How FinTech is experiencing great growth in India
Posted On April 30, 2021
With a population of over one billion, India is definitely a promising sector for FinTech. Before going any further, let’s first explain what FinTech is. In simple terms, FinTech is the industry that includes 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 the world and is expected to increase in the future as well. India is not far behind in this global trend. With more than 500 million invested in Indian fintech over the past three years, the segment only offers a promising growth future.
In 2015, around 12,000 FinTechs emerged globally, representing the total investment of $ 19 billion. By 2020, global FinTech investment is expected to be $ 45 billion, representing a strong 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 2020, investment by 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 to bring about change in personal financial management through electronic payments and e-wallets, in the country that is primarily cash-based.
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 depending 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.
The government has realized the potential of fintech in India and is constantly striving to make regulations friendlier. In 2014, the government relaxed the KYC process rule for customers making online transactions and payments to Rs 20,000 per month. The government is expected to establish a new set of rules to modernize the P2P loan market.
To promote cashless transactions, the government is now offering merchants tax rebates for accepting at least 50% of electronic payment.
‘Jan Dhan Yojana’ aims to provide a bank account to all citizens of India. Since the plan’s launch in 2014, 240 million bank accounts have been opened. FinTech startups can take advantage of opportunities to provide a simple and seamless transaction service.
Incubator 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 startups. India is among the top five countries showing promising results for start-ups. The ‘smart city’ and ‘digital India’ initiatives are established to strengthen the country’s technological infrastructure. To show support for FinTech startups, banks and financial institutions have partnered with incubators and accelerators.