance technology).

4. How secure are Fintech transactions?

  • Fintech companies prioritize security and employ advanced encryption technologies to safeguard financial transactions. Additionally, regulatory compliance and industry standards are adhered to, ensuring the protection of user data and financial information.

5. Can anyone use Fintech services, or are they limited to specific demographics?

  • Fintech services aim to be inclusive, with many designed for a broad user base. However, accessibility may vary depending on factors such as region, regulatory requirements, and the specific target audience of a particular Fintech solution.

6. What is blockchain technology, and how does it relate to Fintech?

  • Blockchain is a decentralized and secure ledger technology that underlies cryptocurrencies like Bitcoin. In Fintech, blockchain is used for transparent and tamper-resistant financial transactions, enabling faster and more secure cross-border payments and reducing the need for intermediaries.

7. How do robo-advisors work in Fintech?

  • Robo-advisors are automated investment platforms that use algorithms to provide financial advice and manage investment portfolios. Users input their financial goals and risk tolerance, and the robo-advisor uses this information to make investment decisions on their behalf.

8. Are Fintech companies regulated, and how does regulation impact their operations?

  • Fintech companies are subject to various regulations depending on the region and the nature of their services. Regulatory compliance is crucial to ensure consumer protection, financial stability, and the prevention of illicit activities. Compliance with regulations can influence the development and expansion of Fintech services.

9. How is Fintech contributing to financial inclusion?

  • Fintech plays a significant role in promoting financial inclusion by providing access to financial services for underserved populations. Digital payment solutions, mobile banking, and microfinance platforms are examples of Fintech initiatives that aim to bring financial services to individuals who may have limited access to traditional banking.

10. What are some potential risks associated with using Fintech services?

  • While Fintech offers numerous benefits, users should be aware of potential risks, including cybersecurity threats, data breaches, regulatory changes, and the volatility of certain Fintech products. It’s essential for users to stay informed and take necessary precautions when using Fintech services.

By indifi

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