Fintech Unit 1
Fintech Unit 1
Fintech Unit 1
FinTech:
• Recent
developments
• Major areas in
FinTech
• Future
prospects and
potential
issues with
FinTech
FINTECH
• An amalgamation of
terms “financial” and “technology,” Fintech
is a new entrant that often applies to any
emerging technology that assists
consumers/financial institutions in delivering
financial services in more unique and faster
ways than what was traditionally available.
• FinTech is a technology that empowers
consumers to take control of their financial
lives, resulting in greater financial literacy and
empowerment. It helps advance consumers’
financial situation and outcomes by leveraging
advanced technology.
Evolution of Fintech in India
NiYO: NiYO offers innovative fintech solutions for employee payroll and
FINTECH
benefits. It provides salary account services with added features like meal
cards and reimbursement management.
INDIA
CRED: CRED is a credit card payment platform that rewards users for timely
credit card payments. It offers a premium experience and exclusive rewards for
responsible credit behavior.
INDUSTRY SCENARIO
• The Fintech sector in India has witnessed funding accounting to 14% share of
Global Funding.
• The Fintech Market Opportunity is estimated to be $2.1 Tn by 2030. Indian
fintechs were the 2nd most funded startup sector in India in 2022.
• Indian Fintech startups raised $5.65 Bn in 2022. The total number of unique
institutional investors in Indian fintech almost doubled between 2021 and 2022,
rising from 535 to 1019 respectively.
Digital Payments
Acceptance of digital
A pan-India digital payments
payments infrastructure has
Digital Payments increased survey (covering 90,000
increased from 170 Mn
by 76% in transactions and respondents) revealed that
touch points to 260 Mn
91% in value (2022) 42% of respondents have
touch points (increase of
used digital payments
53%)
Regulatory landscape
• India Stack
A set of APIs that allows governments, businesses, startups and developers
to utilise a unique digital infrastructure. One of the most important digital
initiatives undertaken globally, aimed at putting up a public digital
infrastructure based on open APIs to promote public and private digital
initiatives. The ‘Indiastack.global’ website serves as a single repository of
all major projects on India Stack.
• JAM (JAN DHAN AADHAR MOBILE) Trinity
Jan Dhan Yojana: The world’s largest financial inclusion
initiative, “Jan Dhan Yojna”, has helped in new bank account
enrolment of over 508.9 Mn beneficiaries
Aadhaar: The world’s largest biometric identification system
(1.3+ Bn Aadhaars generated so far)
Mobile connectivity: India has the 2nd highest number of
smartphone users
Regulatory landscape
• Cross border linkage of India’s fast payment systems (UPI & RuPay network – QR
code & P2M based payments) with other countries, is aiding in enhancing the global
footprint.
• Financial Inclusion: India’s financial inclusion has improved significantly over
calendar years 2014 to 2021 as adult population with bank accounts increased from
53% to 78%.
• Financial Literacy: The RBI has set up the National Centre for Financial Education
and plans to expand the reach of Centres for Financial Literacy (CFLs) to every block.
These steps aim to promote financial education across India for all sections of the
population.
Regulatory landscape
• Introduction of UPI Pay and UPI Lite: Allows access to UPI to 400+ Mn feature phone subscribers and facilitates
low value transactions in offline mode through on-device wallet.
• RBI Payments Vision 2025: The RBI plans to achieve certain outcomes such as 3x increase in number of digital
payment transactions, increase of registered customer base for mobile based transactions by 50% CAGR, increase in
PPI (Prepaid Payment Instruments) transactions by 150%, increase of acceptance infrastructure to 25 Mn by 2025.
• Account Aggregator Framework (AA):
AA is an advanced framework of sharing consent based financial information between Financial Information Providers
(FIPs) and Financial Information Users (FIUs).
With 23 Banks onboarded to the AA framework, more than 1.1 Bn bank accounts are eligible to share data on AA.
3.3 Mn users have linked their accounts on the AA framework and shared data.
RBI has also notified GSTN as FIP (Financial Information Provider) which will enable digital invoice financing and
provide much-needed credit to the MSME sector.
Recent developments in FINTECH
Neobanks:
• Growth of Digital-Only Banks: Neobanks, or digital-only banks, continued to gain
popularity, offering a range of banking services without physical branches. These banks
often focused on user-friendly interfaces and enhanced customer experiences. E.g. SBI
YONO, KOTAK 811,INSTAPAY etc.
• Financial Inclusion Efforts: Some neobanks aimed to address financial inclusion
challenges by providing accessible banking services to the unbanked and underbanked
populations.
Regulatory Challenges:
• Adaptation to Regulatory Changes: Fintech companies navigated through regulatory
changes, adapting their operations to comply with evolving guidelines and frameworks set
by regulatory authorities.
• Dialogue with Regulators: There were ongoing discussions between fintech stakeholders
and regulators to address concerns, provide inputs on regulations, and create a conducive
environment for innovation.
Future Prospects
Financial Inclusion
• Fintech is likely to play a crucial role in
furthering financial inclusion by reaching
underserved populations with innovative
and accessible financial services.
• Jan Dhan Yojana: The world’s largest
financial inclusion initiative, “Jan Dhan
Yojna”, has helped in new bank account
enrolment of over 508.9 Mn beneficiaries
FUTURE PROSPECTS
Regulatory Challenges: Ongoing regulatory uncertainties can impact the growth and operations of
fintech companies.
Data Security and Privacy Concerns: As fintech involves handling sensitive financial data, ensuring
robust security measures and addressing privacy concerns remain critical.
Cybersecurity Risks: The increasing digitization of financial services brings the risk of cyber threats and
attacks on fintech platforms.
Customer Education: As new financial products and technologies emerge, there is a need for customer
education to ensure responsible and informed use.
Competition and Consolidation: Fierce competition may lead to market consolidation, and smaller
players may face challenges in sustaining growth.
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