2017 has brought a revolutionary change in the way people perceive payments. The introduction of breakthrough technologies and initiatives like demonetization and GST proved to be the key drivers of digital payments in the Fintech industry. Digital payments reached a transaction volume of 1,162 crore between April and November and are expected to exceed 1,800 crore in the current fiscal year. EY’s Fintech Adoption Index (2017) ranks India second (52%) behind China (69%) in terms of percentage of the digitally active population. This clearly depicts the potential and need of financial technologies in India.
The year has pretty much offered what everyone expected. It has cemented the significance of the fintech sector in India. This year promises to be a great year for FinTech industry with increasing digitization and data availability. Here’s what else we can expect from the fintech sector in the year to come and the top trends that will dominate this rapidly evolving space:
Banks and Fintech Companies to Collaborate
There is an increase in collaboration between banks and fintech companies through various innovative models. Banks have identified the areas of partnerships and will continue to focus on such partnerships to explore new revenue streams and increase customer retention. Unified Payment Interface (UPI) has democratized money movement from one account to another. With initiatives such as UPI and AEPS, banking will become more ‘open’ in 2018. With more APIs exposed by banks, the process of carrying out payments and other banking transactions would be greatly quickened as well as simplified.
Rise of digital payments in the enterprise sector
For large companies that have stores distributed across large geographies, it becomes a tedious task to maintain cash book, bank book, ledger postings etc. With the increased rate of digital transactions in Indian corporate sector, the workload has decreased dramatically with digital solutions and it is expected reduce further with more transparency in transactions. Also, as businesses are getting more intelligent and leveraging more ties between the physical and digital world to enhance transparency this creates better client experience, drives efficiency and allows employees to focus on more important tasks. Such transparency in B2B transactions will completely remove the incentive for cash transactions.
Boom in Fintech Software Companies Due to GST Rollout
The true power of GST will start unleashing by the end of 2018 and will continue to grow in the next 3 years. It has the power to single-handedly change the way business is done in India. We have already seen a trend of many SOHOs getting themselves registered to start paying taxes in the form of GST. This number is expected to grow further in 2018 and later.
More emphasis on Data Analytics
It’s a perceivable fact that data analytics have made our lives simpler, faster and efficient. Whereas a few years ago a business would have gathered information, run analytics manually, today that business can unearth data in real-time with digital softwares. Today, data analytics is becoming a new norm and is an important feature of every solution. Corporates want insights into every aspect of its business at their fingertips, including the daily expenditure by employees. Expense management solutions will help them to control their OPEX with a click of a button.
A Secure Digital India
Programs & Policies such as Jan Dhan Yojana, IndiaStack, Start-up India, Unified Payments Interface (UPIs) & linking of Aadhar with most of the financial institutions has clearly shown the government’s interest in digitizing India. On the other hand, the rise in digital payments and online lending also makes the sector exposed to hackers who are always on the prowl to feed on vulnerable security. Hence, the sector has the room to innovate to ensure security of sensitive customer data and information.
New players into the market:
The new wave of banking technologies have brought many new players in the fintech domain. Blockchain industry is already on move to make more such apps to make the financial transaction process lot easier.
In a nutshell, the fintech sector will be the one fuelling growth and driving India to new economic heights in the coming year. The Indian FinTech industry is expected to grow and reach an expected $2.4 billion by 2020. Year 2018 is definitely going to be an exciting year for the Fintech industry in India and the competition is expected to increase further. Companies which will build their strategies on data and latest technologies like AI, Machine Learning and cloud will be the frontrunner in this space.
This article was originally published in: CXO Today