Fintech, i.e. the technology that enables banking and financial services, is a very fast growing space in India, especially for the start-up domain. Fintechs are offering services in the form of products, applications, processes and models. The fast growth is enables by the rising digital penetration in India and use of smart-phones.
Even a common man can feel that technology is disrupting the Indian financial sector at a high rate. From bank transfers, to payments and loans, every financial function today has a scope to use more and more technology.
According to NASSCOM, the Indian fintech market is expected to grow at a CAGR of 22 percent for the next five years. A KPMG report states that the transaction value for the Indian fintech sector is expected to reach USD 73 billion by 2020.
A study from accounting firm Ernst & Young (EY) examined fintech adoption rates across 20 major economies. It found 69 percent of Chinese consumers had used at least two fintech services in the last six months. India came in second with 52 percent of consumers using fintech, followed by the United Kingdom at 42 percent.
"India comes out a clear second, where it's fair to say there's a large digitally-savvy population," says Thomas Bull, leader of the EY FinTech Adoption Index. Keeping in view the pace at which India’s payment landscape is growing, it won’t be a surprise if India takes over China in a few years!
Let us look at growth of some fintech start-ups in India over time to get a flavor of the market.
“Targeting the rapidly growing segment of 300 million smartphone users, Sqrrl seeks to use the growth capital to reach out to a million users across India by 2019,” says Co-founder Sanjeev Sharma. Launched recently, Sqrrl is an investment and wealth management platform aimed at helping young Indians build the habit of savings and investments. The app allows users to invest in high performing (zero-commission) mutual funds based on their investment needs, risk horizons, as well as their goals.
Sqrrl has customers in more than 500 cities in India and is aspiring to reach more than five million customers over the next five years. Commenting on the reasons for investment in the platform, Rajesh Sehgal, Managing Partner, Equanimity Investments, says, “I have found Indian millennials to be pretty money savvy and adapting naturally to technology platforms like Sqrrl to achieve their short-term and long-term financial goals. The Sqrrl team is working hard to reach out to the broader Indian population with its highly intuitive offering available in nine Indian languages. We look forward to working with them and supporting this cause of helping young Indians become financially strong and independent in the long run.” Needless to say that with the saving and investment space heating up, Sqrrl faces tough competition from seasoned players like Paytm, Zerodha, and Scripbox.
"Singapore, a global financial hub, has emerged as a leading centre for fintech. Our partnership will not only support our two nations' progress in fintech, but also help drive our international competitiveness and success in this area," Ashraf said.
Now, Nets and NPCI are exploring the use of BHIM, to make payments at Nets terminals. Launched in 2016, BHIM is an initiative to enable fast, secure, reliable cashless payments using cell phone.
The future of the sector is very bright. Today the banks and financial services do not see fintech start-ups as disruptors/competitors. They see them as partners who can take them to the next level by going digital.
Additionally, today’s consumers are increasingly incorporating technological innovations in their daily lives. With mobile data getting cheaper and supportive government regulations, private sector is keen to make high investments.