2020 has been an eventful one, with various disruptions that have impacted both the personal and professional lives of millions worldwide. The Indian fintech sector has been a pivotal one that has witnessed massive growth in the segment over a short period. As per a report by Research and Markets, India registered an 87% fintech adoption rate of March 2020, the highest among emerging markets worldwide, while the global average adoption rate for fintech remained at 64%. Further, as per the report, the Indian fintech market is expected to grow at an approximate CAGR of 22.7%, from INR 1,920 billion in 2019 to reach INR 6,207 billion by 2025. Driven by factors like the preference for cashless payments and rising eCommerce spends, supplemented by broader adoption of UPI and encouraging government policies around digitizing banking and finances, the sector is set to grow further in 2021, will newer innovations and collaborations.
Listed here are a few Key Fintech trends that are set to shape not only 2021 but also the next few years of the BFSI sector in India.
Blockchain technology: This has already seen widespread adoption by banks, seeking to decentralize operations and drive efficiency. However, in the coming months, Blockchain technology is set to play a pivotal role in developing various peer-to-peer financial platforms, allowing a more organized and decentralized distributed ledger system, connecting multiple financial service providers. According to a Business Insider report, 48% of international banking experts and representatives believe blockchain adoption is set to transform banking and set the tone for fintech adoptions in the coming years.
Voice search integration: Even as emerging technologies like AI and ML leverage voice as a medium of communication, Robotics in banking is taking center-stage with voice recognition and search integration. As digital banking and paperless transactions become the order of the day, Voice integration is set to help develop wider reach and enable digital access to fintech innovations across geographies, driving inclusivity among those who may not be able to access the written word.
Digital Wallets: Payment innovations have been at the core of the fintech revolution. The year 2020 has seen a massive rise in the use of digital wallets that leverage UPI’s, across the country. Driven primarily by the preference for contactless payments and e-commerce, the digital wallets help create innovations by implementing AI, ML, and IoT through voice recognition and biometrics. Apart from IoT driven devices like smartwatches and phones, virtual wallets like Apple credit card and virtual banks are helping create a seamless digital transaction ecosystem for consumers. As per the Business Insider report, Generation Z has emerged as a competent driver in the growth of digital wallets, with almost 760 million using digital wallets in 2020, from the 440 million users registered in 2018.
Data-driven insights for Banking and Financial Services: Last but not least, Big Data and data-driven smart insights are shaping the innovations in the fintech sector, helping create not only relevance and effective engagement but also helping shape vital consumer-centric, personal wealth and financial planning segment – one that had so far been dominated solely by professionals. Apart from allowing individuals to gain access and vital intelligence in the financial planning sector, Data-driven insights are also helping virtual banks, International financial organizations, and BFSI businesses to adapt and survive in these volatile times of uncertain market conditions. Data will be at the centre of economic and financial empowerment for individuals, businesses, and countries at large in the years to come.
Specialized Cyber Security: With the massive rise in digital payments and fintech at large, the need for specialized cybersecurity that addresses specific concerns around Fintech tools/ services is set to push innovations in data collection, storage and security for the BFSI sector. Additionally, innovations in cybersecurity has address sensitive issues like payment frauds, identity theft and sensitive data leakage on e-commerce platforms, are also going to become vital in the future. Endpoint security, across mobile and other smart devices, is another important feature set to define specialized cybersecurity for the fintech sector.
Financial Inclusions through digital literacy: While India has already done a remarkable job at encouraging digital literacy and the use of non-English language communications across digital platforms to drive inclusion, it is still a long road ahead to complete the adoption of fintech. Supportive government policies like the Jan Dhan Yojana and a push to local organizations and Non-Banking Financial Companies (NBFC), to offer simpler and easily accessible digital transaction services is helping ridge the divide.
As India works towards becoming a thriving economy in the coming years, in spite of the numerous domestic challenges and the current international volatility, its innovations in the field of financial technology are set to play an important role in helping businesses, large and small, to deliver the speed and efficacy vital to the growth. As a country known for its technology prowess, the Indian fintech ecosystem is raging ahead to explore and empower the private and public sector businesses’ collective efforts to drive the revival and growth of the national economy.
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