India’s FinTech Revolution: Challenging Traditional ways of Banking

India's FinTech Revolution: Challenging Traditional ways of Banking

As consumers’ trust in the banking system begins to reduce, a growing number of financial technology startups are ready to steal away up to $4.7 trillion worth of business. In the year 2014 the global investment of FinTech companies tripled to more than $ 12 billion. This trend continued in 2015 when more than $ 10 billion were invested within the first three quarters and not to miss, 2016 continuing at the same pace.

Growth of FinTech Ecosystem in India

Big companies across various sectors are stepping up open-innovation collaborations with small high-tech ones across the world. The number of FinTech partnerships forged by big banks, multiplied threefold globally throughout the years 2009-2015.

An Accenture survey of executives which included 205 large companies and 201 small high-tech firms based in China, India and the US. It disclosed that 92% respondents from the big companies believe in open innovation with small high-tech firms for the propose of accelerating new product development.

However, more than 70% respondents from the small high-tech firms expressed enthusiasm to take advantage of such collaborations to meet important goals like gaining new insights and experiences that could help them develop.

Technology is changing the way people transact and do banking operations. Numerous startups in the FinTech space, backed by venture financing are unsettling the financial services as well as banking industry. With the increasing internet penetration in our country, more and more people have started to buy things online and using digital wallet services to make payments. A report by Nasscom concluded that e-commerce and retail verticals are leading the adoption of FinTech and the industry is anticipated to grow extensively in the coming years.

Use of Digital Wallets Services to make Payments

These upcoming companies are focused on building financial products, developing innovations that include peer-to-peer lending platforms and creating friction-less payment and trading solutions. In India, the rise of the connected devices especially the smart phones has led to the incubation and growth of startups in the FinTech sector. TransferWise is a London-based peer-to-peer money wire platform which is, at present processing as much as $750 million in personal global transfers each month.

TransferWise: London Based Peer-to-Peer Money Wire Platform

Additionally, the global fin-tech industry is a $45 billion opportunity by 2020 growing at a compounded annual growth rate of 7.1 per cent. Significantly, the Indian fin-tech industry is expected to grow by 1.7 s by 2020. At present the total Indian fin-tech market is about $8 billion with fin-tech software market at $1.2 billion with over 750 FinTech companies in India.

Predicted Market Value of FinTech Industry by 2018

The FinTech sector is becoming more competitive with several startups being imaginative on the way to satisfy the same needs in a better way. With the banking sector always at the forefront of technology adoption the necessity to tap fin-tech start-ups also arises as they need to be fast at adopting the new changes. The manner in which technology has been evolving, a conventional retail bank will have to adapt to the digital highway to remain efficient while capturing the new business value at the same time.

Today, there is a blurring line of difference between a conventional retail bank and technology companies. The whole system of payment gateway has opened up completely new opportunity for technology companies. With such opportunities comes a great sense of regulating the activities and performances of the FinTech industry. A survey of financial technology founders and investors released by Silicon Valley Bank identified regulation to curb as the impediments to growth.

Workings of Payment Gateways

Watch the events’ webcast where experts discussed on ‘Regulations that make it conducive for FinTech’ at Mint FinTech presented by Capital First which took place on 30^th June, 2016 in Bangalore.