Introduction
The growth of FinTech (Financial Technology) has taken the center stage as advancements in automation, data science, artificial intelligence, machine learning and telecommunication have enabled them to penetrate the market widely, rapidly and deeply. These technologies help FinTech companies to provide faster disbursal of loans, real-time payments, quick loan approvals, investment advisory services, and several other services that in the past required human capital but now is becoming digital and challenging the traditional methods.
Here are a few important trends that continue to shape the FinTech industry:
- Buy Now, Pay Later is rewriting credit and empowering Indians to leapfrog credit card payments and access digital credit at the point of purchase.
- FinTech, BigTech and conglomerates are fighting to get a piece of the MSME market. Due to Covid-19, rapid digitization and formalization have made this market even more attractive.
- Thanks to Open API, embedded banking is enabling every company in adding FinTech on their ecosystem they control or influence.
- Corporate giants, FinTechs and BigTechs are competing against each other to build a truly comprehensive financial services Super App.
- WealthTech bringS in first time equity investors into the market, thanks to Covid-19.
Some of the challenges FinTech businesses face include:
Data security and privacy risk – Leaks, platform downtimes, and information theft have become quite common. FinTechs must invest deeply into data protection that comply with regulatory requirements to reduce the risk of leaks or thefts.
Rapidly changing regulations – FinTech is a dynamic industry and constant changes to regulations test this dynamism and regulators needs to strike the right balance between progressiveness without hurting the budding industry.
Lack of financial literacy and awareness – FinTech platforms is majorly concentrated in the urban segment and more than 70% of the Indian population live in rural areas and villages. This sector needs to move into this market by introducing financial literacy and awareness.
FinTech industry has seen a massive growth in the past decade, even established institutions have realized the importance of technological innovation and are learning to leverage it. India’s FinTech industry is moving towards more collaboration where FinTechs, financial institutions, government, and regulators who are charting its journey and more such collaborations are required to achieve sustained growth.
