Any country, along with other pillars, needs financial prosperity and growth to develop itself and protect itself. The growth of the BFSI industry is an important factor that can lead to this financial uplift. Banking, financial services, and insurance (BFSI) is an industry term for companies that provide a wide range of financial products or services. This includes universal banks or companies that operate in one or more financial sectors. BFSI includes commercial banks, insurance companies, non-banking financial companies, cooperatives, pensions funds, mutual funds, and other smaller financial entities.
One of the most trending services is the FinTech (Finance + Technology) companies. With involving technology in the financial services and products, it makes it easy and more popular among the millennials and Gen Z people.
India is one of the fastest-growing FinTech markets in the world. India ranked highest globally in the FinTech adoption rate with China. Digital payments value of $65 bn in 2019 is expected to increase at a CAGR of 20% till 2023. The overall transaction value in the Indian FinTech market is projected to be $140 bn in 2023 from that of $65 bn in 2019. India moved ahead of China in Q! 2019 with investments of around $286 mn with 29 deals becoming Aisa’s top FinTexh funding target market.
FinTech is a vast industry in itself. So for better understanding and clarity, the Fintech industry in India is bifurcated into 4 major segments.
Digital payments have been an important aspect of the Indian FinTech space. India started to navigate its way into digital payments with its real-time payments system ‘IMPS’ in 2010, and further introduced UPI in 2016. India has so far 375 Payment startups in the country out of which mobile/digital wallets, gateways, POS/ mobile POS sub-segments cover over 50% of the payment startups. The market is expected to grow up to $ 1 tn by 2023.
Along with making the products digital, India is always witnessing startups that encourage and adopt innovative business models that include technology. This can be categorized as WealthTech Industry. The factors that drive the industry are increasing personal wealth, increased adoption of mobile & digital channels, decreased asymmetry of information between small & large financial institutions and investors, etc. There are 440+ WealTech startups in India across personal finance management, digital brokerage, financial research, Robo advisors, etc.
Financial Lending services
The urban population seems to leverage different financial lending services as an alternative to other loans that require heavy documentation to save time and effort. The rural population can benefit from a various financial lending mechanism for credit scoring to stay away from loan sharks.
Insurance including technology is the new kid of the FinTech industry. The scope of IoT in Insurance is more than telematics and customer risk assessment. India has 110+ InsureTech start-ups operating in the current market.
India has seen so far huge growth in the FinTech industry already leading in many areas and is expected to grow more in the upcoming year with the ongoing pandemic only increases the scope for it. The Indian government has also introduced many schemes and policies to help such startup firms such as Standup India, Finance (No. 2) Bill, etc. These policies will encourage entrepreneurs to come up with innovative business models and technologies without much being concerned about the required capital.