How the Pandemic Actually Paved the Way for FinTech Innovation

The pandemic has turned out to be a relevant example for the phrase “when life gives you lemons, make lemonade”.  Start-ups in India, especially in the fintech sector, have done exactly that. They turned the pandemic into an opportunity. When businesses came to a complete halt under the lockdown, Indian entrepreneurs and investors came together to deploy technology to keep them running.

While government schemes helped micro, small, and medium scale enterprises with their schemes, there was also a push for indigenous products under the banner of “Atmanirbhar Bharat”. As a result, India moved four places up to reach the 48th rank in the Global Innovation Index (GII), as per the IBEF report. For the first time, India entered the list of top 50 countries, which has meant that Indian businesses and MSMEs are quickly adapting to technological advancements despite disruptive times.

Needless to say, India emerged as a leading fintech hub with over 2000 FinTech start-ups as of 2020 December, according to India Fintech Report 2020 by MEDICI. Further, Deloitte India’s ‘Technology Fast 50’ India 2020 report revealed that in India, four of the top six fastest-growing companies are from the FinTech sector.

Overnight Digitization

With the announcement of nationwide lockdown in March 2020, businesses and industries had to undergo digitization overnight. Since financial technology makes for an integral part when it comes to digitization, it resulted in a spike in more people using online financial services. It can also be said that the pandemic came as a blessing in disguise because it digitized large institutions much faster.

Apart from changes in the financial technology sector, the startups across different sectors put on their innovative caps. Here are some of the examples where start-ups showcased how innovation is unstoppable even amid a pandemic:

• To track early COVID transmission, companies came up with smart surveillance tools. Indian start-ups unveiled surveillance tools like smart cameras, drones, and goggles for ensuring social distancing norms and other guidelines are followed. There has been an emergence of crowd management solutions, movement detection and geo-fencing solutions, among others.
• As sanitizer became an essential weapon against the coronavirus transmission, several start-ups introduced disinfection and sanitization tools to keep the viruses and germs at bay. These solutions are still being largely deployed as the virus continues to spread.
• With online lending solutions, FinTech startups are redefining the way debt was seen. Realizing the opportunities to grow within sight, people and businesses have become less hesitant about taking loans amid the pandemic and it was made possible due to online solutions for the same.
• Digital healthcare has been another happy outcome of this health emergency. Many businesses have come up with healthcare solutions leveraging artificial intelligence or data analytics. More than ever, home healthcare, online pharmacies, wearable technology, and more, have seen more popularity to ensure prevention, detection, disruption management, and operational efficiency.

 Fintech Startups Leading the Way

Meanwhile, FinTech startups have bridged gaps between online payment collections and mass real-time disbursal. They are offering investments in cryptocurrency and providing affordable digital mortgages not to mention offering quick, flexible, and hassle-free small credit using Artificial Intelligence. They have also co-branded prepaid credit cards, saving accounts with debit cards in partnership with banks.

Some startups are automating the entire reconciliation process, giving financial security to e-commerce platforms, insurance providers and banks, which typically have a high volume of transactions. Some companies are even enabling brands to roll out their own branded Banking or Payment products.

No doubt, the pandemic has accelerated the country’s FinTech sector, giving it the much-needed booster shot. Even amid massive challenges, the sector has emerged as the fastest-growing in the country. It has seen a large number of investments, despite earlier indications that FinTech start-ups would suffer due to funding becoming a challenge in the pandemic tainted economic scenario.

Digital financial services and e-commerce gained more traction as social distancing and cashless transactions became part of the pandemic-prompted new normal. Offering an optimistic outlook, funding in fintech is expected to grow to $2.7 Bn in 2021, as per the Inc42 Plus report.

(The author is Chief Growth Officer, Angel Broking and the views expressed in this article are his own)