By Sucheta Mahapatra, MD, Branch International
India is one of the largest fintech markets in the world today – with over 2,100 fintech companies and robust adoption of digital financial services. Fintechs have acted as a catalyst for the BFSI ecosystem at large – opening up Financial Services access to large parts of the population, bringing in a digital first approach and offering world-class customer experience.
Fintechs have fundamentally re-imagined the delivery of financial services in India. Unlike the traditional BFSI players, Fintech’s have unbundled the offering, simplified the proposition, created context-specific financial products, slashed pricing and increased transparency. The focus is on offering brilliant customer experience at an affordable price. While payment providers dominated the early landscape, Fintechs have increased access and penetration in other sectors too – such as lending, payments, investments and insurance.
In fact, the consumer acceptance of Fintech products has accelerated the pace of digital transformation for traditional players such as banks. Witnessed by the increased push towards online, digital banking and the partnerships being forged between banks & fintech companies. The future potential for these tech-led financial services players is also evident from the amount of PE/VC interest they are generating – with Indian players having raised $10B over the last decade.
There are four key drivers that we can see at the root of this impressive pace of growth:
- Demographic dividend
India is one of the world’s largest internet markets. A large millennial population with strong mobile adoption – and historically lower financial services penetration – makes it an attractive market for Fintechs.
2. Data explosion
Data explosion and increasing tech-savviness of the Indian customer, backed by robust smartphone penetration, cheap data rates, swift adoption of mobile and the availability of vernacular content has catalysed the growth of the consumer-tech ecosystem.
3. Public digital infrastructure and favourable policy environment
The government’s focus on creating efficient public infrastructure – Aadhaar, UPI, Digilocker etc. has further enabled access to digital financial solutions. Regulatory sandboxes, for instance, indicate the forward looking intent of our policy makers.
4. Disruption enabled by Tech
The use of technology is helping crash the cost of delivery. For example, the technology now exists to enable remote-onboarding, AI based decisioning, processing data from multiple & non-traditional sources.
Digital lending companies, for instance, are opening up access to credit to previously underserved segments in the form of quick and smaller ticket size loans (not usually offered by traditional banks and lenders). Since they use technology to underwrite a borrower, they are able to reach deeper into the customer base and serve even those who don’t have bureau history. The use of AI, leveraging alternative data sources and using digital distribution channels – allows them to serve customers hitherto underserved.
The content of this article is the author’s personal opinion.
Sucheta Mahapatra is the MD of Branch International which a personal finance app that has scaled to over Rs.1300 crores in Micro loans pan India. The author can be reached at- Sucheta@branch.co