With a population of over a billion, India is definitely a promising sector for FinTech. Before we go any further, let us first explain what FinTech is. In simple terms, FinTech is the industry that is part of the companies that use technology to offer financial services. These companies work in different areas of financial management, insurance, electronic payments, etc.
In the last decade, FinTech has taken over globally and it is expected to increase in the future as well. India is not far behind in this global trend. With over half a billion invested in Indian FinTech in the last three years, the segment only has a promising future for growth.
In 2015, around 12,000 FinTechs sprung up around the world, involving a total investment of $19 billion. By 2020, global FinTech investment is expected to be $45 billion, a sharp increase of 7.1%. According to NASSCOM reports, India has around 400 FinTech companies with an investment of around $420 million. Reports also suggest that by the year 2020, investment by FinTech companies in India will rise to $2.4 billion.
With the help of government regulations, banks and other financial companies, India has formed a favorable ecosystem for the growth of FinTech. FinTech is helping to bring about change in personal financial management through electronic payments and electronic wallets, in the country that runs efficiently on cash.
Number of reasons contributes to the growth of fintech in India. The number of Internet users in India reached 465 million in June 2017. With an increasing number of people relying on the Internet for various reasons, digitization has taken a new turn. The government’s effort to bring the digital revolution through the ‘Digital India’ campaign is opening up many opportunities for existing FinTechs and startups.
Government regulations:
The government has realized the potential of fintech in India and is constantly making efforts to make regulations friendlier. In 2014, the government relaxed the KYC process rule for customers making online transactions and payments up to Rs 20,000 per month. The government is expected to establish a new set of rules to revamp the P2P lending market.
To promote cashless transactions, the government is now offering tax rebates to merchants for accepting at least 50% of electronic payment.
‘Jan Dhan Yojana’ aims to provide a bank account to all citizens of India. Since the launch of the scheme in 2014, 240 million bank accounts have been opened. FinTech startups can take advantage of opportunities to provide easy and seamless transaction service.
Incubators and Accelerators:
The role of incubators and accelerators is not limited to financing, but also to strengthening the financial industry. Incubators provide the obligation-free environment for new businesses. India is among the top five countries showing promising results for startups. The ‘Smart City’ and ‘Digital India’ initiatives are set to strengthen the country’s technological infrastructure. To show support for FinTech startups, banks and financial institutions have partnered with incubators and accelerators.
