FinTech is a unique blend of Financial Services and Technology. In the current scenario, the technological aspect has become heavier due to COVID-19, wherein many people hesitate to move out of their homes, while others have to remain isolated.
From big financial institutions to budding entrepreneurs, all are exploring the technology angle to serve their customers efficiently with the least possible cost. The financial market, the best stock trading platforms in India, the banking and insurance services, all have felt the need and importance of technology. And, that’s how we as customers get access to advanced and tech-driven portals to use.
So, more and more people now understand the benefits like safety, security, and convenience in digital platforms. We can observe that banks no more have the monopoly in payment gateways. Today, the maximum volume of transactions occurs through platforms like Digital Wallets, UPI, IMPS, BHIM, BBPS, etc.
Opportunities in Fintech Industry:
So, what are the hidden opportunities within the fintech industry? Let’s unfold them one by one:
1.A Boom in Insurance Purchases
In a country like India, where the insurance penetration was just 3.76% (2019), a lower number as compared to other Asian countries like China, Malaysia, and Thailand, with the Coronavirus hitting the world, people became more aware and realized the need for insurance.
Policy comparison and distribution has become very convenient with the advent of companies like Policybazaar, Easypolicy, Coverfox, etc. The insurance industry can grow multi-fold in the coming years with an increase in the play of AI, ML, Data Analytics, and Blockchain.
2. Partnership with Lenders
Earlier, fintech companies acted as competitors to lenders, and now they have partnered with banks and financial institutions to assist them in credit risk analysis, reducing paperwork, faster dispensing of loans, credit underwriting, etc., using AI and algorithms.
3. Improving Payment Mechanism
After demonetization, a lot of payment companies emerged, and the existing ones got a boost. Today most of us are using digital wallets and UPI for payments, as reflected in the reports of the Ministry of Electronics & IT. With a population of 130 crores, still there lies the robust untapped market.
4. Investment Sector
With Nifty crossing the 13,000 marks, Demat accounts in India crossing the 2.5 crore mark, and India being the favorite place to invest, the investment and wealth management services are experiencing a massive boom, and the fintech companies have a prominent role to play.
Challenges in Fintech Industry:
Few challenges that can’t be ignored are:
1.Lack of Regulations
A lot of laws and compliance rules restrict the growth of the industry and also demotivate the companies to enter the market (e.g. Whatsapp Pay). Of course, these are for safety and security, but the industry demands the right balance between ease of doing business and regulatory compliance.
2. Underbanked Population
The government is trying to open bank accounts on a large scale and giving incentives for promoting their use, a large chunk of the Indian population still prefers cash transactions over digital ones.
3. Data Privacy
With increasing cyber threats, sensitive data leak, and monetary losses become a barrier for the entry of new customers. It creates a dent in the trust of existing customers.
4. Funding is not a Cake-Walk
Lack of revenues and difficulties in the funding for early-stage start-ups act as a barrier to the growth of innovative ideas and companies. It’s not that easy!
The Rise of Fintech in India:
Fintech is experiencing a surge in demand and growth! It has a strong potential to change the financial landscape of our country. Technology is helping in reducing costs and increasing accessibility and affordability.
Moreover, RBI has been encouraging electronic payments for the last five years, but the pandemic has pushed society further towards a cashless payment system. With AI and Robo-advisory, fintech companies are redefining the wealth management industry. The online stock broking firms like Zerodha, 5paisa, Paytm Money, etc., are growing exponentially.
The rise of fintech in India seems inevitable owing to the rapid and escalating needs of consumers and businesses.
With drastic changes due to the ongoing pandemic and the new customer trends coming up, it would be interesting to see how high and at what scale the Fintech market continues to grow!
