The Promise of the Indian FinTech Landscape – A look at a bright future
The Indian FinTech space is entering an age of revolution, with an array of banks and technology firms leading the charge in the race to harness the potential of technology and digitisation to reinvent the traditional banking model and access new, unbanked communities in the domestic market.
In a world where FinTech has changed the nature of people’s lives, with cash payments potentially approaching extinction and many industries incorporating technological solutions in the race for digitisation, banks are becoming increasingly responsive to the appeal of digital banking, as clients become attuned to the appeal of the convenience that comes with having access to an online banking interface.
Although India’s GDP is currently resting at 8%, it’s increasing at a substantial rate annually - 1.5 times faster than the global average. This rate of growth is mirrored by the Indian digital payments industry, which is predicted to reach a worth of USD 500 billion by 2020, with its digital economy projected to reach a value of USD 1 trillion by 2025.
The major projected growth in digital solutions coincides with the potential of India’s FinTech industry. With the development of FinTech solutions, we will see safer transactions and less scope corruption and theft. We will also see increased product suitability from the insights provided by client transaction patterns and financial histories, according to a report by Moin Qazi at Greater Kashmir.
Beyond this, there is also scope for the improvement in client experience, as technology allows the client to fulfil their banking needs through their smartphone or laptop. The smartphone connection also provides the potential to bring people with limited credit-history into the traditional banking space, as increasing banks of data are collected via the devices we interact with. This data, in conjunction with artificial intelligence and machine learning algorithms, can facilitate accessibility to credit, as technology allows banks to assess the creditworthiness of the user.
However, despite the promise of digitisation, one cannot neglect the potential threat found in total digitisation, as both the all-encompassing and bespoke wealth solutions provided by technology may not wholly replace the ‘human touch’ provided by wealth manages, and the place of experience in curating advice and solutions for clients.
This also brings us to the logistical implications of digitisation, as sparse populations, inconsistent network coverage, and potentially insufficient capital for ventures, there are hurdles to be addresses.
The major challenge comes in convincing the majority of the benefits of technology, as fears regarding the security, affordability and safety of digital solutions are perpetuated by the customer’s potential lack of trust.
In addressing this fear, the role of the government and regulator have been brought forward. There is the need to balance the growth of FinTech regulatory sandboxes, and the importance of providing sufficient digital infrastructure, with enforcing the safety and soundness of new solutions and products through sufficient regulation.
The Reserve Bank of India has been cautious in its approach to digital financial regulation, but with the emergence of the Personal Data Protection Bill, which is yet to be presented to parliament, there is promise in the furthering of data protection, as private entity must seek user consent before collecting personal data.
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