India is witnessing the growth of the FinTech industry at an exponential pace. India’s FinTech adoption rate (87%) has exceeded the global average adoption rate of 64%. Several factors are driving this growth and reshaping the way we do financial transactions. For example, rising consumer awareness and the increasing use of mobile devices in daily transactions.
With increasing technological development and customers’ changing expectations, the FinTech industry keeps rewiring its operations. However, multiple factors providing constant support to the industry should also get the credit for its positive growth.
Let us explore some snapshots of the current trends driving the FinTech revolution in India.
Factors boosting the adoption of FinTech in India
Government initiatives
The Indian government is working towards bringing accessible financial services to citizens as well as budding businesses. Following programs/schemes are directly or indirectly helping the FinTech industry to boom:
● Startup support programs
The Indian government has been promoting FinTech and other startups by creating an environment conducive to innovation and entrepreneurship. One good example is the establishment of the startup India scheme. It enables eligible companies to avail of tax benefits, IPR-fast tracking, and easier compliance with an aim to generate maximum employment. Many FinTech companies have been taking advantage of such government initiatives to expand their business.
● Digital India campaigns
As an impact of the pandemic, government-led programs supporting the digital India campaign are growing. Programs like E-RUPI and the digital India platform aim to increase cashless transactions through mobile banking applications like UPI and Aadhaar Pay App.
Additionally, the Jan Dhan Yojana has been a huge success. The program provides access to financial services for millions of people who otherwise wouldn’t have had access. All you need is an Aadhaar number and your mobile phone number, and your account will be set up automatically. You will also be able to make payments with just a few clicks or taps on your phone. It means there will be no more long waits at banks or ATMs.
Large unbanked population
The unbanked population in India is estimated to be around 43% of the total population. Approximately 190 million people don’t have access to the traditional banking system. They are often excluded from the financial system because they do not have any assets or wealth to deposit in banks. Also, they usually don’t possess any kind of identification issued by the government.
Moreover, most of them can’t afford traditional banking options, which tend to be expensive and inconvenient.
This huge gap between unbanked and banked populations has led to the growth of FinTech companies in India. The companies like BANKIT focus on providing products for these customers and serving them with their needs regardless of their geo-location. The need for remote financial services is high because it allows individuals to take control of their finances. Plus, it gives them access to better economic opportunities.
Credit demand
Around 50% of the Indian population earns an average salary of below 29,400/month. The monthly average wage includes expenses related to transport, housing, and other facilities. Thus, the demand graph for credit is constantly increasing as people want to fulfil their additional needs. A report by SBI Ecowrap estimates a rise of 9.6% in credit growth in India during the fiscal year 2022.
Despite the growing demand, many individuals leave their credit applications mid-way due to inconvenient processes. The traditional credit approval system requires applicants to go through lengthy paperwork. It gets challenging for people, especially those who are in urgent need of credit.
Individuals seek a seamless and friction-free credit approval system. This is where FinTech companies emerge as the best alternative to traditional banks. A FinTech-based credit or loan application offers the following benefits:
- Quick approvals
- Collateral-free loans
- Flexible tenure
- Competitive rates
- Process transparency
- Less paperwork
- E-KYC facilities
A vital factor of the FinTech revolution is the demand for credit as well as quick and simple processes.
Bottom line
The FinTech revolution in India is a reality now. The industry offers unprecedented opportunities for the financial technology sector, startups, investors, and innovators to explore and devise newer ideas. It can transform how payments are made, accessibility to financial products, and how capital markets move. Further, the government’s proactive support will fuel this business ahead. It’s a great time to connect with the right FinTech companies for maximum financial benefits.
(The author is Mr. Amit Nigam, Executive Director and COO, Bankit. and the views expressed in this article are his own)
