Growth Model of Fintech Industry and Expectations in 2021

India is amongst the world’s fastest emerging markets for the Fintech sector. With China, India ranked at the highest in Fintech adoption rate globally. After the 2016 demonetization, the country witnessed the springboard effect in terms of growth for Fintech & digital payments. In the Indian FinTech industry, the total transaction value is expected to leap from approximately $65 billion in 2019 to $140 billion in 2023.

The Fintech sector in the country categorizes into four major divisions, i.e. Digital payments, Money lending applications, wealth-tech & Insurance-Tech. Further, UPI is the most popular amongst all digital payments. Fintechs look for horizontal expansion to bring multiple services on a single platform through integrations to increase ARPU (average revenue per user).

The landscape of the fintech industry in India is changing at a lightning speed. We have seen high growth in the sector across the globe. The right target audience for the fintech is Gen Y & Gen Z as they are tech-savvy and exploratory in nature. These days’ customers are looking for a single platform for various requirements like loans, insurance and ecommerce offers. Money lending applications also seems an emerging player in the Fintech sector. This will, further, help the individuals in the time of crisis and financial crunches.

The Global Pandemic had shaken the majority of the population. Due to job loss and other difficulties in the workplace, many individuals were failing to fulfil the basic amenities. The money lending applications came into rescue with the comparatively lower interest rates, flexible payback options and easy loan sanction within half an hour. Population from Tier-2 & Tier-3 cities are equally benefited from these available resources.

Growth Model and Technology Trends

Fintech is penetrating solemnly among the population in semi-urban and rural regions and it has become a part of their day-to-day activities. As per a market report, 63% of searches happen on mobile devices. Growth in app downloads in India is 190% from 2016 to 2019. As per App Annie Indians spend 4.8 Hours Daily on mobile (Q2 2020). There is a lot of room for an app ecosystem to grow and flourish in lesser time if the quality of service is good and approach is customer-centric. Fintech platforms also played an important role in empowering consumers with financial access and transaction processing; mainly through artificial intelligence (AI) and machine learning (ML).

Expectations from Budget and Finance Ministry in 2021

In 2021, we expect large banks and financial institutions to open their customer bases to fintech partners. Thus, it will benefit from the compliance and regulatory competencies that the banks have. The RBI in December 2020 cautioned the small businesses and individuals against taking loans from unauthorized digital lending apps. There should be a set of pre-assigned guidelines prepared by the Financial ministry for smooth & transparent operations of Fintech. Lowering the Tax would help startups to flourish and to provide better services at minimal charges. The government should also relax the GST for the customers to lower the burden on their pockets. This in return they can benefit more.

In the midst of fintech startups' rising ambitions in 2021, technology has assumed an all-encompassing role. It now affects customer onboarding, alliances, credit rollout, recovery, KYC, and more. The transition to contactless technology rose in the year 2020 owing to the pandemic. This includes broader acceptance of contactless payments and contactless biometric protected access. Although external factors have fueled the journey so far, we need more end-to-end digital infrastructure capabilities. This way, for fintech to realize their true potential because piecemeal solutions may not find scalability in the long run.