With a population of more than a billion, India is definitely a promising sector for the FinTech. Before we move ahead, let us first explain what FinTech is. In simple terms, FinTech is the industry that comprises of the companies that use the technology to offer financial services. These companies work in different areas of finance management, insurance, electronic payments etc.
In the past decade, FinTech has taken over globally and is expected to rise in the future as well. India isn’t behind in this global trend. With over half a billion invested in the Indian FinTech over the last three years, the segment only shoes promising future of growth.
In 2015, around 12,000 FinTech came up globally making up the total investment of $19 billion. It is expected that by 2020, the global investment by FinTech will be $45 billion, which is a steep rise of 7.1%. According to the NASSCOM reports, India has around 400 FinTech companies with the investment of around $420 million. Reports also suggest that by year 2020, the investment of the FinTech companies in India will increase 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 bring about the change in the personal financial management through e-payments and e-wallets, in the country that is predominantly cash- driven.
Number of reason contributes towards the growth of Financial Technology in India. The number of internet users in India reached to 465 million in June 2017. With more and more number of people depending on the internet for varied reasons, the digitalisation has taken a new turn. Government’s effort in bringing the digital revolution through ‘Digital India’ campaign is opening many opportunities for the existing FinTechs and start-ups.
Government has realised the potential of Financial Technology in India and is constantly making efforts to make the regulations friendlier. In 2014, government relaxed the rule of KYC process for customers making online transactions and payments up to Rs 20,000 per month. It is expected that the government will lay out new set of norms to revamp the P2P lending market.
To promote cashless transactions, government is now offering tax rebates to the merchants for accepting at least 50% of electronic payment.
‘Jan Dhan Yojana’ aims at providing a bank account to every citizen of India. Since the launch of the scheme in 2014, 240 million bank accounts have been opened. FinTech start-ups can use the opportunities to provide easy and seamless transaction service.
Incubator and Accelerators:
The role of incubators and accelerators are not limited to funding but also strengthening the financial industry. The incubators provide the obligation free environment for the start-ups. India is among the top five countries that show promising results for the start-ups. The initiatives ‘smart city’ and ‘digital India’ are set to strengthen the technological infrastructure of the country. To show the support to FinTech start-ups, banks and financial institutes have partnered with incubators and accelerators.