Future of FinTech Industry Looks Promising

With the Government's flagship Digital India Programme, adoption of digital payments and enabling a seamless payment experience has played a crucial role in realizing the vision of a digitally empowered economy. With the introduction of emerging technologies like AI and ML, fintech players are benefiting both the industry and the consumers at the same time. Fintech players are hopeful that the industry will expand and will penetrate into newer areas of financial transactions. Previously, most of the technology companies were giving products and services to banks through back-end support. Over the years, India has seen a very unique progress with adoption of fintech services in terms of speed and scale.

The pandemic has been a push for digital payments where every person from any walk of life is learning how to do digital commerce and transacting online. It has created an immediate need for safer, more efficient experience, both online and offline. At the same time, the Government of India through its multiple financial institutions has been aiming at creating a ‘cashless’ society. But this is a dream, which will take some time to get fulfilled. On the other hand the technology officers of multiple companies will play a crucial role in adopting technology to drive efficiencies and growth, eventually leading to better profitability. A techno expert says, the government's support, in providing adequate liquidity through regulated banks and NBFCs, will also provide the much-needed support to the fintech to work towards a positive approach.

Future of the Fintech industry looks shining and growing rapidly on the back of the rise of start-ups in the Fintech industry, penetration of smartphone users, continuous build-up of the digital infrastructure and overall streaming of financial processes in many industries. At the same time, the digital payments industry has evolved considerably introducing innovative products, technologies, operating models, etc from time to time. There has been a manifold increase in digital payments in the recent past. Finance minister Mrs Nirmala Sitharaman in the Union budget has earmarked ₹1,500 crore for a scheme to incentivize digital payments to give a further boost to digital transactions.

The collaboration between tech innovators and financial institutions will go a long way in building a seamless eco-system benefitting all parties involved. A report says, India's fintech industry valuation is estimated at $150-160 billion by 2025. It translates to an incremental value-creation potential of approximately $100 billion. It is estimated that to meet this ambition, India's FinTech sector will need investments of 20-25 billion dollars over the next five years. The current cybercrime related to the banking fraud is over 290,000. Over 2.9 lakh cyber security incidents related to digital banking were reported in 2020. Fintechs have various benefits. They can also be viewed as double-edged swords because the technological innovations led by them may also magnify the existing threats to consumers in terms of privacy breaches and cybersecurity risks.

Dr. Deepak Kumar Sahu, Chief editor, VARINDIA