Overview: Fintech Industry

India has become one of the greatest digital markets in the world, with a Fintech adoption rate of 87 percent compared to the worldwide average of 64 percent. India's fintech industry has enormous potential, which is supported by supportive legislation and a supportive digital infrastructure. According to industry estimates, India has over 1.2 billion telecoms (wireless + wireline) subscribers, over 1.2 billion internet subscribers, and over 825 million smartphone users, with about 39% of these people living in rural regions (as of March 2021). Additionally, from 2,071 crores in FY 2017–18 to 5,554 crores in FY 2020–21, the total number of transactions involving digital payments - a crucial facilitator for the growth of digital markets - has increased. More than 5179 crores worth of transactions has been reported so far this fiscal year. Additionally, India is currently home to the third-largest start-up ecosystem in the world. DPIIT has recognized 59,593 businesses across 57 distinct industries, 1,860 of which are in the Fintech industry. As of December 2021, over 17 fintech firms in India had attained "Unicorn Status," meaning they were valued at over $1 billion. There is no official repository for information on investment inflow in the Fintech industry.

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The government has taken a variety of steps to boost investment inflows into the Fintech sector. By helping recipients register new bank accounts so they can receive direct benefit transfers and have access to a variety of financial services applications, the Pradhan Mantri Jan Dhan Yojana (PMJDY) intends to expand financial inclusion in India. Fintech firms can now create technological goods that will appeal to India's enormous customer base thanks to this.

Different Fintech segments in India

Real-time payments, quicker loan disbursements, investment advice, open insurance distribution and advice, peer-to-peer lending, and various services that formerly required human capital are now quickly integrating into the digital-native Fintech scene. Now that lending for both consumers and MSMEs is possible, the fintech sector in India can concentrate on this. At the same time, this industry also includes more conventional financial services including insurance, personal finance, and gold lending.

• PayTech: Third-party application providers (TPAP), prepaid cards/wallets, bill payment, QR code payment, payment aggregators, and point of sale are just a few of the consumer-focused services available in this area (POS). Corporate cards, B2B payments, and invoice payments are examples of services geared toward businesses. The utilization of services like payment gateways, card networks, application programming interfaces (API)/White label solutions, as well as payment security, is how fintech is incorporated into this market. The leading companies in this market are Paytm, PhonePe, MobiKwik, and Google Pay.
• LendTech: Buy now pay later (BNPL), personal loans, salary loans, gold loans, vehicle loans, school loans, and peer-to-peer lending are some of the consumer-focused services available in this market area. Business-focused services include corporate cards, fixed-term financing, and trade financing. Collections management, credit bureau, alternative credit scoring, lending as a service, loan origination system (LOS), and loan management system are among the fintech services used in this market area (LMS). Leading lending platforms for customers and businesses alike are emerging, including Google Pay, M-Swipe, and Razor Pay.
• Digital Banking: This market segment makes use of technology by establishing retail neobanks, small and medium company neobanks, and digital subsidiaries of banks. Neobanks are essentially corporate banks' digital platforms. Conversational platforms, account aggregators, API providers and aggregators, banks with open APIs, banking as a service, and core banking are some of the Fintech services used in digital banking and Corpseed https://www.corpseed.com/ is one of the best of them.
• InsurTech: The use of technological innovations to increase the efficiency and reduce costs of the current insurance business paradigm is known as "insurance." The name "insurance" combines the words "insurance" and "technology," and it was coined as a play on the term "fintech." Insurance corporations and venture capitalists invest in the industry because they believe the insurance business is ready for innovation and disruption. Insurance is seeking prospects that giant insurance companies have less incentive to pursue by offering highly tailored plans, offering social insurance, and utilizing new data streams from Internet-enabled devices to dynamically price premiums based on observed behavior. Insurance, one of the oldest financial sectors, has a long history and usually rewards individuals with significant financial means and in-depth market expertise. Traditionally, using broad actuarial calculations, policy seekers are assigned to a risk group. The organization is then restructured to combine a large enough group of people to ensure that the company will ultimately benefit from the policies. Given the limited amount of data used to categorize people, this strategy actually results in some people paying more than they should. Among other things, insurtech seeks to directly address this data and analytical problem. The inputs from a number of devices, from the activity monitors on our wrists to the GPS monitoring of cars, are being used by these organizations to create more precisely defined groupings of risk, allowing products to be priced more affordably. Along with smarter pricing strategies, insurance enterprises are experimenting with a variety of potential game-changers. Among these is the use of artificial intelligence (AI) with deep learning training to coordinate the duties of brokers and determine the best combination of policies to meet a person's coverage needs.
• WealthTech: Through Robo advisors, discount brokers, mutual fund investment platforms, research platforms, and alternative investment platforms, technology can be used in this market segment to deliver services linked to wealth and expense management. White label Robo advisers, portfolio management software, and capable management are examples of Fintech services that can be used in this market. Zerodha and Small case are two well-known companies in this market.
• RegulationTech: Technology is also being utilized in the financial services sector to adhere to legal and regulatory standards for KYC, digital on-boarding, fraud detection, anti-money laundering (AML), as well as banking compliance and risk management solutions.

Fintech Funding In India

India surpassed China in terms of Fintech funding in the first quarter of 2020. [1] Indian businesses received a staggering $330 million in funding, compared to Chinese fintech companies' $270 million. To approach the issue from a different perspective, the number of deals signed in these 2 nations, respectively, was 26 in China and 37 in India. India is quickly realizing its immense growth potential, even if China is still the larger market. It would be interesting to examine how Fintech financing is distributed. India is home to several different industries where fintech companies operate, including payments, loans, insurance, personal finance management, investing platforms, and more. More than 2000 fintech companies operate in India, with payments being the most well-liked industry. This is because, regardless of their occupation, gender, or age, everyone has bills to pay, invoices to manage, and online orders to pay for.

Future of Fintech

Here are some statistics on the fintech industry in India:

• From Rs 2 trillion in 2019 to Rs 4 trillion in 2020, digital payment transactions have substantially expanded.
• There was six trillion rupees worth of digital transactions from January to August 2021.
• At a CAGR of 20%, it is predicted that the value of Fintech transactions would increase from US$ 66 billion in 2019 to US$ 138 billion in 2023.
• Over 17 Indian fintech companies had attained unicorn status as of December 2021.

In order to make India the center of the Fintech world, fintech companies are transforming and redesigning themselves. India has a mix of swiftly developing Fin Techs and people who are open to utilizing digital platforms. Even though India's FinTech industry is expanding rapidly, it still needs to learn how to deal with any problems that can develop when these businesses branch out beyond the cities. Things are just starting to shift, and what we see today is merely a dot on the canvas. The world of investment has undergone a dramatic transformation because of technology. The convenience of trading has increased, and trade processing times have shortened. With the introduction of digital stock certificates, the slight fraud connected with paper stock certificates has vanished.

Investors can now review in-depth research papers created by specialists and look into a stock's historical price history. Brokerage businesses offer a variety of investment choices under one roof, including shares, mutual funds, derivatives, and commodities. Today, investors don't need a middleman to purchase or sell stocks in a matter of seconds. Individual traders are free to set their own restrictions on the level of risk they are willing to accept and the price levels at which they would like to close out their holdings. In other words, Fintech has never before given investors more power over their money. In the future, the progress won't just continue; it'll accelerate. This is due to the fact that various Fintech businesses are increasingly collaborating and offering users better-integrated experiences.