In the previous part we talked about Fintech, the current trends in the country and the overview of the industry. In this part would assess the advantages, the challenges and the future of Fintech in India.
Fintech levels the playing field for all sorts of people, especially the ones who don’t have much time on their hands. Apart from that, Fintech is more financially inclusive and removes any biases or bottlenecks in banking. You can picture smoother financial transactions and a general ease of doing business through mobile apps or an advanced market analysis through machine learning. All of that and more is possible through a thorough implementation of Fintech services.
Moreover, getting Fintech to the rural areas can bring about a change in the perception of banks and finance in the minds of the village folk. A smart example of this is exhibited through the adoption of the Bhim app in several towns and villages of India.
These provisions along with the absence of ‘the middleman’ can help usher the rural populace of the country and bring in the financial inclusion much needed for the economic stimulus the nation needs.
Challenges for Fintech in India
Unlike most other services in the tertiary sector, the challenges for Fintech are not internal but rather pressed on it from the conjectures and fears of the primeval industry. Fintech’s ‘tech’ part has been noted to be rather problematic for financial institutions who want to maintain the integrity and the sanctity of the Finance sector – which really means that they really care about their jobs.
The easiest challenge to scale, User adoption trumps all the other challenges as it decides the market interest and defines the type of changes and features that the industry would possibly deploy. As of today, clever government PR and marketing efforts from several start-ups has brought Fintech to the limelight. People are willing to adopt apps and other fintech services in exchange for convenient services or random discounts. In any case, the technological developments in the society has accentuated people’s interest and willingness to adopt Fintech
Fintech deals with money. Money makes the rounds through carefully curated financial instruments. Those financial instruments are wielded by big, scary banks. Therefore, getting the banks, the regulatory authorities and the other financial institutions is necessary for Fintech initiatives to get sustainable traction in the market. As of now several start-ups have sprung up to gauge the rapidly evolving industry but until and unless the large financial institutions are in cahoots with the start-ups and the cottage companies, the change would not be effectively reflected at the grassroots level.
Traditionally, innovations in Fintech have been derided by regulators and incumbent banking institutions. Extensive regulatory requirements have historically presented a barrier for new budding companies. Also a lack of appropriate regulations and a financial ‘embargo’ presents an ambiguous situation for the industry hopefuls.
India’s Fintech landscape has seen a tremendous user adoption, largely driven by the payments and the Finance information sector. Mass marketing and easy services have directed even the most techno-phobic folks to use apps like PayTM, Bhim and MobiKwik. But the change is not quick enough and not as efficient as the government would want it to be. The current percentage of Fintech investments in India are only 3% of the entire global portfolio, whereas the population of India far exceeds that of several developed countries.
Since the country is looming under the threat of an unstable world economy, the best way the government could ensure a controlled fallout is to provide financial inclusion to the depraved and the underprivileged. This would help strengthen the country’s basal economic structure and help provide a cushion against any economic threat.