Introduction to

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

• After Demonetization in 2016, and with the onset of a cashless economy,

several startups emerged in the industry, leading to a rise in digital payments
from 10% of all transactions to 20% and setting new fintech trends in India.
• According to BFSI, India tops the chart of fintech adoption rate worldwide at
87%, whereas the global average rate is 64%. The COVID-19 pandemic
played a considerable part in the growth of these trends in the fintech
industry. Nonetheless, consumers have embraced and adapted to
these fintech trends in their day-to-day lives.
• In 2017, UPI processed more than 100 million transactions worth INR 67
billion, which increased to INR 125.95 trillion by the end of 2022. (Source:
NIC)-National Informatics Centre
• The market share of fintech companies has expanded significantly and is
expected to grow at a Compound Annual Growth Rate (CAGR) of more than
10%.
 FinTech (financial technology) is a catch-all term referring to software,
mobile applications, and other technologies created to improve and
MAJOR AREAS automate traditional forms of finance for businesses and consumers
IN FINTECH alike. FinTech can include everything from straightforward mobile
payment apps to complex blockchain networks housing encrypted
transactions.
MAJOR AREAS IN
FINTECH
• Digital Payments: The adoption of digital payment methods has surged in India, with the
government's push towards a cashless economy. Unified Payments Interface (UPI) has
been a game-changer, allowing seamless peer-to-peer and peer-to-merchant transactions.
• Mobile Wallets: Mobile wallet services like Paytm, PhonePe, and Google Pay have
gained popularity, offering users a convenient way to make payments, recharge mobiles,
pay bills, and even invest in mutual funds.
• Digital Lending: Fintech companies in India have been leveraging technology to provide
quick and hassle-free lending services. They use alternative data sources and innovative
credit scoring models to extend credit to underserved populations.
• Insurance Technology (Insurtech): Insurtech has gained momentum, with startups
offering digital insurance solutions. These platforms use technology to simplify the
insurance buying process, customize policies, and improve customer experience.
• Robo-Advisors: Robo-advisory services have emerged to provide algorithm-based
financial planning and investment advice. These platforms use automation and algorithms
to offer cost-effective investment solutions.
MAJOR AREAS IN
FINTECH

• Blockchain and Cryptocurrencies: While the regulatory environment for

cryptocurrencies in India has been uncertain, there is growing interest in
blockchain technology. Several startups are exploring blockchain
applications beyond cryptocurrencies.
• Regulatory Landscape: The regulatory environment has been evolving to
accommodate the growth of fintech. The Reserve Bank of India (RBI) and
other regulatory bodies have introduced measures to ensure the stability of
the financial system while fostering innovation.
• Startups and Innovation: India has seen a surge in fintech startups,
addressing various aspects of financial services. These include personal
finance management, wealth management, and financial inclusion.
• Partnerships with Traditional Banks: Fintech companies in India often
collaborate with traditional banks to expand their reach and offer a broader
range of services. Such partnerships help bridge the gap between traditional
banking and innovative fintech solutions.
• Financial Inclusion: Fintech in India plays a crucial role in promoting
financial inclusion by reaching unbanked and underbanked populations.
Mobile-based services and digital wallets have been instrumental in this
regard.
 Paytm: Paytm is one of India's leading digital payment platforms,
Fintech companies in offering services such as mobile recharge, bill payments, online
shopping, and digital wallets. It has expanded its offerings to
include banking and financial services.

PhonePe: Acquired by Walmart-owned Flipkart, PhonePe is a

popular UPI-based digital payments platform. It provides a range
of services, including money transfers, bill payments, and mobile
recharges.

Google Pay: Google Pay, powered by UPI, enables users to make

seamless digital transactions. It offers features such as in-app
payments, bill splitting, and integration with various businesses.
India:

Razorpay: Razorpay is a fintech company that provides payment

gateway solutions for businesses. It enables online businesses to
accept payments through multiple channels, including credit/debit
cards, net banking, and UPI.
 PolicyBazaar: PolicyBazaar is an online insurance aggregator that helps users
compare and purchase various insurance products, including health, life, and
general insurance.

Zerodha: Zerodha is a prominent online discount brokerage platform that has

COMPANIES IN played a key role in popularizing low-cost online trading in India. It offers
services for equities, commodities, and currency trading.

Lendingkart: Lendingkart is a digital lending platform that uses data analytics

and technology to provide quick and efficient working capital loans to small
and medium-sized businesses.

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

Upstox: Upstox is an online brokerage platform that allows users to trade in

stocks, commodities, and currencies. It offers a user-friendly interface and
competitive brokerage rates.

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

From just 1 Mn transactions

UPI recorded the highest Daily transactions on the UPI
in 2016, UPI has since
ever volume of transactions platform can touch 1 Bn by
crossed the landmark 10 Bn
in August 2023 – 10.58 Bn 2025
transactions

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

 Digital Payments Growth:

• Continued UPI Adoption: The Unified Payments Interface (UPI) continued to witness
robust growth. The number of UPI transactions and the total transaction value increased
significantly, indicating a widespread adoption of digital payment methods.
• Contactless Payments: The COVID-19 pandemic accelerated the adoption of
contactless payments, with more users opting for QR code-based transactions and near-
field communication (NFC) payments.
 Cryptocurrency Regulations:
• Regulatory Developments: There were ongoing discussions and debates regarding the
regulation of cryptocurrencies in India. The government and regulatory bodies were
exploring frameworks to address the concerns related to digital currencies while
fostering innovation in the blockchain space.
• Potential Cryptocurrency Legislation: There were indications of potential legislation
to provide clarity on the status and usage of cryptocurrencies in the country.
Recent developments in FINTECH

 Open Banking Initiatives:

• Data Sharing Ecosystem: Open banking initiatives aimed at creating a more
collaborative ecosystem by allowing financial institutions and fintech companies to share
data securely.
• API Integrations: Increased adoption of Application Programming Interfaces (APIs) for
seamless data sharing, allowing fintech firms to access and utilize financial data with the
consent of users.
 Rise of Embedded Finance:
• Partnerships and Integrations: More companies were exploring embedded finance
models, forming partnerships between fintech firms and non-financial businesses to
integrate financial services into various platforms seamlessly.
• API-driven Services: The rise of APIs Application Programming Interface) facilitated the
integration of financial services into applications beyond traditional banking, including e-
commerce, travel, and other industries.
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

• Continued Growth in Digital Assets: If regulatory

clarity is achieved, the use of digital assets and
cryptocurrencies may continue to grow.
• Enhanced Customer Experience: Fintech companies
are expected to focus on providing seamless and
personalized customer experiences, leveraging data
analytics and AI.
• Artificial Intelligence (AI) and Machine Learning
(ML): Increased use of AI and ML in risk assessment,
fraud detection, and customer service in the financial
industry.
Potential Issues

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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