News & Analysis

2020: The Decade When FinTech Comes of Age

By Aditya Agarwal

The past twelve months have been beyond interesting for the FinTech industry in India. For it was in 2019 that we saw the space evolve rapidly while witnessing a surge in userbase combined with an influx of new regulations and policies that resulted in higher levels of accountability and a sense of uniformity in the sector.

This year, we have also seen the entry of many specialised players to help on-board new offline customers. Another fillip to the sector has been the introduction of an Ombudsman Scheme for Digital Transactions (ODST) in January for redressal of complaints relating to digital transactions. These trends were key to shaping the industry and without a doubt, technologies like smart contracts in blockchain, behavioural analytics, and exposure monitoring among others have also made a significant mark.

Amongst all these trends, however, there was one particular function that stole the show in the payments industry. UPI has been a phenomenal success and has contributed immensely to the payments industry while doubling in size this year. In fact, it has managed to even breach the unorganised sector in record time. It has now become a common sight to see even tender coconut sellers and paan shops sporting multiple QR codes.

Remittances have also been simplified because of UPI. We don’t need to actually look too far to verify this, as possibly even your security guard sends money to his parents in his hometown using UPI.

Technology ushered in far-reaching changes in every sector in the last decade. In 2010, it would have been unthinkable to leave home without a wallet, but in 2019, all we need is our smartphone. In a few days, we will be entering a new decade. The upcoming decade brings with it the promise of a wider reach of these everyday technological advancements. Just like the disappearance of the CD player in recent years, physical wallets may soon become redundant.

Some trends to look out for would include global trends coming home like Neo-Banks and Open Banks. Neo-banks are 100% digital banks offering services ranging from accounts, credits and payments without the burden of a physical network. Currently, in India, regulations do not allow a completely digital bank. So, we have been seeing platforms like NiYo Solutions and Open partnering with banks like DCB Bank and ICICI respectively to offer customers a combination of the savviness of digitisation and the predictability of conventional banking.

Open Banking, on the other hand, requires banks to allow their account and transaction details to be shared with third parties through APIs. Under this approach, banks can quickly offer tailor-made products to their existing customers, particularly payment solutions. In a recent report by PwC, it is expected that 71 percent of SMEs and 64 percent of adults will adopt open banking by 2022.  It goes without saying that both these trends will bring along with it a new regulatory framework to make it more suitable for the Indian context.Apart from this, with millennials coming of age, the focus may shift from banks to advisory-led wealth management apps which offer personalised investment, insurance and wealth management options. Banks are also working towards bridging the gaps and making their services more user-friendly. Screens and calls, already have, and will continue to replace physical visits to a bank branch. In this regard, it will also be exciting to see how Voice- Based commerce will influence the FinTech sector in India.

From this point in time, 2020 and the decade ahead would undoubtedly witness sea changes in the way we transact and manage our financial life. The truth is that the customer is king and all services and products will continue to evolve with their growing demands.

And technology will be the perfect enabler, being at the forefront of this dynamic change.

(Disclaimer: The author is Co-founder of Wealthy, a Bangalore-based wealth management and advisory company that helps customers plan their investments and their future. The opinions expressed here are those of the author)

Leave a Response