Will India become the FinTech capital of the world in this decade?
As we enter 2020 and usher in a new decade, it’s the opportune time to start scripting a new growth story. In the decade gone by, we saw the MSME sector, especially the startup ecosystem, go from strength to strength. And a big reason for that is the way FinTechs revolutionized the lending industry by reducing the processing time, making the process smooth, fast, flexible, and transparent. India is fast emerging as a FinTech hub, and we have good reasons to believe that it will become the FinTech capital of the world by the end of this decade.
Nation-wide rise
According to the recently released survey ‘Global Fintech Index 2020’ by London-based research agency, Findexable that covered over 230 cities across 65 countries, there are six Indian cities – Bangalore, Mumbai, New Delhi, Pune, Hyderabad, Chennai, and Ahmedabad, among the world’s 100 leading Fintech Cities. Also, tier-2 cities like Kochi, Madurai, Indore, and Jaipur were highly ranked in the Asia-Pacific region. Given how all these cities are situated in different corners of the country, it tells a lot about the diversity of FinTech hubs in India. In the Fintech Country Rankings of the index, India secured the 15th position while China, known for its dominance in the sector stood, at the 21st position. Don't use plagiarised sources.Get your custom essay just from $11/page
Investment skyrocketing
The survey also found that India witnessed 23 venture investments in FinTech firms in the second quarter of last year, while China saw only 15. According to “Fintech Outlook 2019”, a survey done by DataLabs by Inc42, there are currently over 2500 Fintech startups in India. The fact that only 700-odd existed in 2014 shows the tremendous growth the sector has seen in the second half of the decade. Major media outlets reported that India’s Fintech startups raised $2.6 billion in 2019, the highest ever in a calendar year. With twice the number it raised in 2018, it became the number one funded sector last year followed closely by the transportation and logistics industry. While in the whole decade ending in 2019, $ 7.4 billion were invested in the sector. No wonder Niti Aayog CEO Amitabh believes that the Fintech market in India is likely to expand to USD 31 billion in 2020. All this mainly could happen because issues like accessibility to loans, a collaboration between banks and Fintech startups, and simplification of investment opportunities in share market and mutual funds, were gradually resolved.
Governmental push towards a cashless economy
While the demonetisation move may have hit small-scale business, it gave Fintech startups a shot in the arm. Several other Government initiatives like UPI, GST, Jan Dhan Yojna, Make in India, Licence for payments banks, Digital India, Recognition of P2P lenders as NBFCs, Regulatory sandbox by RBI and few others added to the momentum. With the whopping number of internet users in India, UPI payments are soaring with global giants and homegrown companies entering the market. This evolution will help them reach semi-urban and rural spaces that continue to rely on traditional loans and open up a vast untapped market.
Trends to look out for
India is adopting global trends quite swiftly. Artificial Intelligence, blockchain, data analytics, cybersecurity tools will play a key role in taking the FinTech sector a step ahead and perk up both productivity and efficiency. It will also be interesting to watch if and how India adopts cryptocurrency.
Conclusion
The reasons one can hope India to be in the top five of FinTech capitals of the world are the renewed interest of investors in this sector, the race to tap the rising the customer base, and constant innovation. The FinTech sector walked in the last decade, this decade, it will sprint!